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Ola to Invest Rs 5,000 Cr in Cab Leasing Business

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Ola Cabs screenshot

Cab hailing app Ola has been spreading out its branches to tackle the tough competition the San Francisco based firm Uber has been subjecting it to. It is now planning to invest Rs. 5000 crore in a programme under which drivers can lease a car for a minimal initial deposit of Rs35, 000.

To take its new leasing business, it has made a major appointment by hiring former LeasePlan India executive Rahul Maroli as Vice President (Strategic Supply Initiatives). This trend of picking those whose profile showcase tremendous achievements in the said sector has been widely seen this year.

When drivers lease a car under the scheme with the said initial deposit of Rs.35,000 and also paying up monthly lease which goes upto Rs.15,000 roughly, they can even own the car after three years. We think this is a form of stability which is likely to draw drivers towards this lease scheme of the company, helping the company to gain more cabs and drivers, and also helping the drivers to turn into entrepreneurs once they own the vehicle after three years.

At the cost of Rs.15, 000 per month however, the cab would cost them Rs.5, 40, 000 and the additional Rs.35, 000 in three years. If the drivers who are single bread earners of the family could afford this buy, we aren’t very sure of.

Ola has now set aside a dedicated capital of Rs. 5,000 crore to be put into this particular project in a span of a year. The Bengaluru based company is going to probably take smaller steps towards the larger investment. It is a good idea to taste the soup and then have it too. It will hence begin with investing Rs 500 crore to begin with, and will raise funds independently for this subsidiary in the time to come. As a part of the pilot project, over 1,000 vehicles in Bengaluru, Chennai, Hyderabad and three other cities are already on road as part of it.

By December 2015, at least 10,000 cars are expected to be on-road under the leasing model, Ola said. “We believe that this first-of-its-kind leasing programme brings a unique benefit to driver partners to turn entrepreneurs. Rahul’s rich experience shall help us scale this business rapidly and in making this programme an industry benchmark,” Ola co-founder and CEO Bhavish Aggarwal said.

Various Ola Initiatives

To put back Uber, in very few months in near past, Ola has announced a bouquet of new initiatives like shuttle bus services by on-boarding chartered and tourist buses. It is also exploring ancillary revenue channels. It entered the food delivery business with Ola Café in March and also a grocery delivery app Ola Store in June. It is also expanding its mobile wallet, Ola Money, by offering it to other ecommerce platforms such as OYO Rooms, Lenskart and Saavn. Apart from this Ola has been offering Kaali Peeli taxis as well as autos on their platform since last year!

Now lets see how Ola, which is India’s third most valued Internet company deals with leases, and how far this investment takes it.

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