App-based taxi aggregators spur car sales in India

NEW DELHI, NNA - The growing popularity of app-based taxi aggregators like Uber and Ola in India is driving car sales, prompting Japan's Suzuki Motor Corp. and other automakers to cash in on the trend.

Maruti Suzuki India Ltd., Suzuki's Indian arm and the South Asian country's top carmaker, and Hyundai Motor India Ltd., say they are witnessing strong demand from such taxi service providers and expect to sell over 5,000 cars and 2,500 cars per month, respectively, this year.

"We have already sold over 65,000 cars to such taxi service providers, including app-based taxi aggregators, in 2016," R.S. Kalsi, Maruti Suzuki's executive director in charge of marketing and sales, said.

South Korea's Hyundai, India's second-largest car manufacturer, says the taxi segment accounts for around 7 to 10 percent of its total sales every month. "We are expecting to sell around 2,500 to 3,000 units per month to taxi service providers in the country," Hyundai Motor India CEO Y.K. Koo said at a recent press conference.

In a bid to tap the growing demand for taxis in India, several car manufacturers are tying up with app-based taxi aggregators such as Uber of the United States and Japan's SoftBank-funded Ola to facilitate car leasing and financing solutions to drivers working for the taxi aggregators.

Toyota Kirloskar Motor Pvt. Ltd., Toyota Motor Corp.'s Indian subsidiary, has entered into an arrangement with Uber to provide flexible leasing and financing solutions to Uber's prospective drivers.

Local automobile firm Mahindra and Mahindra Ltd. recently partnered with Ola to provide 40,000 vehicles to its drivers, a deal which translates into overall vehicle sales and financing worth over $400 million.

According to research and consulting firm RedSeer Consulting, app-based taxi aggregators in India posted nearly half a billion rides in 2016, up 250 percent over the previous year. "The industry delivered around 500 million rides in 2016, up from around 130 million in 2015," RedSeer said.

With India's taxi segment growing, it is likely to account for 15 to 17 percent of the nation's total domestic passenger vehicle sales by 2020, according to rating agency ICRA's estimates.

"Car manufacturers have realized the market potential and have dedicated sales teams to cater to fleet operators. Considering strong demand and increasing penetration of such players in smaller towns, the Indian taxi market is poised for robust double-digit growth over the next two to three years," ICRA Senior Vice President Subrata Ray said.

"In FY2016, fleet sales (including cab aggregators) accounted for around 9 percent of Indian passenger vehicle sales and are expected to reach a 15-17 percent level by FY2020," Ray added. (NNA/Kyodo)