Ride-hailing giant Ola is all set to enter the user car retailing market under a new brand named ‘Ola Cars’, said a person aware of the company’s plans.
Ola’s entry into the online automobile marketplace segment comes at a time when the segment has received increased investor attention alongside several companies looking to go public.
The development was first reported by Entrackr on July 27. The report added that Ola has already built an independent team for OlaCars and is expected to start a pilot in Bengaluru in August.
“Ola will look to build its second-hand car supply from its existing base of drivers who are looking to resell their cars, and will also purchase vehicles directly from consumers,” said the person mentioned above asking to remain anonymous since the person is not authorized to speak with the media.
‘OlaCars’ is a notable launch from the Bangalore-based mobility giant considering that the last significant mobility product was its expansion into self-drive car rental space back in March 2019. OlaCars has also been running ads on social media platforms including Instagram and Facebook for sourcing supply for its new second-hand car retailing unit.
A spokesperson for Ola declined to comment on the story.
OlaCars will directly compete with the likes of existing second hand retailing platforms such as CarDekho, CredR, OLX, Droom and Spiny which are currently the most funded companies in the space.
Mumbai-based Droom, an online marketplace for new and used vehicles on July 28 closed a $200Mn funding from investors such as 57 Stars and Seven Train Ventures catapulting it into the unicorn club at a $1.2Bn valuation.
Apart from Droom, CarDekho is also expected to raise $150Mn in funding which would likely value the firm at $1Bn. Gurgaon-based Spinny had also recently secured $108 Mn in funding led by Tiger Global which has been actively investing in Indian startups in the past few quarters.
In addition to various funding rounds, automobile marketplace CarTrade is also gearing up to list in India with a target to raise INR 2,000 Cr from its IPO. CarTrade had filed its red herring prospectus with the exchanges on May 17.
Ola’s entry into the second hand retailing market comes shortly after it raised $500Mn ahead of its planned initial public offering (IPO). Investors including Singapore government’s investment fund Temasek and Plum Wood Investment Ltd, an affiliate of Warburg Pincus, a global private equity participated in that round on July 9.
Temasek is an existing investor in Ola after it poured $225 Mn in 2018. The startup had previously raised INR 35.88 Cr ($5.05 Mn) in Series J funding round from ARK Ola Pre IPO Fund in October 2019. Prior to today’s announcement, Ola had raised $3.8 Bn over 25 rounds.
Plum Wood is expecte to acquire a minority shareholding in Ola, founder Bhavish Aggarwal will increase his share to further strengthen his involvement in the management and affairs of ANI Technologies, the parent company of Ola.
Ola had announced its IPO ambitions last year. Founded by Bhavish Aggarwal and Ankit Bhati in January 2011, Ola offers its services across 250 cities in India, UK, Australia and New Zealand.