Indian ride-hail giant Ola to announce Mahindra strategic alliance
Indian ride-hail app, Ola, and automotive major, Mahindra and Mahindra, have announced a $400m deal that aims to increase Ola’s fleet size by 40,000 vehicles over the next two years, the majority of which will be Mahindra’s Verito model. The strategic tie-up also allows Ola drivers to become eligible for Mahindra vehicle financing on both new and used vehicles, and offers significant savings on insurance premiums. However, Mahindra made it clear that the vehicle-provision aspect of the partnership was not exclusive, perhaps leaving the door open for a similar deal with Uber.

Mahindra Group is set to announce a strategic alliance with Ola on Thursday, which may be in line with the growing trend of auto majors joining hands with cab aggregators.

In June, Tata Group and Uber had formed a partnership to offer Uber’s driver-partners vehicle-purchase and ownership solutions.

Recently, Ford Motors, along with other strategic investors, pumped in around $24 million in vehicle rental start-up Zoomcar. Earlier this year, Toyota Motor Corp invested in Uber. These collaborations also follows investments by Volkswagen and General Motors in Gett and Lyft (rivals of Uber in the international market), respectively.

The deal between Mahindra and Mahindra and Ola could be on similar lines where the former could invest in the Bengaluru-based app.

Ola will also gain as it plans to expand its fleet in a bid to compete with rival Uber, whose major focus has shifted to the burgeoning Indian market after exiting from China last month.

Experts feel that this comes at a time when car sales, globally, have taken a hit due to several factors, including economic slowdown and entry of car-rental and sharing companies. Auto companies are looking at innovative ways by adopting technology to improve their sales.

Arvind Singhal, founder of technology and retail consultancy firm Technopak, said: “Auto companies are surely facing the heat with the advent of car-on-demand services. Globally, private-car ownership has started declining. It will happen in India, too, but not soon.”

Harshad Lahoti, a serial angel investor, said: “There is a huge market for ride-sharing, and the ride apps are changing the way we want to travel. The main intent of auto-makers right now would be to improve sales; and for them cab aggregators are a major competition. So it’s better to join hands with them instead of fighting against them.”