The ride-hailing app headquartered in Bengaluru Ola is about to enter the used automobile retailing industry. This new company will be branded ‘Ola Cars,’ and it will be the company’s first significant product announcement since 2019. In the used automobile retailing market, the ride-hailing service will compete alongside startups like Spinny, CarDekho among others.
Ola’s introduction into the online automotive marketplace sector comes at a time when the sector is attracting more investor recognition, thanks to a number of startups aiming to go public. According to Entracker reports, Ola has already begun recruiting a team for the new venture and plans to launch a trial in Bengaluru in the mid of August. “The senior management at Ola sees it as a complementary business model to its core business — mobility,” as stated by the source and added that the used-car business is going to be called “Ola Cars”.
The Bengaluru-based startup would most presumably use a full-stack approach, in which it will buy automobiles from individuals and driver-partners and then resell them once all defects have been smoothed out. Ola’s move into used car retailing also comes at a time when its primary ride-hailing business is suffering as a consequence of the COVID-19 outbreak. It’s auto and bike businesses, on the other hand, have seen a significant surge in the last two years. Ola has also unveiled its electric two-wheeler, titled Ola Electric Scooter, which will be readily accessible in 10 different colors. The price of the upcoming scooter is estimated to range from Rs 1.2 lakh to Rs 1.4 lakh (ex-showroom).
Bhavish Aggarwal led Ola’s expansion into secondhand retailing follows after the company secured $500 million ahead of its expected initial public offering (IPO). The round of financing was participated by investors such as the Government of Singapore Temasek Investment Fund and Plum Wood Investment Ltd, an affiliate of Warburg Pincus, a multinational private equity firm.
Temasek is an existing investor in Ola, having invested $225 million in the company in 2018. In October 2019, the firm raised Rs 35.88 Cr (~$5.05 Mn) in a Series J fundraising round from ARK Ola Pre IPO Fund. Ola had collected $3.8 billion in 25 rounds to date.
Ola is also planning an initial public offering (IPO) to launch on the stock exchanges. Investors such as SoftBank, Steadview Capital, and Tiger Global will be benefited from the IPO by being able to exit or partially liquidate their ownership in Ola and return funds to their investors.