Ride hailing firms joining hands with automobile manufacturers; to benefit drivers

Collaboration seems to be the hot theme in transportation startup ecosystem right now. Both Ola and Uber are partnering with major car manufacturers in India to cash on the rising demand of online taxi aggregation services. While Ola has partnered with Mahindra & Mahindra and Nissan Motors, Uber has strategic partnership with Tata and Maruti Suzuki. Depending on the type of deal, the auto makers will offer services such as car leasing, financing, auto insurance, driver skilling programs etc.

The move is expected to help the ride sharing companies entice more drivers on their platform, and also reduce the cost of ownership for their drivers. Besides enticing more drivers, the move will help companies retain the drivers on their platform, and stop the migration to rival company.

It is a bold move from the automakers who are struggling from a slump in domestic car sales over a period of time. Any significant uptick in ride hailing business will definitely culminate into higher sales for the automotive industry, though only for the short term. In the longer run, however, the sales may dip if a large segment of the population in Tier 1 and 2 cities abstain from buying new cars in the favor of ride sharing applications.

However, if we look from automaker’s perspective it may all make sense. Maybe the automakers have seen the writing on the wall that people will eventually adopt ride sharing as an alternative for their transportation needs, and the best way forward is to make your enemy a partner. Indeed a lifesaving strategy by automakers.

In whatever direction the pendulum swings in future, this collaboration will definitely be a turning point in the future of domestic transportation industry.