All along, cab aggregators—Uber and Ola—were pure technology providers as the cabs on their platform were owned by the drivers. That model is all set to change in India as aggregators look to quickly add more drivers to their network. Uber and Ola have brought in subsidiaries that have introduced the leasing model that is quite popular globally. Ola launched Ola Fleet Technologies last year while Uber now has Xchange Leasing. The driver can lease a car at a low initial deposit—since it is not his credit score that is considered—followed by lease payments and the option of owning the vehicle after three years. To push demand for leasing cars, Ola joined hands with Mahindra & Mahindra to add 40,000 vehicles to its network over the next two years while Uber is in talks with Maruti Udyog and Tata Motors for over 1 lakh vehicles.
The bulk demand will be a shot in the arm for automobile companies that are just emerging from years of muted growth. As leasing companies are involved, it could lead to cheaper down-payments and interest rates for drivers. As more people in more cities opt for Ola/Uber, the share of fleet sales in overall passenger vehicles sales has reportedly risen to 10-12%. As cab services proliferate in more cities, it could, over time, lead to a tapering off in demand for personal cars. While that is a long-term fear, for now, Uber already has 4 lakh driver partners in 28 cities, while Ola has 4.5 lakh vehicles in 102 cities. For Uber, the move to increase its presence is important as it is looking to expand its India operations ever since it sold-out to Didi Chuxing in China. In mid-2015, Uber had announced that it would invest $1 billion in the country. As the battle between Softbank-funded Ola and Uber intensifies, expect more.
