​Know how Ola and Uber are redefining aam admi’s dreams

Indians dream of owning a car. Unlike the US where it’s 800 cars per 1000 people, in India it’s a meagre 18. And now with Ola and Uber on top gear in their business, people are not that keen in buying cars. As reported by The Economic Times, many people are choosing to sell their cars and go for radio cabs for commuting.
Apart from being economical, the cabs free the car owners from parking hassles and maintenance costs.

A very senior executive of a leading carmaker, who did not wish to be quoted, told ET he prefers app-based cab services for weekend trips with family than using his car. Parking is a hassle he says, and driver's off on Sundays. Auto industry is taking note.

An auto company CEO who wished to remain unidentified told the ET, that an internal meeting with dealers and vendors was dominated by discussions whether timely and cheap cab services will reduce incentives for car ownership. Mayank Pareek, president of Passenger Vehicle division at Tata Motors, told ET, services like Uber and Ola are "a big change and as a major responsible manufacturer, we really need to understand how this will pan out and we need to see what role we will play in this".

Ola and Uber, the top two cab rental companies, provide six lakh rides a day between them and are growing 20% to 25% month on month. Both have huge growth plans, says the news report.

Ford in the US recently started a car sharing initiative that helps people let out their Ford cars to a select set of customers to reduce the cost of maintaining the vehicle.

Some auto executives say the Ola-Uber factor must be viewed in the light of these companies now "burning cash" to acquire customers. They ask about the sustainability of the cash-burn model.

But funds, many experts say, won't be a growth constraint for app-based cab services for a long time.

Some auto industry veterans reckon the attraction of car ownership won't dim much because a car is more than a utilitarian asset. RC Bhargava, chairman of Maruti Suzuki, says "if people only used their car for commuting purposes, then there would be only small compact cars all around. But that is not the case, cars are considered as extension of one's taste, personality and beyond".

However, auto industry insiders say modern cab services may kill the need for the second or the third car, but not the first. Sumit Sawhney, country CEO and MD of Renault India, told the financial daily that cab services "will have no major impact on the first car purchase in the family, as India is yet to see accelerated motorisation".