Automobile economics behind the success of Ola-Uber-Rapido! Not just an app, but the power of vehicles!

App-based taxi services like Ola, Uber and Rapido have revolutionized urban transport in India. These companies call themselves technology companies, but the foundation of their business is on four-wheelers. Interestingly, these vehicles are often owned by drivers or fleet owners. So the vehicle becomes the most important tool in this entire business.

Companies like Ola, Uber and Rapido provide mobile apps, GPS tracking, digital payments and customer-driver connecting platforms. However, the vehicle owner is responsible for the actual servicing of the car, its maintenance, insurance, fuel costs and loan repayments. Hence, the vehicle becomes a source of income for the driver and a major revenue generator for the companies.

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Both parties benefit in this model. A driver or vehicle owner gets a chance to earn regular income from his own car. On the other hand, companies can build a large network without having to buy a fleet of thousands of vehicles themselves. Companies make profit from the commission earned on each ride. Hence it is known as ‘Asset-Light’ business model.

Many drivers in India take loans from banks and financial institutions to buy vehicles. Some companies have also made various partnerships for this. Ola had earlier launched vehicle financing, electric vehicle leasing and special loan schemes for drivers. Uber has also partnered with several banks, NBFCs and vehicle manufacturers to provide vehicles to drivers on easy terms.

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The increasing use of electric vehicles in recent times is creating new business opportunities. Initiatives like Ola Electric have increased investment in the EV sector and some cities are also experimenting with electric taxi services. Collaboration between vehicle manufacturers, charging companies and ride-hailing platforms will become more important in the future.

Overall, the strength of Ola, Uber and Rapido lies not only in their apps but also in the vehicles running on the road. The business has been successful due to mutual cooperation between vehicle owners, drivers and technology companies. So the four-wheeler is considered as the real engine and most valuable tool of this industry.