In 2015, online cab aggregator Ola released a commercial that wasn’t targeted at customers. Instead, the ad, featuring a jovial cabby, sought to entice the lifeblood of Ola itself—drivers. Or driver-partners, as online cab aggregators prefer to call them. The company, hoping to attract a wave of drivers to its platform, ran an ad featuring a cabby who credited Ola for an upswing in his fortunes. He narrates how he “turned his life around in 6 months” after leasing a vehicle through Ola’s leasing scheme.

Ola’s cab leasing scheme, started that same year under the banner of Ola Fleet Technologies Pvt. Ltd, saw the company stockpile both new and used cars, leasing the same out to drivers for down payments as low as Rs 25,000 ($366). Following this, drivers get to drive around in their chosen vehicles for a daily fee. The objective was simple: increase the number of cabs on its platform to keep up with growing demand.

This upsurge in cab numbers was something Ola realised was vital very early on. Demand for affordable cabs, in a country riddled with poor public transport infrastructure, rising fuel prices and a burgeoning population, was never going to be the hard part. Even with Uber and its deep pockets entering the fray. However, it would take more than affordability and pricing to win the cab wars. And Ola bet that supply would be the X-factor.

With attractive incentives and the leasing scheme to get them started, Ola managed to attract several youngsters and middle-aged Indians struggling to find stable jobs to come onboard as driver-partners. Traditional taxi and fleet operators with 10-50 cars also started listing on Ola, and they too were interested in leasing cars under the new scheme. For its part, Ola set aside Rs 5,000 crore ($730 million) for its cab leasing operation when it first launched.

The success of Ola’s strategy is there for all to see—the company has managed to scale from 250,000 vehicles in 2015, to around 900,000 vehicles today.

Great earnings for drive-partners at a nominal entry fee plus huge strategic gains for Ola, it sounds like an outcome that’s too good to be true. Because it is. Behind the big numbers of Ola’s cab fleet is a ticking time bomb.

Three years after Ola launched its leasing unit, the hordes of people who flocked to Ola’s platform, either on a part-time basis or as full-time driver-partners, are an unhappy lot. According to several Ola fleet owners and individual drivers The Ken spoke to, revenues have reduced drastically over the years. With driver incentives plummeting by at least 50% since Ola’s launch and fuel prices continuing to increase, both individual drivers and fleet owners are left counting the cost.

AUTHOR

Salman SH

Salman has around four years of experience reporting primarily on consumer internet, startups, and the telecom sector. Previously, he worked with the financial newspaper Mint, reporting on startups and consumer internet trends. Prior to this, he worked with MediaNama and NextBigWhat. At The Ken, Salman will look at startups, technology trends, and the government policies shaping up around them. Loud metal, moshpits, and local gigs are he what he lives for.

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