South Korean automobile major Hyundai Motor Group has invested $300 million in cab-hailing firm Ola, following a global trend of carmakers investing in app-based mobility companies. Notably, Ola is the second online taxi company in Hyundai group’s firm, which has also invested in Southeast Asia’s Grab. Other major investments by automakers include Japanese firm Toyota backing Uber, General Motors investing in Lyft, Volkswagen’s investment in Israeli ride-hailing startup Gett and BMW’s funding in California-based carpooling app Scoop.
The investment will be jointly made by group firms — Hyundai Motor Company and Kia Motors Corporation — and under a tripartite agreement with Ola, the companies will jointly develop electric vehicles ecosystem and fleet services for global markets. Under the partnership, the three firms will also aim to develop electric vehicles (EVs) and charging infrastructure customised for Indian market, the firms said in joint statement.
At a time when passenger car sales in India have shown signs of a slowdown, analysts are of the view that app-based cab services are likely to bring in the growth for automakers. “First and foremost, car manufacturers are making these investments with an opportunity of preferred market access in mind. Beyond that there is also potential for customised product development based on data collection,” a Delhi-based analyst looking at consumer internet sector told The Indian Express.
“Hyundai, Kia and Ola have also agreed to coordinate efforts to develop cars and specifications that reflect the needs of the ride hailing market (both users and drivers). Data accumulated during service operation will allow the companies to make constant vehicle improvements to better meet local needs and specifications,” the statement said.
“India is the centerpiece of Hyundai Motor Group’s strategy to gain leadership in global mobility market and our partnership with Ola will certainly accelerate our efforts to transform into a smart mobility solutions provider,” said Euisun Chung, executive vice chairman of Hyundai Motor Group. While there is an increase in investments being made in technology firms by traditional automakers, it has not ended well for all. According to agency reports in December, Volkswagen, which invested $300 million in Gett back in 2016, had begun preparations to write off its investment after app failed to gain ground on bigger rivals Uber, Lyft and Didi. The German carmaker had earlier noted that it had aimed for on-demand mobility services such as smartphone ride hailing to earn a “notable share” of future revenues.
Indian automakers, too, have invested in auto-tech platforms. Mahindra & Mahindra last month invested nearly Rs 176 crore in self-drive car rental company Zoomcar. In India, during February, domestic passenger vehicle sales declined 1.1 per cent to 2,72,284 from 2,75,346 units in the same month last year. On Monday, India’s biggest carmaker Maruti Suzuki India said that it cut production by over 8 per cent in February on account of subdued demand.
“Hyundai Motor Group expects to accelerate its transition from a ‘car manufacturer’ into a ‘Smart Mobility Solutions Provider’, as the partnership’s initiatives will allow it to engage in all aspects across the entire mobility value chain — including vehicle production, fleet operation and mobility services,” Tuesday’s statement said.