Bengaluru: Ride hailing service Uber Inc. pumped in at leastRs.43 crore in Mumbai-based car leasing firm Xchange Leasing India Pvt. Ltd between January and March this year, in a move that could see the San Fransisco-headquartered company significantly boost its supply through leasing programme to take on home-grown rival Ola.
According to documents filed with the Registrar of Companies, Xchange Leasing received Rs.10 crore on 20 January from Uber International Services Holding B.V and its subsidiary Mieten B.V, followed by another Rs.32.99 crore from the same entities on 29 March.
Mint reported on 30 December that Uber has partnered with Xchange Leasing to launch a car leasing programme for drivers affiliated to its platform, borrowing a page from the playbook of Ola. Uber’s director of financial reporting Joshua James Waldron joined Xchange Leasing India’s board as a director on 7 November.
Xchange Leasing and Uber India Systems Pvt. Ltd have a common director, Mohd Akbar Khan, according to the documents. The documents also show Xchange Leasing operates with Uber in the US and South Africa.
By the time of filing the report, Uber did not respond to an email seeking comment.
Uber drivers have to pay a security deposit of Rs.30,000-35,000 to be part of the leasing programme and then pay monthly lease payments with an option to own the vehicle after three years. Uber in Delhi has bought CNG-fuelled cars such as Maruti Suzuki India Ltd’s WagonR and Ritz, among others,Mint reported on 30 December.
Uber started leasing programmes globally in 2013 in partnership with firms such as General Motors Co. and Toyota Motor Corp. As the company had data on cash flow from drivers, it allowed auto makers to predict risks and offer better rates to drivers.
The leasing programmes would enable drivers borrow at cheaper interest rates, which will in turn boost the supply of cars.
Uber’s rival in India, Didi Kuaidi-backed Ola, also started buying cabs and lending them to new drivers, as it moved to a part-inventory model to build exclusivity with drivers, Mintreported on 30 September.
Ola had said that the company, with financing partners and car manufacturers, will invest Rs.5,000 crore towards this cab-leasing programme over the coming year.
Apart from increasing supply, the leasing programmes are also expected to help Ola and Uber retain the drivers exclusively on their respective platforms. Currently, many drivers use both Ola and Uber to get more clients and, hence, are not exclusive to one service. As the stakes get higher in the market share battle between Ola and Uber, both are trying to sign on as many drivers as possible and make them their exclusive partners.
Uber, the world’s most valuable start-up at $68 billion, and Ola are fighting for dominance of India’s cab business that, according to SoftBank Group, may be worth $7 billion by 2020.
India is an important market for Uber, especially since it is possibly the last frontier in Asia with a lucrative market potential. In China, Uber is still a distant second to Didi Kuaidi, which is also an investor in Ola.
Ola, one of the so-called unicorn start-ups with a valuation of about $5 billion, has so far raised $1.2 billion from investors.
Uber announced in July last year that the company would invest $1 billion in India.