Global Opportunities: Japan

Sony to launch a ride-hailing service in Japan as Uber CEO signals further expansion in the country

Key Points
  • Sony has struck partnerships with several taxi firms to start its Japan service.
  • Hours later, Uber's CEO signaled its intention to expand further into the country.
  • Japan's taxi market is extremely competitive with a number of players including Didi Chuxing and Toyota.
Adam Galica | CNBC

Sony announced partnerships with several taxi firms to start a ride-hailing service in Japan on Tuesday.

Hours later, Uber's CEO Dara Khosrowshahi signaled his company's intention to expand further into the country.

Sony's ride-hailing service will be based on its artificial intelligence (AI) technology, the company said in a press release.

The Japanese electronics giant, along with Daiwa Motor Transportation Corporation and five other taxi firms, will aim to establish the new company in the spring.

The six taxi businesses together own 10,000 vehicles, and provide services mainly in the capital of Tokyo. Sony's AI technology will be used to predict taxi demand and make sure the right number of cars are available for users.

Uber Japan push

Sony's announcement adds another player to the already fiercely competitive Japanese taxi app market.

Shortly after the announcement, Khosrowshahi spoke of Uber's plans to push further into the market by striking its own partnerships.

"It's clear to me that we need to come in with partnership in mind, and in particular a partnership with the taxi industry here, which actually has a very, very strong product," Khosrowshahi said on his first trip to Asia as Uber CEO, according to comments reported by Bloomberg. "But that product hasn't kept up with technological change."

Further expansion in Japan comes as Uber has retreated from some key international markets and is considering whether to sell its Southeast Asia unit to Singapore-based rival Grab.

Japan, with its mature smartphone market, could provide an opportunity for growth.

Tough rules legislate ride-hailing apps in Japan. Non-professional drivers are effectively barred from offering taxi services, so apps like Uber have to link riders with existing taxi fleets. That means its core service, that it offers in major markets like the U.S. and U.K., is not in full operation in Japan.

A partnership, as Khosrowshahi hinted at, could help Uber push further into the market.

Intense competition

Uber and Sony's efforts to crack the Japanese market could be tough thanks to a number of strong competitors. Earlier this month, Japanese conglomerate SoftBank and Chinese ride-hailing firm Didi Chuxing announced plans to set up a venture in the country. SoftBank is an investor in Uber.

Automaker Toyota agreed to invest 7.5 billion yen ($70 million) in ride-hailing app JapanTaxi earlier this month.

And local players Nihon Kotsu and Daiwa Motor Transportation announced plans in January to trial a taxi-sharing service.