Hyundai Motor and Kia Motors will invest US$300 million (338.4 billion won) in Ola Cabs, the largest car hailing company in India, the two companies announced on March 19.
Hyundai Motor and Kia Motors have inked an agreement on investment and strategic business cooperation with Ola Cabs. Under the agreement, Hyundai Motor will invest US$240 million (270.7 billion won) and Kia Motors US$60 million (67.7 billion won). It is the largest investment that Hyundai Motor Group has ever made in an outside company. It eclipsed the group’s investment of US$275 million in Grab, Southeast Asia's largest mobility company, in 2018.
"Through cooperation with Hyundai, we will be able to develop innovative and advanced mobility solutions for a population of one billion people in India," said Bhavish Aggarwal, CEO of Ola Cabs who met Chung Eui-sun, executive vice chairman of the Hyundai Motor Group, at the end of February. “We will widen the scope of our services and introduce next-generation mobility solutions."
Founded in 2011, Ola is the largest car hailing service provider in India and currently offers services in 125 cities around the world. Ola has 1.3 million registered vehicles and has recorded one billion hailing calls in total so far. The average daily number of car haling calls per day in India surged from one million in 2015 to 3.5 million in 2018.
Hyundai Motor and Kia Motors are the only automakers that have invested in Ola. Hyundai Motor became the second-largest automaker in the Indian automobile market by selling 550,000 units last year. Kia Motors plans to complete the construction of a 300,000-unit-a-year plant and step up its business activities on a full scale in the Indian market in the second half of 2019.
Ola agreed to cooperate with Hyundai Motor and Kia Motors in three areas –- the development of the fleet solution business, the establishment of an electric vehicle (EV) ecosystem in India and the development of new mobility services.
First of all, Hyundai and Kia will enter the fleet market in India through this partnership, selling vehicles to corporations, rent-a-car companies and used car dealers rather than individual customers. The three companies will develop and supply vehicles tailored to mobility services and provide customers with integrated fleet solutions that include vehicle management and maintenance. They will also provide financial services such as leases, installment plans and insurance to its drivers to help them buy vehicles and allow drivers without their own cars to rent cars at competitive prices.
They also plan to cooperate with the Indian government to develop electric vehicles exclusively for the Indian market to be used in car hailing services as the Indian government plans to make only electric cars sold and used as new cars by 2030. In addition, Hyundai Motor and Kia Motors will build electric car charging stations and develop customer services to pave the way for a smooth entry of the electric vehicles they will launch in India.