MUMBAI (NewsRise) -- Mahindra & Mahindra has picked up a stake in Zoomcar, as India's second-largest utility vehicle maker seeks to entrench its electric vehicle brands in nation's fast-growing car rental market.
Mahindra has taken a 16% stake in Zoomcar Inc., the U.S.-based holding company of the car rental startup, by paying 1.76 billion rupees ($27 million), it said in a statement last week.
The stake purchase comes barely a few months after the Mumbai-based automaker tied up with Zoomcar to supply electric cars. In November, the two companies agreed to accelerate electric vehicle adoption by launching Mahindra's E2o Plus electric cars on Zoomcar in three cities, including Bengaluru in southern India.
Mahindra said Zoomcar will expand the partnership to more than 20 cities by adding 500 electric vehicles. According to an Economic Times report in January, Zoomcar is aiming to add 12,500 such vehicles to its fleet in the next two years.
Mahindra, one of the earliest entrants in the electric vehicle business through the acquisition of Reva Electric Car, hasn't been able to fast track it sales due to the slow pace of building charging stations. The company has in the past tied up with China's Tencent Holdings- and Japan's SoftBank-backed Indian ride-hailing company Ola to set up an electric mass mobility ecosystem in western India, launching more than 100 EVs on the cab aggregator's platform.
It has also partnered with ride-hailing firm Uber Technologies to deploy a few hundred EVs on its platform in two Indian cities, starting this month, before expanding to other places.
Mahindra aims to expand its EV business as it grapples with slowing sales and shrinking market share amid rising competition in the SUV segment.
It is now looking to stay ahead of the curve in EVs that are gaining popularity in the ride-hailing market, touted to be the future of transportation in Asia's third-largest economy. Creaky public transport systems and low rates of car ownership have fueled the popularity of ride-hailing services in India over the past four years.
Mahindra has been losing market share to Maruti Suzuki India, Fiat Chrysler's Jeep brand, and Hyundai Motor that have been aggressively launching new models amid an industry-wide shift to bigger models. Sales of industrywide SUVs expanded 30% in the year ended in March, outpacing a 3.9% rise in overall car sales.
--Dhanya Ann Thoppil