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| Hyundai Motor Group Executive Vice Chairman Chung Eui-sun, right, shakes hands with Ola CEO Bhavish Aggarwal after their meeting at the group's headquarters in Yangjae-dong, Seoul, last month. The group said Tuesday it will invest $300 million into the Indian ride-hailing firm. Courtesy of Hyundai Motor Group |
By Nam Hyun-woo
Hyundai Motor Group will invest a combined $300 million in Ola, India's largest ride-hailing service provider, the automotive group said Tuesday.
Hyundai Motor Group said its units Hyundai Motor and Kia Motors will each spend $240 million and $60 million as part of their partnership with Ola. This will mark the two Korean carmakers' biggest combined investment so far.
The partnership will cover developing customized cars for fleet sales and fleet management, and building India-specific electric vehicles and infrastructure, the group said.
"India is the centerpiece of Hyundai Motor Group's strategy to gain leadership in the global mobility market and our partnership with Ola will accelerate our efforts to transform into a smart mobility provider," the group's Executive Vice Chairman Chung Eui-sun said in an English statement. "Hyundai will proactively respond to market changes and persistently innovate to deliver greater value to our customers."
The group said the investment decision was made after Chung and Ola CEO Bhavish Aggarwal had a meeting last month at Hyundai Motor Group's headquarters in Yangjae-dong, Seoul. The group refused to disclose the exact date of the meeting.
Under the partnership, Hyundai Motor and Kia Motors will supply Ola with vehicles customized for ride-hailing services, and Ola will provide financial services or leases to its drivers.
Data accumulated during Ola's service operation will allow the companies to make more vehicle improvements toward local needs.
This is the two carmakers' first foray into the Indian car-hailing service market. Hyundai Motor Group invested in another Indian car-sharing firm, Revv, last year, but this is the first time for the group to cover the whole process of ride-hailing, the group said.
Also, the three companies will jointly develop India-specific electric vehicles and infrastructure, to meet the Indian government's initiative to electrify all new vehicles sold by 2030.
For that, Hyundai and Kia will provide technical support to Ola's bid to use electric vehicles in its car-hailing service.
Founded in 2011 as an app-based ride-hailing service, Ola currently covers more than 125 cities across India, Australia, New Zealand and the U.K., connecting more than 1.3 million drivers with a diverse range of vehicles.
Ola made global headlines recently as it received investments from global big names including Mahindra, SoftBank and Tencent.
"As Ola progresses to build cutting-edge mobility for 1 billion people, the three companies will bring to market a new generation of mobility, as we constantly expand our range of offerings for our consumers," Ola CEO Aggarwal said.
"This partnership will also significantly benefit drivers on our platform, as we collaborate with Hyundai to build vehicles and systems that enable sustainable earnings for millions of them, in the time to come."
The Indian ride-hailing market is emerging as a core market of the global car-sharing industry.
According to the group, the number of India's daily ride-hailing calls stood at 1 million in 2015 but grew more than threefold to reach 3.5 million last year.
The partnership is the latest of Hyundai Motor Group's series of aggressive investments in ride-hailing and car-sharing services worldwide. Before the agreement with Ola, the group's largest outside investment was $275 million in Grab, a Singapore-based ride-hailing firm, last year.
Along with Ola, Grab and Revv, the group has invested in last-mile logistics platform Mesh Korea, U.S. mobility service provider Migo, China's e-scooter maker Immotor and Australia's peer-to-peer car-sharing firm Car Next Door.
"The group seeks to accelerate its transition from a car manufacturer into a smart mobility systems provider, as the partnerships will allow it to engage in all aspects across the entire mobility value chain ― including vehicle production, fleet operation and mobility services," a group official said.
