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Ola and Mahindra to provide vehicle financing worth $400M to drivers

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Cab aggregator Ola has tied up with vehicle manufacturer Mahindra & Mahindra Ltd to provide vehicles on loans to 40,000 driver partners through financing worth $400 million (~Rs 2,600 crore). Both companies have entered into a strategic alliance to provide “Mahindra-Ola” financing package for drivers; it will offer Mahindra brander cars at separate rates, loans with zero down payment from NBFCs, subsidized insurance premiums, and vehicle maintenance packages.

Ola says that the $400 million worth of financing is aimed at “empowering (its) driver partners who otherwise may not be able to invest in a car.” The package will also support drivers with accident insurance and scholarships for their children. Currently the company claims to have over 450,000 vehicles spread across 102 cities including cars and auto-rickshaws combined.

Ola’s previous tie ups for drivers:
-Last month, the company tied up with FlexiLoans to offer Ola’s drivers with ‘business and need based’ loans of up to Rs 100,000, limited to its ‘Ola Star’ or top rated drivers in Mumbai and Bangalore.
– In February 2015, Ola tied up with SBI to extend vehicle financing for its drivers under a new programme called Ola Pragati.
– In March 2015, Ola launched a reward points programme called Ola Stars for drivers based on their monthly performance. This would include benefits like medical insurance, scholarship for children, skill development training to fuel discounts and car-servicing.
– In August 2015, it announced a new programme to incentivize drivers in Delhi with benefits of up to Rs 100,000 and including a discount of up to Rs 60,000 to purchase a new CNG car.
– In September 2015, Ola partnered with Indian Oil to provide its drivers cashbacks of Re 1 for every liter of fuel filled at IOCL stations across India.

Ola financials:

For the quarter ended 31 March 2016, ANI Technologies the parent company of Ola, reported revenues of Rs 51.05 crore from operations and other income in FY 2013-14. This was a growth of over 200% from Rs 16.4 crore in the preceding financial year. Losses in the period stood at Rs 34.22 crore compared to the loss of Rs 22.8 crore in the previous financial year. SoftBank said that Ola’s bookings increased 10 times from the same quarter last year.

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Similar initiatives by other companies:

Zoomcar: In April, self-drive car rental company Zoomcar, launched  ‘Zoomcar Associate Program (ZAP)’ which let Zoomcar users and other individuals buy one or more vehicles which could be leased to Zoomcar and operate on a revenue sharing model. The company would offer bank loans through its lending partners or let users buy a car with cash.

Uber: In November 2015, Uber launched a driver loyalty programme called UberCLUB based on driver performance. In November 2014, it launched a vehicle financing programme with lending firms Shriram Finance, AU Financiers and Toyota Financial Services.

 

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