Faced with the possibility consumers may no longer buy their own vehicles, more automakers are joining hands with their potential future customers: ride hailing apps.

On Tuesday, two of the world’s largest automakers, Toyota and Volkswagen, separately announced partnerships with two different ride-hailing companies.

Toyota announced it had made a strategic investment for an undisclosed amount in Uber Technologies Inc., the world’s biggest ride-sharing app, while Volkswagen said it will invest $300 million (U.S.) in Tel Aviv-based Gett.

The announcements this week are the latest in a dizzying array of deals that are being done amid dramatic advances in technology that could eventually make traditional car ownership obsolete.

In January, General Motors Corp., aligned itself with Uber’s main U.S. rival, Lyft, for $500 million. Ford Motor Co. has also been in discussions with Uber and Lyft.

“There is a huge market in ride-sharing,” said Steve Man, a Hong Kong-based analyst covering the auto industry at Bloomberg Intelligence. “This is changing the way we use cars and the automakers don’t want to miss out.”

If the car buyer of the future is a driver for Uber or Lyft — instead of Mr. and Mrs. Smith — then automakers want to make sure they’re aligned with those services as preferred suppliers.

Drivers for car-sharing companies “are high-mileage users, who drive larger, more profitable vehicles and change them more often — dream customers that are coveted,” said auto industry consultant Dennis DesRosiers of DesRosier Automotive Consultants Inc. “These tie-ups bring loyalty to the brand.”

For the tech companies, the auto industry represents a powerful new source of revenue.

Apple, which recently invested $1 billion in Chinese ride-sharing service Didi Chuxing, is vastly outspending the top 14 automakers on research and development, Morgan Stanley analysts said in a research report this week.

While it’s unclear how much of the additional $5 billion Apple spent between 2013 and 2015 was devoted to auto-industry related research, the payoff could be huge.

The potential market for shared mobility services is worth an estimated $2.6 trillion (U.S.) worldwide, of which Apple could garner at least a 16 per cent share, the report by Katy Huberty, Adam Jonas and others predicts.

Uber alone has been valued at $62.5 billion despite regulatory challenges to its services in some major cities, including Toronto.

Earlier this month, Toronto City Council legalized UberX, which uses a smartphone app to connect passengers to drivers using their own vehicles, after months of protest from the established taxi industry.

Mayor John Tory said he hoped the move would pave the way for competitors, such as Lyft, to set up shop in Toronto.

Uber founder Travis Kalanick was in Europe this week, promoting his vision of Uber commute, in which neighbours use the app to arrange carpools to work.

"We can turn every car into a shared car — the next frontier is the Uber commute," Kalanick said Monday at a conference in Brussels, saying car sharing helps reduce traffic congestion and pollution.

Uber also announced it is test-driving a self-driving vehicle in Pittsburgh, using a Ford Fusion equipped with cameras, radar and sensors, as part of its vision of ultimately dispatching driverless cars to pick up customers.

That message has not been lost on Ontario, the heart of Canada’s auto industry. Earlier this year, the province moved to allow self-driving cars to be tested on public roadways in a bid to spur investment in both the auto and tech sectors.

The city of Stratford is vying to become the first autonomous car test centre, citing its advanced public network as a key advantage.

For the automakers, these deals have become almost a necessity as ride-hailing companies threaten to take over the car market, particularly in urban areas.

With more people living in large cities, where the cost of owning, insuring and parking a car can be prohibitive, ride-sharing services are growing exponentially.

Add to that the entry of Silicon Valley giants like Google and Apple in a race to develop more intelligent, self-driving vehicles and the old business model of selling cars to consumers goes out the window. Who needs to own their own car or even have a licence to drive one if you can easily hail an autonomous car with your mobile phone?

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Barclays Capital predicted in May 2015 that self-driving cars could cut vehicle sales by 40 per cent within 25 years, in part by making it easier for more family members to share fewer cars.

That may all sound slightly surreal coming off a year in which vehicles sales in North America set another record as lower gas prices, low interest rates and pent-up demand drove consumers into auto showrooms.

But that equation could look quite different in the future as the tech giants attempt to provide solutions for an aging population and the threat of climate change.

Automakers clearly believe they can’t afford to sit on their laurels.

“Ride-sharing has huge potential in terms of shaping the future of mobility,” said Shigeki Tomoyama, senior managing officer of Toyota Motor Corp., in a statement this week. “Through this collaboration with Uber we would like to explore new ways of delivering secure, convenient and attractive mobility services to customers.”

Gett, which provides an app that connects riders with licensed taxi and black cab drivers, is ranked in “the top 15 explosively growing companies” by Forbes. The Israeli-based firm operates in 60 cities, including London, Moscow and New York City and has raised over $520 million in venture funding.

Innovative, digitally integrated services covering all aspects of mobility promise very strong growth momentum and huge earnings opportunities in the coming years, Volkswagen said about its deal with Gett.

“Alongside our pioneering role in the automotive business, we aim to become a world leading mobility provider by 2025,” says Matthias Müller, chairman of the board of management of Volkswagen AG.

Share the wealth

Some recent deals between automakers and ride-sharing companies.

Toyota invested an undisclosed amount in Uber Technologies Inc., the world’s biggest ride-sharing company.The deal includes a leasing option that would allow Uber drivers who lease their vehicle from Toyota to cover their payments through their earnings.

Volkswagen will invest $300 million (U.S.) in Tel Aviv-based Gett, Europe’s version of Uber. While details are sketchy, it includes jointly developing mobile on-demand car sharing solutions, the companies said.

General Motors is investing $500 million (U.S.) in ride-sharing service Lyft, the main U.S. rival to Uber. The deal will see GM become the preferred supplier of vehicles for short-term rental to Lyft drivers at various hubs in U.S. cities. The companies will work to develop a network of self-driving cars that riders can hail on-demand.

Apple is investing $1 billion in Didi Chuxing, China’s largest ride-hailing service, in part to learn more about the Chinese market and also to collaborate on future projects. It was the single largest investment the Chinese company had received to date.

- with files from Star wire services

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