In February 2025, Grab and GoTo, the two leading ride hailing firms in Southeast Asia, were reportedly in merger discussions. Share price declines for both (versus the price of their IPOs), challenges in growing market share individually, and headwinds on the path to profitability are the key drivers for the potential merger.
This merger would further consolidate the ride hailing market in Southeast Asia, creating a giant with a value share of around 85% of the USD8 billion regional market in terms of gross booking value, ie gross merchandise value (GMV). The enhanced market dominance will give strong negotiating power against suppliers, including automotive firms. To encourage competition, regulators are likely to encourage the growth of smaller competitors or even the entry of foreign peers. Furthermore, the synergies between the two firms will pose a strong threat to businesses in food delivery, retail e-commerce and financial services.
Consolidation in the Southeast Asian ride hailing market, with an 85% GMV share
The combined entity will account for 85% of market GMV in ride hailing in Southeast Asia
Source: Euromonitor International, Passport Automotive and Mobility, 2024 data
Nevertheless, with significant share gaps with larger giants, including Didi and Uber, there will be no changes in the company rankings globally and in Asia Pacific.
Grab only recorded a 4% value CAGR over 2019-2024. It would be tough for Grab to achieve an 85% share through organic growth (ie without a merger or acquisition). GoTo recorded a 13% annual average decline in value over 2019-2024, impacted by competition from Grab, and a sluggish recovery from the COVID-19 pandemic in 2020-2021 in its home market, Indonesia. In Singapore, GoTo had to offer regular discounts to retain its customer base and maintain monthly transactions, owing to competition from Grab. The reported USD7 billion offer by Grab will offer a premium over GoTo’s current market capitalisation of USD6 billion (IDR94 trillion), enabling investors to cashout before any further decline in the share price.
Opportunities for smaller fish and foreign peers
With Grab’s already dominant position in Southeast Asian markets, the further increase in its market share through the potential merger means that the transaction will be subject to strict regulatory scrutiny in key markets, especially in Indonesia. The combined entity would hold a market share of over 91% in Indonesia, and almost 90% in Singapore.
According to Euromonitor Passport Travel, arrivals from China to Singapore amounted to 3 million trips in 2024, almost recovering to the pre-pandemic level of 2019. The trial of ride hailing roaming will benefit foreign peers, including Didi, in being able to apply for new licences.
Stronger bargaining power against suppliers and threat to digital service providers
One key benefit of the merger will be improvements in cost efficiency through the entity’s larger scale, including advantages in automotive procurement for drivers. Japanese manufacturers, especially Toyota and Honda, along with Malaysian manufacturers, including Peruda and Proton, will have to offer more discounts to maintain their partnerships. Similarly, electric vehicle (EV) challengers, including VinFast and BYD, will have to make more attractive offers to drive growth, which will also assist Grab and GoTo in shifting to EVs to promote sustainability.
Furthermore, there are synergies between Grab and GoTo across ride hailing, food delivery, retail e-commerce and financial services. In ride hailing, Grab has strong expertise in four-wheeler products and associated lending and insurance, particularly in Singapore and Malaysia, where four-wheeler products are popular. In contrast, GoTo’s roots in Indonesia, where motorcycles are pervasive, means that is has significant experience in two-wheeler services, including partnerships with Gogoro in EV motorcycle and battery swapping stations.
GoTo’s expertise in retail e-commerce, with Tokopedia, combined with Grab’s pan-regional driver network for delivery, will pose a substantial threat to Shopee and Lazada in retail e-commerce. In addition, there is likely to be a regional digital bank alliance formed between Grab’s GxS digital bank joint ventures in Singapore and Malaysia, and GoJek invested Bank Jago in Indonesia. The pan-regional digital ecosystem will benefit the digital bank alliance for customer merger and usage, facilitating cross-border transactions, especially for small and medium enterprises (SMEs), challenging regional incumbents, including OCBC, and other digital challengers, including ANEXT Bank.
Challenges and opportunities
While the potential merger will face regulatory hurdles, given its contribution to further market consolidation, it will allow the two firms to better capture opportunities across industries in Southeast Asia. For example, the regional ride hailing market is poised to exceed USD18 billion at constant 2024 prices in 2029, with an 18% value CAGR over 2024-2029, driven by factors including the increasing cost of car ownership, a recovery in tourism, along a with shift from hybrid working back to office working.
40% of respondents in Indonesia used a ride hailing service in 2023, a 5% increase from 2022
Source: Euromonitor Voice of Consumer, Mobility Survey, (n=1,004) Indonesia
The synergies of the two companies across industries will be a threats to incumbents, which will have to analyse the specific impacts, and design strategies to defend their positions or build partnerships. If this deal is blocked, Grab and GoTo will need to rethink and evaluate diversification strategies, including expansion into other markets, similarly to Didi’s expansion into Latin America and the Middle East and Africa.
Read our report, World Market for Shared Mobility, for more insights.