M&M TO PROVIDE 40K CARS TO OLA, EYES $400M BIZ

MUMBAI (TIP): Following in the footsteps of global automakers, Mahindra & Mahindra is partnering with Ola for providing as many as 40,000 cars to the ride-hailing startup over the next two years. Drivers on the Ola platform will be able to avail low-cost financing for their vehicles, get insurance benefits and post-sales maintenance services as part of what the two companies call the Mahindra-Ola package.

The initiative is expected to bring in additional$400 million worth of business — through purchase of cars and financing — for the Anand Mahindra-led group, reports Times of India.

Ola and the Mumbai-based diversified group will look to extend its non-exclusive partnership into building products going forward, Mahindra told TOI in an interview. Uber recently announced a similar ‘strategic’ partnership with Tata Motors for its driver community. Uber, the world’s most valuable startup, counts Tata Opportunity Fund as an investor.

Having cautioned against the growing adoption of ride-hailing services about a year ago, Mahindra said the idea was to build an ecosystem together with players like Ola.

“So, for now, we are putting Verito in but all auto companies will have to design cars in future to address the needs of the shared mobility universe,” he said. Mahindra’s acceptance of the growing adoption of new-age transportation startups comes at a time when traditional automobile firms are increasingly collaborating with app-based ventures to tap the ever-increasing set of commuters opting for aggregators in lieu of buying cars.

“To me, a lot of noise has been made around car companies investing in ride hailing startups, I don’t think that brings any strategic benefit right away as it’s a financial investment. What we are addressing are the pain points of the shared fleet industry, which are cars and drivers for their entire lifecycle,” Mahindra told TOI.

For cab aggregators, constraint on the car-supply side has been a critical issue as they’ve grown aggressively, which is what partnerships like these help in solving. Last year, Ola announced it will invest Rs 5,000 crore to buy and then lease cars to its driver-partners over the coming years. But owning a fleet goes against the basic tenet of these tech-backed startups and a partnership with car makers is a more suitable option, for now.

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