Ola and BMW India have joined hands to offer luxury mobility service for the aspiring retail consumers in India under Ola Lux. Following the partnership, Ola will introduce 1000 BMW cars in Mumbai, Delhi and Bangalore while eying to tap the Hyderabad market soon. The ride will be availed for Rs 22 per km along with 4G connect, Wifi, professional chauffeurs and other premium offerings for impeccable consumer experience.
What is this partnership with BMW for Ola Lux all about?
There is only 1 per cent luxury cars penetration in India and the reason is less access to luxury vehicles. And that is what the partnership is about, we want to offer luxury mobility to the aspiring retail consumers in India. Initially we will introduce 1000 BMW cars and want to add another 1000 on the Lux platform next year.
In the past eight months we observed that there is a lot of demand from retail consumers and corporate enterprises for rental, ride later, Ola corporate and luxury mobility service. This is the first time that we have provided luxury mobility access in India and we see a tremendous opportunity ahead.
When did you started the Lux service and in which cities?
In June this year, we started with the luxury offering at a fare price of Rs 22 per km and have already surpassed more than 1 per cent of our overall rides. We have started in Mumbai, Delhi and Bangalore and soon we will enter in Hyderabad and other tier II markets while targeting to double our luxury booking. The pricing model will be commission based.
One direct parameter for venturing into new cities is the adaptability of these services and second one is the scale of the city, the scale we have, the kind of users that we have, need for prime and better experience in prime.
What will be the benefits of this partnership to the consumers and operators?
This is a comprehensive offering. In the car we are offering 4G auto connect, wifi, professional chauffeurs and BMW integrating the Travel MINI support to ensure impeccable end to end consumer experience. Also we have introduced multiple payment options from cash to Ola Money and soon we will roll out debit and credit card options for the users.
It’s a financial deal from BMW finance, but the ownership of the vehicle will be with the operator. The alliance is made keeping in mind the overall cost of ownership which is not just initial showroom price but also includes the insurance cost and maintenance part. There will be the maintenance for three years, 100 per cent financing by BMW, insurance benefit and upfront discount to bring down the operations cost for the operators. Under the buy back guarantee, operator can sell back the car after three to four years.
Since the customer base is similar, how will Ola Lux be the differentiator?
Competition never had this category that was one notch lower than what we are offering today in terms of ultra premium luxury which includes BMW, Mercedes and some Jaguars for both retail and corporate segment. We are seeing good response from the corporates and a lot of aspiration from young retail users.
Will the per km rates for luxury ride will go up as permit rates are going high?
Increase in permit cost increases the cost of ownership and it potentially might have adverse effects on the pricing for the users. For the luxury segment the cost of permit will not be very significant and if you amortise over three to four years life of vehicle it will not be very significant. It might have some hit on the usual segment that we operate in for the masses.
Will your entry into the Lux space dilute the focus on micro? How will you balance the whole thing?
Ola is the inclusive platform which has micro, mini, prime and luxury and along with kali peeli taxis, electric vehicles and autos. The platform has a very unique set of users and India is a very diverse set of market. It changes at every 100 km. Depending on the consumer needs, we have products for everyone and we will continue to build more micro innovations for improving the driver and consumer experience.
What will be your focus areas for the next 6 to 12 months?
In the coming quarters we will promote share mobility which is Ola share and that is the need of the hour. There is increase in demand especially when the government is also putting restrictions on the pricing. We are promoting shared mobility so that we can take more consumers with the number of cars that we have in supply constraint market.
So are you going to have more cars available on the share platform?
We already have that regardless of the government regulations and that is something that we are going to bet on because it also gives some sense of social impact, impact on environment and also it makes complete business sense when you increase the asset utilisation further.
Maharashtra government is going to appoint a new regulator who will decide the fair for cars. What’s your view on it?
We will discuss this with the regulators and make them understand the difference between luxury offering and other segment that we have been doing altogether. Government understands ride sharing very well and we are law abiding citizens, we will follow the govt regulations.
What is your observation of luxury car market in India?
Luxury market in India is very limited to sub 1 per cent. Out of all 30 million cars, there are less than 30,000 luxury cars in India. Whereas the globally luxury car market share is of 20 per cent.
What is your current market share?
We have 5 lakh vehicles and millions of customers in more than 100 cities. It’s very hard to figure out the real market share but multiple third party report says that we have somewhere around 6 per cent market share.