Uber to sell Southeast Asia business to rival Grab -sources

The Uber app logo is seen on a mobile telephone in this October 28, 2016 photo illustration. (Reuters)
Updated 25 March 2018
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Uber to sell Southeast Asia business to rival Grab -sources

SINGAPORE: Ride-hailing firm Uber Technologies Inc. has agreed to sell its Southeast Asian business to bigger regional rival Grab, sources with knowledge of the matter said on Sunday, in what would be the US company’s second retreat from Asia.
The deal, which could be announced as early as Monday, marks the industry’s first big consolidation in Southeast Asia, home to about 640 million people, and puts pressure on rivals such as Indonesia’s Go-Jek, backed by Alphabet Inc’s Google and China’s Tencent Holdings Ltd.
As part of the transaction, Uber would get a stake of as much as 30 percent in the combined business, said a source with direct knowledge of the matter who did not want to be identified as the deal is not yet public.
Another source familiar with the deal said Uber would acquire a 25 percent to 30 percent stake in Grab, valuing the entire business at $6 billion, the same valuation it commanded in its most recent capital raising.
Uber and Singapore-based Grab, Southeast Asia’s biggest ride-hailing firm, declined to comment.
Expectations of consolidation in Asia’s fiercely competitive ride-hailing industry were stoked earlier this year when Japan’s SoftBank Group Corp. made a multi-billion dollar investment in Uber.
SoftBank is also one of the main investors in several of Uber’s rivals, including Grab, China’s Didi Chuxing, and India’s Ola.
Ride-hailing companies throughout Asia have relied on discounts and promotions to attract both riders and drivers in the fast-growing market, driving down profit margins.
Uber, which is preparing for a potential initial public offering in 2019, lost $4.5 billion last year and is facing fierce competition at home and in Asia, as well as a regulatory crackdown in Europe.
It is also recovering from a year of scandals that saw co-founder Travis Kalanick forced out as chief executive in June amid US criminal inquiries and a workplace marred by sexual harassment allegations.
SoftBank gained two seats on Uber’s board of directors through its investment and has said it wants the company to focus on growing in the United States, Europe, Latin America and Australia, but not in Asia, due to the lack of profitability.
Uber’s CEO Dara Khosrowshahi said at a conference in New York in November that the company’s Asia operations were not going to be “profitable any time soon,” particularly because of how heavily Uber was subsidizing rides there.
“The economics of that market are not what we want them to be,” he said at the time.
Khosrowshahi, who took over the top job at Uber in August, has been working to clean up the company’s financials ahead taking it public.
Still, during a visit to India in February, he pledged to continue investing aggressively in Southeast Asia.
Now that Uber is pulling out of Southeast Asia, attention may turn to the company’s operations in India, which accounts for more than 10 percent of Uber’s trips globally, but is not making money yet.
Uber’s deal with Grab would be similar to the one struck in China in 2016, when a bruising price war ended in Didi Chuxing buying out Uber’s China business in return for a stake in the company.
Grab raised about $2.5 billion last July from Didi, SoftBank and others in a deal valuing the company at around $6 billion. Bloomberg first reported the deal.


BMW picks insider Zipse as CEO to catch up with rivals

Oliver Zipse
Updated 19 July 2019
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BMW picks insider Zipse as CEO to catch up with rivals

  • German giant has lost ground to Mercedes-Benz and Tesla as tech steps up

FRANKFURT: BMW has named Oliver Zipse as its new CEO, continuing the German carmaker’s tradition of promoting production chiefs to the top job even as the auto industry expands into new areas such as technology and services.
Hailing Zipse’s “decisive” leadership style, BMW hopes the 55-year-old can help it win back its edge in electric cars and the premium market  from rival Mercedes-Benz.
But some analysts questioned whether Zipse was the right choice with new fields such as software and services like car-sharing becoming increasingly important.
“What is intriguing is the cultural bias to appoint the head of production. It works sometimes but ... being good at building cars is not a defining edge the way it was 20 years ago,” said Jefferies analyst Philippe Houchois.
Current CEO Harald Krueger, and former chiefs Norbert Reithofer, Bernd Pischetsrieder and Joachim Milberg were all former production heads.
Zipse joined BMW as a trainee in 1991 and served as head of brand and product strategies and boss of BMW’s Oxford plant in England before joining the board.
He will become chief executive on Aug. 16, taking over from Krueger who said he would not be available for a second term.
“With Oliver Zipse, a decisive strategic and analytical leader will assume the Chair of the Board of Management of BMW. He will provide fresh momentum in shaping  the future,” said Reithofer.
Zipse helped expand BMW’s efficient production network in Hungary, China and the US, in a move that delivered industry-leading profit margins.
Under Krueger, BMW was overtaken in 2016 by Mercedes-Benz as the best-selling luxury car brand.
It also had an early lead over US  rival Tesla in electric cars, but scaled back ambitions after its i3 model failed to sell large numbers.
Reithofer initially championed Krueger’s low-key consensus-seeking leadership, but pressured him to roll out electric vehicles more aggressively, forcing Krueger to skip the Paris Motor Show in 2016 to reevaluate BMW’s electric strategy.
Krueger’s reluctance to push low-margin electric vehicles led to an exodus of talented electric vehicle experts, including Christian Senger, now Volkswagen’s (VW) board member responsible for software, and Audi’s Markus Duesmann, who is seen as a future CEO of the company.
Both were poached by VW CEO Herbert Diess, a former BMW board member responsible for research who was himself passed over for BMW’s top job in 2015.
VW has since pushed a radical 80 billion euro ($90 billion) electric car mass production strategy, and a sweeping alliance with Ford.

Other skills
“A CEO needs to have an idea for how mobility will evolve in the future. This goes far beyond optimising an existing business,” said Carsten Breitfeld, chief executive of China-based ICONIQ motors, and former BMW engineer. “He needs to build teams, attract talent, and promote a culture oriented along consumer electronics and internet dynamics.”
German manufacturers have dominated the high-performance market for decades, but analysts warn shifts towards sophisticated technology and software is opening the door to new challengers.
“Tesla has a lead of three to four years in areas like software and electronics. There is a risk that the Germans can’t catch up,” UBS analyst Patrick Hummel said.
Germany’s Auto Motor und Sport car magazine, normally quick to champion German manufacturers, this week ran a cover questioning BMW’s future.
“Production expertise is important, but if you want to avoid ending up being a hardware provider for Google or Apple, you need to have the ability to move up the food chain into data and software,” a former BMW board member said.