By now, it is clear that the sharing economy is here to stay, and that it is disrupting businesses in unprecedented ways. One of the biggest disruptions is under way in the auto sector, where the growth of ride-sharing, cab-hailing apps, etc, has meant changing patterns of ownership, one where people could be lesser likely to own cars for personal use.
Maruti Suzuki chairman RC Bhargava, as per a Mint report, sees it as a paradigm shift for India as well—he believes soon, more cars will be bought for use as taxis than private use. Though he believes that it is an opportunity for the auto sector—in stark contrast to Mahindra Group chairman Anand Mahindra who thinks of it as a threat, presuming sales will be far below potential as people who could have bought cars for personal use opt for taxis—it is too early to correctly assess what the disruption means.
Whatever it is, automotive companies have to be ready for it, and Mahindra and Tata are early leaders here, with a tie up for vehicle financing with Ola and Uber, respectively.
In the long run, however, ride-sharing apps or cab-aggregators may prove a less drastic disruption for traditional auto-makers than AI and automated vehicles. With a Google or a Tesla, or even an Apple, having the early-bird advantage in developing automated cars—though these are still to be perfected for real-world conditions—auto giants in the West are scrambling to develop their own or acquire/partner smaller firms that are working on such cars. Maruti Suzuki, Mahindra and other Indian makers need to realise that they can’t be late for that party.