Uber Technologies Inc. has announced an investment compact with Toyota Motor Corps (NYSE: TM)., one of the largest and oldest automobile manufacturers operating on a global scale.
Though Toyota and Uber have so far refused to comment on the size of the investment or specific numbers involved in the agreement, the terms of the deal seem advantageous to both companies. Toyota can now forgo the expense of building its own ride-sharing infrastructure, instead using the network established by Uber, and thereby cashing in on a profitable and proven model. It also offers leasing options to Uber drivers through its financial services system, tightening the relationship between Toyota and its customers, and generating a possible source of ongoing income.
Uber meanwhile will strengthen its current leasing programs in addition to gaining capital. Since its inception in 2009, the company has grown into a expansive service, servicing over 449 cities and worth over $60 billion. Securing more investors -- with potential legal battles looming over the near future -- is a task the company is committed to. This deal has built a partnership similar to the ones between other ride-sharing and manufacturing companies, like General Motors-Gett and Volkswagen-Lyft.
These recent partnerships are indicative of a new norm that is quickly defining the transportation business, one defined by today's online economy and divided along battle-lines. It is now an economy in which the automobile industry is umbilically attached to these ride-sharing corporations in order to expand their business potential. These partnerships also serve to corner areas of the market for automobile manufacturers to dominate. Case in point: General Motors (NYSE: GM) interacts primarily with rural communities, which comprise the bulk of their consumer base in the United States.
Ride-sharing - along with the online transportation companies that have adopted and nurtured the practice - has been both lauded and criticized from a variety of media outlets, individuals, and governments. However, everyone agrees that the practice is disruptive. While its admirers argue it provides a better and more efficient service than publicly operated taxis, others claim it lacks regulation and encroaches on more legitimate businesses that hard-working people rely on for support. It is difficult to estimate how many people participate in ride-sharing, but given the rapid growth of the industry in past years, it is formidable.
Uber -- the largest of these ride-sharing companies and often the recipient of the most attention given its pioneering policies -- is following the lead of its competitors in continuing its aggressive expansion. It could be said that Uber wishes to disrupt the car loan and leasing industry after it has disrupted the public transportation one. But the popularity of the company shows that for the foreseeable future, its disruptive practices are here to stay, and certainly here to affect the market.