The alliance will offer Ola's driver partners a package which will allow them to buy Mahindra vehicles at lower than market prices, attractive financing with zero down payment, low interest rates and subsidised insurance.
08 Sep 2016 | 9954 Views | By Sumantra B Barooah
Utility vehicle market leader Mahindra & Mahindra and Ola, India's largest shared transportation platform, have signed a Memorandum of Understanding (MoU) to enter into a strategic alliance.
The alliance will offer Ola's driver partners a package which will allow them to buy Mahindra vehicles at lower than market prices, attractive financing with zero down payment, low interest rates and subsidised insurance premium. The partners will also 'explore other areas of joint collaboration to build the new generation of mobility solutions'. "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," says Anand Mahindra, chairman, Mahindra Group.
As the contours of the industry changes, Mahindra sees electric vehicles (EVs) benefitting from the growing trend of shared mobility platforms. It won't be surprising to see Ola, for example, becoming a key fleet customer for the electric sedan Mahindra e-Verito or the small electric car, e2o.
"The game- changer for EVs maybe fleets around the world," says Mahindra. His group is already experiencing this growing trend as a fleet of 600 Mahindra Genze electric scooters are plying in San Francisco as part of a scooter rental service called Scoot Network. In India too, a fleet of a couple of hundred e2os have also found a customer in Bangalore-based fleet service provider, Lithium, which provides services only to the corporate sector. Such developments will help the EV industry to negotiate better with the government for support, feels Mahindra. He says, "When you reach that scale, you can put benevolent pressure on the government."
Ola, which also has a tie-up with Nissan Motor India for leasing cars to its driver partners, believes it can play a key role in scaling up the Indian EV market which is still struggling to get the critical scale. Mahindra Reva is suffering the most. "As price points meet market need, we can help scale up that business faster. That future is not too far off," says Bhavish Aggarwal, co-founder and CEO, Ola.
Before that becomes a reality, it will be the internal combustion vehicles that will benefit from the growth of the likes of Ola, Mahindra being a key one of them. With the alliance with Ola, M&M plans to sell 40,000 vehicles to Ola's driver partners nationwide in the next two years. In terms of value, M&M sees a US$ 400 million or around Rs 2,600 crore (vehicle sales and financing) opportunity by 2018 with the new strategic move.
Along with the automotive sector, M&M's finance, pre-owned car sales and service will also gain from the alliance. In terms of products, the new move will give a fresh lease of life to the Verito sedan and the Verito Vibe compact sedan which have been struggling to see good sales volumes. Some other Mahindra products could also join the Ola fleet. "Our alliance with Mahindra will help build significant scale by innovatively building more mobility options and newer use cases in the time to come," says Ola's Aggarwal.
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