Taxi aggregators such as San Francisco-headquartered Uber and its Indian rival Ola, instead of being a threat to carmakers, would drive their sales in the country, said RC Bhargava, the chairman of India’s largest carmaker Maruti Suzuki.
At 82, Bhargava understands the Indian car market better than most others. He gives the example of his son who owns a car, but takes a taxi to work.
Two-wheeler users and college-goers are the new customers of Ola and Uber. Moreover, the millennial generation – under the age of 25 – will drive consumption for half of the country’s population.
Compared to others, cab aggregators will buy cars at a “much faster” rate. He further said, “Cabs are a cheaper and more efficient way of travel, but for that to continue, Ola and Uber need to be economical and competitive …. There can’t be a quasi-monopoly,” he said.
If the cab aggregators grow in number, carmakers will benefit as aggregators or their partners will buy more cars. “They use the car much more intensely and efficiently – as more people use the car, its utilisation increases,” Bhargava said.
Already major carmakers have tied up with cab aggregators. Maruti sells one out of every two cars to Uber. Mahindra and Mahindra and BMW have a pact with Ola. Globally, Ford, General Motors and Toyota are tying up with cab aggregators Didi Chuxing, Lyft and Uber.
Cabs will also increase replacement demand. On average, a cab travels much more than a personal vehicle, thereby getting worn down soon. “The car has to be scrapped after it has run for a certain number of kms… if it is used by an aggregator it will be replaced faster,” said Bhargava.