Ride-hailing service Ola scored an agreement with Mahindra & Mahindra Ltd. to offer cars cheaply to drivers, a move aimed at fending off competition from Uber Technologies Inc.
The Indian automaker has agreed to sell and finance vehicles for 40,000 Ola drivers by 2018, a deal worth $400 million, both companies said. The Mumbai-based car company, part of the Mahindra Group industrial conglomerate, will provide vehicles at special prices, financing with zero down-payments, subsidized insurance and maintenance packages.
Their agreement resembles tie-ups struck between automakers and ride-hailing services around the world. Ola is defending its turf against Uber, now freer to focus on India after agreeing to sell its Chinese operations to local leader Didi Chuxing. Both are vying for a slice of one of the world’s fastest growing ride-hailing markets, estimated to be worth over $10 billion.
The alliance “seeks to encourage micro-entrepreneurship among drivers to address India’s growing mobility needs,” Ola and Mahindra said in a joint statement.
Ola’s battle with Uber is now spilling beyond capturing customers to attracting drivers. The U.S. company and its local rival both offer cash incentives for drivers to stay logged onto their apps and complete a certain number of daily rides.
They’re also battling taxi and three-wheeler drivers’ unions in several cities. A series of recent shutdowns by unions protesting against ride-aggregators has affected both Mumbai and New Delhi. Regulators and courts too have become involved in the battle as regional governments file cases and counter-cases.