Days After Apple Invests In China's Didi, Toyota Invests In Uber To Boost Car Leasing

Tyler Durden's picture

Less than two weeks after Apple unveiledan unexpected $1 billion investment in China's Didi Chuxing, an amount some have speculated may be the cost of continuing "business as usual" for Apple's service offerings in China, moments ago Toyota unveiled that it would inject an undisclosed amount of funds in one of the most valuable private "Decacorns" in the US, Uber.

As Bloomberg reports, Toyota said it is making a strategic investment in Uber Technologies. The purpose behind the investment appears to be to expand the company's lease vertical as it will offer auto leases to the ride-hailing company’s drivers.

Uber declined to disclose the size of the investment. Toyota wasn’t immediately available for comment. By leasing Toyota cars, Uber will expand its existing program, which also includes Enterprise Holdings Inc.

BLoomberg adds that automakers have been developing alliances with the various global ride-hailing services, with one simple motive: to find partners that can help sell more cars. Gett Inc., an Uber rival in Tel Aviv, said on Tuesday that it raised $300 million from Germany’s Volkswagen AG. Daimler AG acquired a pair of ride-hailing startups in 2014.

In January, General Motors Co. invested $500 million into Lyft Inc., the second-largest U.S. ride-hailing service. GM leases vehicles to Lyft drivers in Chicago, and the companies plan to expand the program. As noted above, in a less obvious deal, Didi Chuxing, the Chinese car-booking giant, received a $1 billion investment from Apple Inc. this month.

"Ridesharing has huge potential in terms of shaping the future of mobility. Through this collaboration with Uber, we would like to explore new ways of delivering secure, convenient and attractive mobility services to customers," Shigeki Tomoyama, senior managing officer of Toyota, said in a statement.

Indicatively as more car producers shift to a lease-only driven model, it means that the leasing cliff noted here recently will only get greater. The point is to delay the inevitable moment of repricing all those amortized cars to fair value on company balance sheets. Indeed as we noted in "Deflation Is Coming To The Auto Industry As Used Car Prices Drop, Off-Lease Deluge Looms", the best way to avoid recognizing a lease is to replace it with one or more new leases. That is precisely what Toyota hopes to do with its Uber investment.

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PPT Inc.'s picture
PPT Inc. (not verified) May 24, 2016 2:56 PM

If you go to Craigslist and look at used car prices, they will blow your mind. Everything is on offer and there is no bid. You can buy a 9-year-old Camry with 55K grandmother miles for $1500.

Nero_Hedge's picture

This is fine with me..uber is pretty awesome, way better than trying to catch a cab just about anywhere

nibiru's picture

I don;t know why someone would downvote your comment - it's just true.

Wookie's picture

Uber is great if you are a rider. If you drive for Uber it is a nightmare. The prices as a rider are so good because most drivers are losing money to drive you around, they are just too stupid to figure in all the costs. Lyft lowered rates as well and hardly anyone tips either. FUCK UBER AND LYFT, total piece of shit companies to work for. If they were a public company I would be shorting the shit out of those bastards.

Squid Viscous's picture

they overpaid because Tim Cook just liked the name Didi, as in "come here boy and didi my clam-hole"

special kind of idiot's picture

What are these companies doing with all the money . Surely you can develope a cab hailing app for under a few million dollars.

IndyPat's picture

Ha! That's some rich shit.

Anyone else that went to the NRA convention in Louisville this weekend see the ocean of Ford inventory in the Kentucky State Fairgrounds lot?

I'm NOT exaggerating. Fucking truck after truck stretching on forever.
I took a picture.
For all I know they could have been last years models cooling it out there.

But yeah, I'll lease.


InflammatoryResponse's picture

you mean you showed up for the NRA convention with all of those gun people and you didn't even get shot?  how is that even POSSIBLE?




i mean to listen to the media the mere thought of a gun gets somebody killed.


cart00ner's picture

How is UBER even legal?

CC Lemon's picture

Fantastic. Sell more cars to support ride sharing programs, which is supposed to reduce cars.