The popular cab aggregators, Ola and Uber have withdrawn a substantial number of orders of around 2.7 lakh vehicles from the largest automobile maker Tata Motors.
These companies that have been a valuable player in the ride-hailing space, obtain cars from automakers to make it available for the cab drivers on installments, but now it has lost a good number of orders. This event was the outcome of a clash between the chairman emeritus Ratan Tata and company’s former chairman Cyrus Mistry.
“How will Tata Motors justify turning away any proposal for a guaranteed offtake?“ asked Tata.
According to the reports, Ratan Tata was in talks with Ola co-founder Bhavish Aggarwal who was willing to obtain 10,000 Nanos and Indicas/Indigos from Tata Motors on an immediate purchase, a lease or a joint venture. Apart from this, they also had plans to get 150,000 such vehicles on an annual basis.
Another ride-hailing company Uber that has been Ola’s rival for a long time, was also in talks with Tata Motors for a closer deal with a requirement of 120,000 Indicas and Indigos. Since the companies did not receive a positive response from the Tata group, Ola withdrew from the deal which was already approached by Maruti Suzuki.
“A proposal to offtake 150,000 Indicas and Nanos should be welcomed by the company, as it constitutes about 15 months’ production at current sales levels. If Tata Motors could execute both the Ola cabs and Uber proposals it would be even better and would be a real shot-in-the-arm for the company,” said Tata, regretting that the company had lost out the business opportunity to Maruti Suzuki “while Tata Motors is gasping for breath”.
A major reason that can be held responsible for the failure of the deal is that Mistry had an objection to Tata private investment in Ola. Tata asked Mistry to consider a proposal by Ola, which wanted to buy 150,000 cars.
He also questioned Mistry through a letter if Tata Motors could execute both the Ola and Uber proposals it would be even better and profitable for the company.