Taxi app to EVs and used car marketplace: Can Ola become a true mobility brand?

Or will its 'cab-hailing equity' bog it down? As Ola diversifies, we stop to analyse the pros and cons.

Ola, a ride-hailing platform, recently announced a new vehicle commerce platform, Ola Cars, and appointed Arun Sirdeshmukh as its chief executive officer. Through this platform, people can purchase both new and pre-owned vehicles through the Ola app.

When you open the Ola app on your mobile phone to book a cab, you will now be presented with an option, titled ‘pre-owned’. When you clicks on that option, you will be taken to the ‘Ola Cars’ section, where you can see pre-owned cars from various brands.

Ola announced that it in due course of time, it will also be making its electric cars available on the platform for the drivers and people alike to buy. The company also provides financing options to make the purchase process easier.

Ola is also offering various options, in terms of vehicle finance and insurance, registration, maintenance, including vehicle health diagnostics and service, accessories and, finally, resale of the vehicle back to Ola Cars.

In a press release, Bhavish Aggarwal, founder and CEO, Ola, said “The customers are looking for a new way to buy, service and sell their vehicles. They are no longer satisfied with the archaic retail store mode. They want more transparency and a digital experience. With Ola Cars, we are bringing a completely new experience for buying, selling and overall ownership for both new and owned vehicles.”

Over time, the company plans to open up the platform to new vehicles – both from Ola Electric and other auto brands. Starting with 30 cities, Ola Cars plans to scale up to over 100 cities by next year. Ola Cars also offers people the option of digital car inspection and a three-day test ownership before purchase, as well as a 12-month warranty.

However, at its core, Ola is a brand that is best known for being a ride-hailing service. In the past, the company has diversified into foods (with cloud kitchens that serve dishes like biryani, pizza, etc.). Ola recently made a foray into the electric bike segment. It also offers car rentals and takes bookings for outstation road trips.

The other competitors in the pre-owned space include CarDekho, Cars24, OLX, Droom, CarTrade, etc. Car brands like Hyundai and Maruti also offer options to purchase pre-owned cars at authorised dealers.

We wondered how the diversification will impact Ola’s brand equity. To answer this question, we reached out to industry experts. Avik Chattopadhyay, founder, Expereal, a brand consultancy firm, points out that Ola is all about mobility – from services to marketing to manufacturing and to selling.

“It did start off as a ride-hailing service, but its current foray into electric two-wheelers will help stretch the brand beyond how it started. The move to being a used car/vehicle aggregator is one more step in that direction.”

Chattopadhyay predicts that Ola may even diversify further into manufacturing three-wheelers, four-wheelers and buses, lease them, roll out a subscription model, and so on... all in the quest of becoming India's most integrated and sustainable mobility brand.

He acknowledges the other purchase avenues for pre-owned cars in India and adds that tomorrow, a consumer may get a better deal on a Maruti Suzuki vehicle on the Ola platform, rather than that of the manufacturer itself.

“While the automobile world traditionally applies forward and backward integration, Ola is applying horizontal and circular integration too in its mobility model. At the end of the day, the more vehicles, of all brands, are on the Ola mobility platform, the more the valuation and the reason to finally sell off and exit!”

Rohit Raj, - VP strategy and consulting, Dentsu Impact, points out that the Indian mobility landscape is in a very exciting phase right now. Electric alternatives, digitisation of the consumer journey and numerous other initiatives are changing the face of mobility, as we have known it.

"Ola has had a track record of disruption, first with its ride-hailing service and then with its electric scooter venture. This new venture, of listing pre-owned cars for sale, can be a significant addition to its ambition of being a one-stop shop for mobility solutions for the consumer.”

Raj explains that given the ticket size of the purchase, buying a car – new or pre-owned, is a very rational, considered and trust-driven process. He points out that while Ola is an established brand and does enjoy a level of equity with the consumers – that equity is in another category.

“It will be interesting to see if that level of trust and confidence extends to this new venture. The key to success will lie in how the consumer can get a wider set of choices with a convenient, transparent and reliable customer experience and, more importantly, if it can be consistently scaled up.”

Raj opines that the auto industry is one that has come late to the transformation game. But with electrification, new ownership models, connected technologies, etc., the very fundamentals of the industry are changing.

According to Raj, regardless of the outcome of this venture, it’s imperative for the auto industry to put the consumer at the centre of their plans and constantly innovate to provide greater value to them.

“Given the speed of change and the choices that the consumers have in the category, any complacency on the part of the incumbents can very quickly lead to adverse results.”

Suman Srivastava, a brand consultant, points out that Ola diversifying into the pre-owned cars space is part of a trend where companies diversify into unrelated areas.

He opines that Ola as a brand has expertise in other areas of design and marketing related to its cab-hailing offering. He recalls that in the past, when a company like Tata diversified into different areas, it could do so because it had the clout to get the licenses required to start the business.

“The expertise in designing and marketing an electric vehicle service or a pre-owned car service, is different from one needed to run a cab-hailing company.”

Srivastava gives the example of Elon Musk, who is idolised by many entrepreneurs, and points out that his (Musk’s) company Tesla makes cars, batteries, flamethrowers and surfboards, as well as dabbling in space travel.