MUMBAI (Reuters) - Ola, India’s largest online taxi business, will more than double its reach by expanding into 200 cities after this week’s acquisition of rival TaxiForSure handed it control of more than 80 percent of the country’s organized cab market.
The company aims to capitalize on India’s low level car ownership, with urbanites deterred by both the expense and the lack of parking space, its 29-year-old Chief Executive Bhavish Aggarwal told Reuters on Tuesday.
“In the United States 70 percent of the population own cars. In India it’s about 5 percent,” said Aggarwal, who does not own a car. “India will never get to 70 percent car ownership, and that’s the opportunity for us.”
Backed by Japan’s Softbank, Ola bought TaxiForSure on Monday for $200 million in one of India’s biggest e-commerce deals to date as the company looks to see off its domestic rivals and the emerging challenge of fast-growing United States-based rival Uber.
Ola does not comment on its valuation, but industry sources say it could be worth about $1 billion based on current revenue. The Indian taxi industry is estimated to be worth $8 billion to $10 billion, Ola said.
Seeking to grab a larger part of the market beyond the middle classes, Ola has also tied up with auto rickshaws, the cheaper three-wheeled taxis that ply India’s roads. The auto rickshaws also accept cash, unlike many app-based providers that accept card payment only.
Aggarwal said the group will also invest in technology and customer safety, which has become a big issue in India since an Uber driver was accused of raping a passenger.
Uber has since introduced India-specific safety features, including a panic button.
Ola added new personal safety features in January, including an SOS button and emergency contacts, and Aggarwal said that the company has a large team in each city to check car quality and the background of drivers.
The company has raised about $300 million to date, with $210 million coming from SoftBank in October. Other backers include Tiger Global and Sequoia Capital.
Industry sources say that Ola’s biggest rival is Meru Cabs with a 16 percent share of the market while Uber holds a 5 percent share.
Uber does not comment on its market share, but the company operates in 11 cities in India.
Meru Cabs said it is present in 19 cities with a fleet of more than 12,000 cabs serving 5 million-plus passengers.
Editing by Clara Ferreira Marques and David Goodman