Ola changes tact to beat Uber at its game! Plans to invest Rs 5,000 crore.

Ola has now decided to buy its own vehicles and lease them to drivers. The online cab aggregator is considering this move to cut-down the number of independent cabbies who also register with rivals like Uber and Meru for making more money.

If reports are to be believed, Ola is planning to invest Rs 5,000 crore on vehicles. The move will come in contrast to its current practice in which Ola partners with drivers having their own vehicles.

In its official statement, Ola has said that it will make the investment through a fully-owned subsidiary. Initially, the firm will invest Rs 500 crore and gradually, it will raise funds independently for this subsidiary, which is separate from its aggregator model.

According to the subsidiary, the drivers will have to get them registered, make a down payment of Rs 25,000-30,000 and pay a monthly subscription fee along with a commission on each ride to get a car on lease.

As per The Economic Times report, the drivers will be attached exclusively to the Ola platform and will have an option to own the vehicle.
The online platform is piloting the the leasing programme in Bengaluru, Chennai and Hyderabad with more than 1,000 vehicles. Apart from Maruti Suzuki India, Ola is in advanced talks with Mahindra and Mahindra and other car manufacturers for outsourcing of cars.

The firm is targeting to enable its leasing model for more than one lakh drivers by the end of 2016.

The industry’s two foremost companies, Ola and Uber have been struggling to keep their drivers loyal by offering a hefty amount of incentives to them. But unfortunately, the cabbies registered with Ola also ply for Uber and vice-versa, depending on which company offers higher during a particular time, a factor that affects crucial metrics for the taxi firms.

Maroli, newly-appointed vice-president of strategic supply initiatives at Ola says, "This initiative is focussed on getting more quality cars (supply) on the Ola platform. We will be doing background checks, past employment checks as well as a psychographic profile to check integrity of the drivers we get on board.”

Meru, which has been following both a lease and an aggregator model for several years, has been profitable for the past three years. "Our lease model gives us a four-year commitment of dedicated supply, and even after competition spending millions, drivers tend to stick to our platform," said Siddhartha Pawha, CEO of Meru Cabs.

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