The Japanese giant's investment values Grab, South-east Asia's largest car-hailing service, at just over US$10 billion, Bloomberg reported.
The automaker on Wednesday said by deepening the partnership, it hoped to achieve connectivity for Grab's rental vehicle fleet across Southeast Asia and offer financing, insurance and maintenance services to drivers based on data collected on its platform.
Since August 2017, Toyota and Grab have been developing connected services for the latter, utilising driving data collected by Toyota's TransLog data-transmission driving recorder.
A Toyota executive will be appointed to Grab's board and another Toyota official is being tapped to be an executive officer at Grab, the company said.
Toyota will also share technology with Grab, including software that predicts when cars need maintenance.
Toyota is the lead investor in Grab's ongoing financing round, launched following Grab's takeover of Uber's Southeast Asian assets.
This represents the largest ever investment by a auto manufacturer in the ride-hailing scene.
The investment comes as Toyota works to adapt to what company president Akio Toyoda calls "profound change" in the industry.
Grab added that the investment will allow Grab to further expand its range of online-to-offline services, such as GrabFood and GrabPay, deeper into the region.
"A board seat nearly guarantees that Grab will buy cars from Toyota", said Steve Man, an analyst at Bloomberg Intelligence in Hong Kong.
Grab and Toyota will roll out connected vehicle services, such as telematics-based insurance, which could reduce the cost of insurance premiums for safer Grab drivers, said Grab.
Other automakers have put money into the ride-hailing industry.
Toyota, the world's most valuable carmaker with a market capitalization of about $221 billion, has sought partnerships with a pantheon of tech companies including Amazon Inc. and Apple Inc.in a bet that data will be a key part of its future.
"We are thrilled to have Toyota onboard as a long-term, strategic partner of Grab". "We want to be the one-stop mobility platform for users".
Until March this year, Grab was Uber's biggest competitor in the Asian region.
Last month, Indonesian ride-hailing and online payment firm Go-Jek said it would enter Vietnam, Thailand, Singapore and the Philippines in the next few months, investing $500 million in its worldwide push. In particular, that will involve close collaboration with the Toyota Mobility Service Platform (MSPF), which is working on areas such as user-based insurance, new types of financial packages and predictive vehicle maintenance.
Grab said it logs six million rides a day via apps downloaded onto over 100 million mobile devices.
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