Ola Cars decoded: Vehicle retail, service business is the final piece in Ola’s personal mobility puzzle

Unless you’ve been fortunate enough to afford a digital detox in an era when screen times are rising as rapidly as fuel prices in India, chances are you’ve seen and heard plenty about Ola Electric. And if you live in an Indian metro and spend a reasonable amount of time on social media, chances are you’ve come across an advert from the newly-formed Ola Cars vertical, inviting you to either consider buying a used car, or sell yours, if you so please. That advert – and the emergence of Ola Cars – is not coincidental, but a well-timed push into the pre-owned vehicle business; a move that ties in with company founder Bhavish Aggarwal’s idea of establishing Ola as a full-fledged mobility solutions provider.

Gone are the days when you pulled up the Ola app on your phone to only book a cab ride to your friend’s home. On the app now are a variety of options – you can book the Ola S1 and S1 Pro electric scooters, order food, buy health insurance, and now, get yourself a used car. And not without reason – the Ola app serves over 20 crore customers across India, granting the company immediate access to a gigantic user base.

While it is beginning with pre-owned car sales, Ola Cars aims to expand to pre-owned two-wheeler sales, new two- and four-wheeler retail as well as vehicle servicing. Image: Mohammed Hassan via Pixabay/Tech2

Ola Cars’ pre-owned vehicle business arm has commenced operations in seven markets – Ahmedabad, Delhi-NCR, Mumbai, Pune, Chennai, Hyderabad and Bengaluru – and intends to branch out all over the country in the coming year. With this, Ola will try to establish over the only remaining aspect of personal mobility it wasn’t dealing with so far, as the company has long been a player in the shared mobility space, and is now poised to begin production of its own electric vehicles with the impending market launch of the S1 and S1 Pro e-scooters.

By FY2025, the used car market is expected to swell from the current 3.9 million units a year to 8.2 million units a year – more than twice the new car market estimate for 2025. With organised pre-owned car businesses expected to account for 45 percent of used car sales by FY2025, Ola Cars – which believes its expertise in the digital domain will play into its hands – is moving quickly to position itself as a prime player in the space.

Ola Cars CEO Arun Sirdeshmukh has worked with Amazon Reliance Trends and IBM Global Services in the past, and was formerly SVP and global business head at Ola Electric. Image: Ola

“If you ask why we decided to enter the pre-owned vehicle space, we believe a lot that can be done to enhance the customer experience that has been fairly traditional for many years now. The size of the business of pre-owned cars in India and in other markets is actually a lot larger than that of new cars. We want to provide a digital-first experience, making for a much more efficient way for us to be able to offer you that full experience – right through the full journey of you either seeking to sell or seeking to buy a vehicle on our app”, says Arun Sirdeshmukh, CEO of Ola Cars during an interaction with Tech2.

In a market dominated by the likes of Mahindra FirstChoice, Maruti Suzuki True Value and standalone players such as Cars24, CarDekho and OLX Autos, what will Ola Cars bring to the table that hasn’t already been done before? Sirdeshmukh attributes the company’s confidence of its prospects to its digital platform chops, the goal to make a pre-owned vehicle sale/purchase more seamless and convenient than it has ever been and bringing trust and transparency into the process.

“We are a digital-first brand and business, and want to provide personalised experiences. There are ways in which we can add technologies across processes to make them far more efficient, better and speedier. Once a vehicle is sold today, we're completing the transfer to the seller’s account in 30 minutes – but we’re not happy with that. We want to make that transaction instant. The overall share of such digital experiences is still miniscule compared to what currently, is a more traditional physical process and that overall experience is fragmented. It has lack of trust, transparency, quality”, adds Sirdeshmukh, who was previously Senior VP and global business head at Ola Electric.

Tier-II and III cities are estimated to account for 70 percent of all used car sales in India by FY2025. Image: Volkswagen

Unlike Ola’s electric vehicle business – which, as things stand, will have no physical outlets – the Ola Cars pre-owned business cannot be digital-only. Buying a used vehicle is still a largely physical experience, with customers wanting to experience the vehicle they’re interested in and having a thorough look at it before finalising their purchase. Sirdeshmukh says Ola is aware of these ground realities, and has tied up with hundreds of existing used and new car dealers, as it believes its role in the vehicle retail and service business will be that of a facilitator, an ally to existing players.

