Ola signs partnership with BMW. Photo credit: jessmine.
Ride-hailing app Ola has entered a partnership with German carmaker BMW India to boost its luxury car segment, as the Indian startup looks to expand services that offer higher margins.
Under the deal, BMW will make its cars available to Ola’s fleet operators under easy financing offers, offer after-sales service, and a guaranteed buyback, Ola said in a statement.
“The luxury segment is extremely important to us now. Although the segment is not a large chunk and bookings are not very high, margins are,” Ola Spokesperson said. Monday’s agreement follows Ola’s partnership with India’s top SUV maker, Mahindra & Mahindra, announced last month. In June this year, Uber also announced a tie-up with Tata Motors.
Uber started with high-end sedans and later moved to add hatchbacks to become more “mass”
The company will extend the luxury offering to the remaining metros by December. Currently, luxury cab hailing makes up only 2 percent of Ola’s revenues, but the company is planning to double that this year, Ola COO Pranay Jivrajka said.
Ola’s move shows the company’s intentions to go after money-making services that can build a sustainable business model. Under pressure from rival Uber, Ola has managed to keep its lead by expanding services like Ola Mini and Ola Micro, which allow for cheap car rides. While those help the company clock more rides and build a bigger fleet, they don’t really help bring in profits.
A 10km ride in an Ola Micro will cost somewhere between US$1.42 and US$1.57, while the same ride in UberGo, the cheapest ride Uber offers, will be in the range of US$1.27-1.87, with an additional per minute charge of US$0.01 for each operator.
The company lost US$119 million in the year ending March 2015, a 20-fold increase over the previous year.
BMW India acting president Frank Schloeder (left), with Ola COO Pranay Jivrajka at the event to announce the partnership.
See: Why Ola can’t pull a Didi, buy Uber India, and be done with it
Stay updated on the go with our mobile app.
Get latest insights with smoother, more personalized experience through TIA mobile app.
