The demand for individual cars seems to be “tapering off” and automaker wants to innovate
The highly competitive ride-hailing and taxi aggregator business in India is up for more action as leading car manufacturer Mahindra & Mahindra plans to enter the space. The $19 billion group could start an Ola-Uber rival, according to ToI, as the demand for individual cars is “tapering off”. More people, especially in traffic-heavy cities, are opting for shared rides. “Even my daughters have no intention of owning a car for commuting. This reality is now at home,” Chairman Anand Mahindra was quoted as saying.
This comes two years after Mahindra had publicly spoken about the threats posed by taxi apps to traditional carmakers. He’d even said that services like Ola and Uber will eat into auto sales in the near future. “The age of access being offered by taxi-hailing apps like Uber and Ola is the biggest potential threat to auto industry. Since these apps operators have made transpiration a commodity, (auto) sales could be hit and volumes get impacted,” Mahindra had said in September 2015. ALSO READ: Ola cabs partners Google to launch ‘Progressive Web App’
India’s young population with higher disposable incomes can afford to buy a car but may not end up finding a parking spot. On top of that, there are insurance and maintenance hassles. Hence, large numbers of people are drifting towards cabs-on-demand. They don’t need a vehicle, they only need access to transportation. “So, our job is to offer wider choices to consumers with more innovative models,” Mahindra had then said.
Currently, the $13 billion taxi market is dominated by Ola and Uber which saw rides increase four-fold last year. A study by market research firm RedSeer reveals that Ola and Uber jointly completed 500 million rides in 2016 compared to 130 million in 2015. Ride-sharing (Ola Share and UberPOOL) was the fastest-growing segment with many first-time passengers coming on board. “Since the costs came down, even people who could not afford a cab, started getting one,” the report said.
Much of this growth is coming from cities other than the big metros of Bangalore, Delhi and Mumbai. The market is poised for robust double digit growth over next 2-3 years, says ICRA. “In FY2016, fleet sales (including cab aggregators) accounted 9 percent of Indian PV (passenger vehicle) sales, which is expected to reach 15-17 per cent level by FY 2020,” it said. ALSO READ: Uber completes 2 million ‘uberMOTO’ trips in India
Mahindra & Mahindra wants to ride this wave. And so do others like Indonesian taxi service Grab, who’s reportedly hired engineers in Bangalore and might launch its service soon. There’s also Mukesh Ambani’s Reliance that is reportedly poaching drivers from Ola and Uber for its yet-unannounced taxi service, JioCabs. India is in for an interesting ride surely!