“Digital-first does not mean that we are completely virtual. Even with physical touchpoints, we want to employ more technologies to accelerate processes. There are elements to the pre-owned purchase process which are physical – such as the all-important test drive – but a large part of it is the full transaction, covering everything from interest to closure charges, as well as finance and final payment. This is not about us doing it ourselves. The whole nature of this business across all the spectrum of opportunities I'm talking about in car commerce is collaborative in nature. Any player in this ecosystem must see us as being a friend and a valued partner, and we want to help enhance his or her business”, says Sirdeshmukh.

At this point, there are no plans for Ola to have any physical touchpoints of its own, but Sirdeshmukh says “should that be the right thing to do because the customer would find that experience much better”, the company would be open to establishing its own outlets. For now, it has teamed up with preowned as well as new car retailers (and refurbishment specialists) in 30 cities, with an aim to expand to 100 cities by 2022.

However, pre-owned cars isn’t all Ola Cars wants to deal in. Over a period of time, Ola hopes to also sell brand-new cars via its digital platform. But that begs the question – why would an established carmaker choose to join hands with Ola for retail, instead of going its own way? While he acknowledges that several OEMs already have their own mechanisms in place and have been able to execute them with a reasonable degree of success, Sirdeshmukh says Ola believes there will be enough takers for its solution, both in India and abroad.

“We believe there will be – and already are – many brands and players in India and overseas for whom, if someone is able to enable the full spectrum of retail and aftersales service in a manner that makes for a high-quality experience, they would want to work with us than handle all these issues themselves, right through the whole chain. If somebody is already doing the full spectrum of these things and doing it well, then they'll probably continue doing so. But for others, it is a matter of investment, scale, reach that we might be able to provide, so they can focus on the engineering and the value of the product itself, than on all of this, which is a go to market strategy”, says Sirdeshmukh.

As it commences production and retail of its own electric scooter, Ola is also keen on foraying into the two-wheeler service business in the time to come. Image: Ola Electric

Ola also wants to expand and get involved in retail of pre-owned two-wheelers, a space that – while still largely unorganised – holds tremendous potential.

“Four-wheelers aside, there's also the two-wheeler business, in India and international markets. I think if you look at the market opportunity on the pre-owned two-wheeler side, the number of vehicles is likely to be far, far larger than in cars. We must be ready for a network that is deeper, in terms of geography, as this business may be driven more by Tier-II/Tier-III towns than the major cities”, says Sirdeshmukh.

While they are two separate verticals, it’s hard to ignore the fact that Ola Electric and Ola Cars are working in the same direction. Many have been circumspect about Ola Electric’s decision to sell directly to customers and not have physical showrooms/service centres of its own unlike traditional vehicle OEMs, but it seems more than likely at this point that Ola Cars’ on-ground partnerships will essentially form the backbone of the Ola Electric after-sales experience. During the chat, Sirdeshmukh hints at the possible synergies between the verticals.

“The Ola Electric business ties in on all the touchpoints I’ve mentioned. In the case of pre-owned two-wheelers – as and when we get into that space – customers will enjoy the same pluses. If you're an existing two-wheeler owner and you wish to trade in your two-wheeler before buying an Ola electric scooter, you could do it on the Ola Cars vehicle commerce platform. If you talk service, this is not only about service for cars; we're going to offer two-wheeler service as well. If you look at insurance and financing, on the purchase of Ola Electric, that is already on. We see synergies across these touchpoints”, remarks Sirdeshmukh.

The claim of Ola Cars’ ability to provide an unmatched purchase and after-sales experience digitally, while promising, is still quite ambitious, bearing in mind how Ola Electric struggled badly with its online portals in the face of unprecedented customer demand for its e-scooters in September. And then there’s the small matter of gaining customer confidence with transparency in communication and actually delivering on promises – two more areas Ola Electric is currently lagging in – even as competition intensifies.

However, what’s certain is that Ola is moving in a direction that will help cement its hold over nearly all personal mobility solutions, and if it can make things work as planned, it will pose a challenge to traditional operators in all sectors – be it vehicle manufacturing, retailing or servicing.

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