Indian car manufacturer denies Uber and Ola are a threat

Despite the Mahindra Group Chairman, Anand Mahindra, calling Uber and Ola a threat to the car buying industry, he has since stated that their penetration will not lead to the extinction of individual auto buyers. Mahindra, the Indian multinational automobile manufacturing corporation, plans to build cars "passionately" to make sure that demand does not decrease. However, despite these comments, reports suggest that Uber is a great threat to the company, especially since it invested $1bn to help increase its operations in India. Ola, Uber's domestic rival is also investing heavily to expand its market share.

After calling taxi-hailing services like Uber and Ola as a threat to industry, Mahindra Group Chairman Anand Mahindra said their penetration will not lead to extinction of individual auto buyers. "Despite the Ubers and the Olas, individual buyers of city and commuter cars are not going to become extinct," Mahindra said in a video message at the launch of the company's compact SUV in Chakan, Maharashtra.

Image: Flickr

Though he conceded that overall volumes of commuter and city users may drop because of the "sharing economy", there will "indeed remain many buyers who would want to own a car and enjoy the experience of driving". On heightened sensitivity to pollution, he said, "There is going to be enormous societal pressure to use vehicles in cities with small footprint, both in terms of carbon and space occupied."

It can be noted that Mahindra was among the leading auto industry chieftains to flag concerns around taxi aggregating apps in September last year. "The ease of access being offered by taxi-hailing apps like Uber and Ola is the biggest potential threat to the auto industry. Since these apps operators have made transportation a commodity, (auto) sales could be hit and volumes may be impacted," he said.

The onus, Mahindra said, is on the auto industry to build cars "passionately" to ensure demand for cars doesn't go away. "The market is becoming polarised and I am not a strong believer in the sustained growth of the mid-sized sedan market," he added. Uber is keen to increase its India presence from the current 18 cities. Industry estimates peg Uber's daily rides at around 2,00,000.

Despite initial hiccups in India, the US-based taxi-hailing app is investing USD 1 billion to ramp up its operations by March next year. Its domestic rival Ola, which leads the market in terms of number of taxis, drivers and users by a wider margin, is also getting millions of dollars of investments to increase its market share.