Olacabs acquired competitor TaxiForSure, combining two vastly different business models.
India’s top two ride-hail companies joined forces today: Olacabs, the largest taxi-hailing service, acquired TaxiForSure, the country’s second largest taxi-hailing company, for $200 million in a cash and equity deal, according to the company.
India’s newly formed top ride-hail player has 1,015,000 drivers combined across more than 127 cities and, according to Olacabs CEO and co-founder Bhavish Aggarwal, plans to be in 200 cities by the end of the year. “The main focus is to expand the market,” he told BuzzFeed News.
“We will not waste time and money fighting each other,” Aggarwal said. “We will put all the efforts in growing the market. The taxi industry in India is potentially even larger than the taxi app business in U.S. In India there is no car ownership and very small taxi industry. Hopefully now that the competition is behind us we can work together [to capture] the market.”
The companies aren’t the first in Asia to throw in the towel and join forces. In China, the largest ride-hail company, Kuaidi Dache, merged with runner-up Didi Dache. But Olacabs’ acquisition of TaxiForSure isn’t necessarily a natural fit. The companies have two vastly different business models. Olacabs, on the one hand, partners with car owners who rent out their cars to drivers, while TaxiForSure partners with cab operators.
TaxiForSure will now have access to Ola’s technology (and vice versa) such as Ola wallet — a digital wallet that riders can refill.
“Cash is primary source of payment mode [in India],” Aggarwal told BuzzFeed News in a previous interview late last year. “To have level of convenience of cash free rides, we introduced the Ola wallet. You can recharge your Ola Money wallet on the app. And the ride fare gets set against balance in your account. Forty percent of bookings are paid for through the Ola Money wallet.”
The remaining 60% of rides are paid with cash — something Uber in India does not allow. Though Uber’s place in the market was “extraneous” to Aggarwal and TaxiForSure CEO Raghunandan G’s decision-making process, Aggarwal said Uber’s vast funding rounds that the company planned to invest in its expansion in the Asia Pacific aren’t concerning.
“Winning in emerging markets is not about capital, it’s about understanding global dynamics,” he said. “Uber is essentially bringing a Western product to Asia. For example, our business model is very different. We accept cash. We allow the consumer to make a booking through a call and schedule and preplan a booking.”
According to Aggarwal, the Indian ride-hail industry is similar to that of China on many fronts, but is most similar in that the market is currently dominated by a local, homegrown player.
Aggarwal also said the company is planning to “aggressively scale out” its auto-rickshaw service. TaxiForSure offers an auto-rickshaw hailing service in a few locations, and three months ago OlaCabs launched its own auto-rickshaw service out of beta in seven cities, including Chennai, Mumbai, Hyderabad, Bangalore, and Delhi. Aggarwal said he did not have a clear number on exactly how many cities the service will be expanded into just yet.
The new company will also be expanding its Ola Pink service — which is still in Beta in three cities. Ola Pink, Aggarwal said, is a car service for women driven by women created in the wake of the alleged rape of an Uber passenger late last year.
The acquisition comes just a few months after BuzzFeed News first reported that there have been talks of a global taxi alliance among ride-hail apps including Olacabs and two other Softbank-backed Asia-based apps, GrabTaxi and the new, yet unnamed Kuaidi Dache–Didi Dache entity.