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Volkswagen offering Gett drivers in Russia discounted vehicle loans

VW invested $300 million in Uber rival earlier this year

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Volkswagen's New 2011 Compact Sedan World Premiere
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Volkswagen announced today that it would be offering “preferential” vehicle loans to Russian drivers of the ride-hail service Gett. The news comes five months after Volkswagen said it was investing $300 million in the Tel Aviv-based black car-hailing app.

Drivers in Moscow will receive cheaper financing and insurance terms on a select number of vehicles: the Polo Sedan, Jetta, ŠKODA Rapid, and the ŠKODA Octavia. Gett said its drivers identified these four models as their preferred cars of choice in a survey. Drivers will also get a simpler down payment process, which Gett believes will ease the barriers for entering the taxi business.

Special package offers such as these are becoming a trend — GM is working on similar deals, and Uber has aggressively moved into the finance space. Such financing is seen as a double-edged sword — it pads automakers' sales and can let drivers who wouldn't otherwise qualify for financing get the vehicles they need to work for a ride-hailing service, but can also lock them into bad terms or subprime loans.

Such financing is seen as a double-edged sword

The logic behind Volkswagen’s investment in Gett is obvious — many other traditional automakers are embracing the disruption being brought on their industry by ride-hail apps like Uber, Lyft, and Gett by forming strategic partnerships with these startups. General Motors invested $500 million in Lyft, while Uber has formed partnerships with Nissan and Volvo.

But the strategy is also a little confusing. Volkswagen’s head of business and mobility, Ole Harms, said in a statement that he hopes that Gett customers who hail a Volkswagen car will enjoy the experience so much they will become Volkswagen customers. This flies in the face of the mission of most ride-hailing startups, which is to end the era of private car ownership.

Gett app in New York City
Gett app in New York City

Gett is widely used in cities like Moscow and London, but has struggled to compete with Uber in the US, where it is only available in New York City. The investment from Volkswagen, which brought Gett's total funding up to $520 million, was seen as an effort to help it grow stateside.

In addition to black cars, Gett also offers delivery services and logistics. The company is most well-known for its aggressively anti-Uber marketing campaign. Earlier this month, Gett announced a new fee structure for its drivers in New York City, prominently advertising a 10 percent take from fares — a commission that undercuts Uber by at least 10 percent. Gett also tried enticing riders with its "surge sucks" ad campaign.