Ola Electric Gets Show Cause Notice After Thousands Of Customer Complaints
The central government has issued a show cause notice to Ola Electric Mobility Ltd. after thousands of customer complaints over the quality of its best-selling scooters.
The showcause notice has been issued to billionaire founder Bhavish Aggarwal and his company over breach of the Consumer Protection Act, people familiar with the matter told NDTV Profit on the condition of anonymity. The action follows more than 10,000 complaints received by the National Consumer Helpline in the past one year, they said.
Ola Electric confirmed receipt of the show cause notice in an exchange filing.
“The show cause notice has been issued by the Central Consumer Protection Authority for alleged violation of consumer rights, misleading advertisement and unfair trade practices,” according to the exchange filing undersigned by Chief Financial Officer Harish Abichandani. “The company will file a reply to the show cause notice before the Central Consumer Protection Authority.”
Currently, the show cause notice has no impact on financial, operational or other activities of the company, the exchange filing stated. The show cause notice doesn't impose any penalties or financial fines either.
“Ola Electric has been charged with service delays, delayed vehicle deliveries and unfulfilled promised services,” the people cited earlier said. “The Central Consumer Protection Authority is looking at manufacturing defects, over charging, and faulty components.”
Ola Electric has been served at a time when it's overwhelmed by customer complaints, its service centres overflowing with scooters awaiting repair.
On 26 September 2024, an NDTV Profit ground report exposed the ground reality of the “Ola Experience” after speaking with over a dozen disgruntled customers in Mumbai and Bengaluru. You can watch the video here and read the story here.
The company swung into action the following day to announce its so-called HyperService initiative to address its after-sales woes. It plans to double its service network by December this year, and train 1,00,000 third-party mechanics in fixing its electric scooters by end of next year.
Meanwhile, Ola Electric sales have continued to slide.
Total sales of India's largest electric two-wheeler maker fell 11% month-on-month to 23,965 units in September 2024, as against 26,928 units in August, according to the government's VAHAN portal on 30 September. In comparison, rivals Bajaj Auto Ltd., TVS Motor Co. Ltd. and Ather Energy clocked growth and gained market share.
Ola Electric sales down 11% MoM at 23,965 units (market share: 27%)
Bajaj Auto sales up 13.71% MoM at 18,933 units (market share: 21.47%)
TVS Motor sales up 2.43% MoM at 17,865 units (market share: 20.26%)
Ather Energy sales up 15.20% MoM at 12,579 units (market share: 14%)
On Sunday, the service woes spilled over into social media and was at the centre of the Twitter spat between Ola Electric's billionaire founder Bhavish Aggarwal and standup comedian Kunal Kamra. On Monday, the company's shares hit a lifetime low.
According to an analyst, at its core, Ola Electric's troubles are to do with its culture.
“This is essentially a service enterprise building a product,” the analyst, who has been tracking India's automobile industry for more than decade, told NDTV Profit on the condition of anonymity. An app can be rolled out in beta and improved upon over subsequent iterations. An automobile doesn't exactly work the same way.
“The learnings from building an app cannot be extrapolated into manufacturing a scooter.”
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