Ola May Offer Subscription Service For Luxury Car Rentals: Reports

Bhavish Aggarwal-led ride hailing unicorn Ola is now exploring a subscription-based model for its self-drive or car rental offering.

A media report citing sources said that Ola is in discussions with luxury carmakers, including Audi, Mercedes and BMW, to bring a model where users can get access to luxury cars by paying a monthly subscription fee.

Ola has earmarked an investment of up to $500 Mn (including debt) for this venture. Self-drive car rental services essentially let users rent a car from the company for a fixed period of time and drive it themselves.

Inc42 had reported that Ola is planning to launch the service in seven cities by deploying over 10,000 vehicles including luxury sedans and SUVs under its ‘Ola Self-Drive’ Category.

At present, Ola has been running a small-scale pilot of the self-drive service in Bengaluru and is expected to launch the offering in the next few weeks through Ola Fleet Technologies.

Subscription model for luxury cars is common in developed markets such as the US. However, the high cost of luxury vehicles in India has made players skeptical about the direct-to-customer model for this premium segment. Interestingly, Ola already offers luxury cars to its ride-hailing customers. In October 2016, the Bengaluru-based company had partnered with BMW for expanding the category.

An email query sent to Ola didn’t elicit any response till the time of publication.

Self-Drive: Will It Suit Ola?

In India’s massive mobility market, self-driving is still considered to be a growth segment, and Ola is exploring ways to ensure business sustainability, if it ever becomes a major part of the overall market. A report by Ken Research suggests that the Indian car rental market is expected to touch $12.5 Bn by 2019, growing at a CAGR of 35%.

Ola will now be competing with some of the popular players such as Sequoia Capital India-backed Zoomcar and Y Combinator-backed Drivezy.

In terms of funds, Bengaluru-based Drivezy has raised $39.45 Mn to date. Recently, it was reported that technology majors SoftBank and Amazon are in talks to lead a $100 Mn (INR 690 Cr) equity financing round in Drivezy.

Further, Zoomcar India is also in talks to raise around $500 Mn (INR 3,421 Cr) in a funding round led by automaker Mahindra & Mahindra to join the unicorn club.

Ola: Expanding The Portfolio

Ankit Bhati and Aggarwal have disrupted the mobility market in India, and built a company over the last nine years that can stand up to a direct challenge from global ride-hailing major Uber.

With a continuous influx of funds and major investors sitting on its board, Ola has been nothing short of an Indian success story on the global stage. In line with its goal to profitability, the company turned profitable unit economics last year in July. Doubling down on its growth, the company has expanded globally to Australia, New Zealand and the UK.

As part of the expansion, the company has continued its focus on food delivery with Foodpanda by turning the model into a cloud-kitchen one. Further, it also added on to the market sentiment and is pushing adoption of electric vehicles with its Ola Electric unit, which raised $56 Mn (INR 400 Cr) from Ola’s early investors, Tiger Global and Matrix India among others.

The company has also earned accolades and raised skepticism for standing its ground against a major investor— SoftBank, as the founders refuse to cede control in their daily operations.

[The development was reported by PTI.]