If there is one top executive in the automotive sector who boldly announced that Ubers and Olas in the long run would impact vehicle sales, it was Anand Mahindra, Chairman of the $ 17.8 billion Mahindra Group. Many thought he was over-reacting even as the impact of the disruption that the car aggregators are delivering in the mobility space is playing out. Mahindra could do very little about the transformation that is happening but instead of standing in the sidelines and observing the change, he has decided to participate in it.
The Mahindra group has entered into a strategic alliance with Ola, India’s largest car aggregator, to what it calls ‘driving entrepreneurship and smart mobility across India’. The deal which was announced earlier today will enable Ola’s driver partners to avail an attractive ‘Mahindra-Ola’ package. This includes attractive financing with zero down payment, low interest rates, subsidized insurance premium and comprehensive maintenance package. Mahindra hopes to sell 40,000 units through this alliance by 2018. This is a fairly large numbers that could well help the company shore up its market share.
According to Anand Mahindra, Chairman, Mahindra Group, “This is an initiative whose time has come, one that meets the current and future needs of Indian consumers, particularly younger ones who prefer shared mobility solutions. It also has a positive social impact on the lives and prospects of at least 40,000 driver owners, and their families. To me, this is an important strategic alliance for the Mahindra Group, one that I believe will change the contours of our industry, while giving us the first mover advantage in the fast growing sharing economy of India.” He further added that this alliance created a ‘click and brick’ model and will strengthen Ola’s value proposition. Total value of sales through this alliance for Mahindra is expected to be about $ 400 million (Rs 2,650 Crore) over two years.
Bhavish Aggarwal, Co-Founder and CEO, Ola said, “We are delighted to work with an iconic Indian brand like Mahindra to further our mission of building mobility for a billion Indians. As part of the strategic alliance between the two companies, we have created a unique solution to help tens of thousands of aspiring driver-entrepreneurs realise their dreams. Our alliance with Mahindra will help build significant scale by innovatively building more mobility options and newer use cases in the time to come.” Using the Ola mobile app, users across 102 cities can book from over 450,000 vehicles across cabs, auto-rickshaws and taxis.
The Mahindra-Ola package attempts to empower driver partners who otherwise may not be able to invest in a car, to purchase one at a highly affordable price with zero down payment. It also offers scholarships for their children.