Flattish car sales in the last five years, coupled with changing consumer preferences, are forcing auto-makers to partner with cab aggregators, which were once seen as a threat by the same car companies.

Mahindra and Mahindra on Thursday entered into a partnership with cab aggregator Ola, targeting to sell 40,000 cars and gain $400 million worth in sales by offering discounts, lower financing cost as well as free accident insurance worth ₹15 lakh for Ola’s driver-partners and academic scholarship for their children.

“Future of mobility will be influenced by sharing economy. Sharing economy in India will grow faster than in the West,” said Anand Mahindra, Chairman, Mahindra Group, while announcing the partnership. The partnership is not exclusive for either of the parties.

Mahindra himself, in the past, has spoken about the threat the industry faces from companies such as Ola.

“We already have half a million drivers on our platform. With partnerships such as these, we expect that to grow 10 fold in the next five years,” said Bhavish Aggarwal, co-founder and CEO, Ola.

Shared economy Mahindra acknowledged that shared economy will impact car sales, considering there’ll be more people sharing the same car on the road.

“There will be only two types of consumers — those who buy cars as an object of desire and those who just want access to mobility. Our cars are suitable for both scenarios,” Mahindra said.

However, what Mahindra is trying to achieve with Ola partnership is to rekindle sales of its Verito sedan, which has not been able to sell more than 200-300 units a month for the past several months. The initial partnership with Ola will be limited to Verito sedans and might later extend to other vehicles, Mahindra said.

‘Short-term benefit’ Analysts believe that this alliance will be beneficial for Mahindra only in the short run. “This partnership is only for Verito at the moment, which is already at end of its prolonged lifecycle. For Mahindra, therefore, the partnership is good as it will provide them with the numbers. However, adding other popular brands such as Scorpio, which is more popular in the personal consumer space, could hurt Mahindra’s brand image as a brand associated with fleet owners,” said Gaurav Vangaal, Senior Analyst, IHS Automotive. “Instead, Mahindra should look at similar partnerships with self-drive car rental companies which target individual consumers.”

Fleet cars Companies such as Toyota and Tata, which have been targeting fleet companies for sales of models such as Etios and Indica, have faced challenges selling the same cars to consumers.

Mahindra is trying to play catch up with the same rival car-makers such as Tata Motors, Nissan, Ford and Toyota that have been actively engaging with not only Ola and Uber, but also self-drive companies such as Zoomcar and Carzonrent, to sell as many of their cars as possible by offering similar goodies.

Nissan Motor India had tied up with Ola last year to buy and lend cars to its driver-partners, while Ola’s rival Uber partnered with Tata Motors in June for a similar deal. Incidentally, Ratan Tata is also an investor in Ola.

Ford, on the other hand, is trying to position itself as a mobility company rather than just a car-maker through Ford Smart Mobility, which it launched in March. It also invested in self-drive car-rental company Zoomcar last month.

Mahindra had a similar partnership with Meru Cabs, wherein it was able to sell its Logan sedans in bulk to the cab company. However, that partnership involved direct sales to Meru and not to driver-partners. Will such partnerships really help Mahindra push sales? Only time will tell.

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