Grab signs exclusive partnership with SMRT to build ‘largest’ car fleet in Singapore

SINGAPORE — Ride-hailing firm Grab on Friday (Oct 20) announced a new and exclusive partnership with SMRT to build the largest taxi and private-hire car fleet in Singapore, a move that could help entrench its position in the market.

Grab drivers will have exclusive access to SMRT’s current and future taxi and private car fleet, which currently stands at just over 2,900 vehicles. This means that SMRT cab drivers can only accept ride bookings from Grab, ruling out other rival booking apps like Uber.

With this new partnership, Grab drivers will also be able to use SMRT workshops and service centres for maintenance purposes.

Grab also announced their intentions to build the largest car rental fleet in South-east Asia by the fourth quarter of next year, which comes on the heels of US$700 million (S$951 million) in debt financing that it raised from regional and global banks – the largest ever debt financing raised by a South-east Asian start-up.

Grab Singapore’s head Lim Kell Jay told TODAY: “SMRT has the fleet of the future – eco-friendly hybrid and fully electric vehicles. This is really what we’re hoping to benefit from.”

While Mr Lim did not share numbers, he said that Grab and SMRT will be building the largest commercial car fleet in Singapore and will offer “various competitive rates” to drivers.

In April last year, SMRT joined hands with GrabCar and ventured into the private-hire car industry, offering limousine services, chauffeured services and car rental services.

SMRT’s private-hire car business is parked under Strides Transportation, a wholly-owned subsidiary of its taxis arm, SMRT Taxis. The fleet of 300 sedans offer chauffeured and car-rental services, which users can book via a customer hotline or through app-based ride-booking platforms, including Grab.

Since January this year, the number of Grab drivers has nearly tripled to more than 1.8 million, giving the ride-hailing firm what it touts as the largest land transportation fleet in South-east Asia.

Transport analysts said that the tie-up will give local commuters a new and more consistent range of services from Grab. Singapore University of Social Sciences (SUSS) transport economist Walter Theseira said that Grab would be able to provide more consistent service by being able to control the vehicles that they provide their drivers.

“I wouldn’t expect that much impact in Singapore, though, because our vehicles used for ride-sharing are generally already in good condition,” Dr Theseira added.

Analysts also noted that the move is a win-win for both companies. Dr Park Byung Joon, an urban transport expert from SUSS, said that SMRT would have higher utilisation of their maintenance assets. More drivers might be enticed to join Grab rather than Uber, he added, as they can use SMRT’s maintenance facilities.

National University of Singapore transport researcher Lee Der-Horng also noted that with this partnership, SMRT will be able to concentrate on their core business: rail and bus services.

The new partnership announced on Friday comes as Grab’s main rival Uber and Singapore’s largest taxi operator, ComfortDelGro, negotiate a potential strategic alliance, which was announced Aug 22.

This could include teaming up on fleet management and booking software solutions, include making its fleet available on the Uber application.

Dr Lee said that he was “sceptical” of how ComfortDelGro and Uber would be “able to fight back in a meaningful way”.

“It is really up to ComfortDelGro to decide if they should go with Uber or not. If they really ink their alliance, the offering must come with a greater and stronger ‘wow’ factor,” he pointed out. “Otherwise, the market may not keep eyes on ComfortDelGro and Uber at all.”

Dr Park said that the Grab-SMRT tie-up is a “wake-up call” for Uber and ComfortDelGro.

“Uber is facing problems all over the world, and people are questioning how long they will be around. If they want to save their business, they have to be quick,” he added.