Ola Electric Mobility Ltd. is in regulatory trouble, with transport authorities across various states conducting raids, closing showrooms, seizing vehicles and sending show-cause notices due to the stores allegedly not having trade certificates.
However, only a little over 100 of the company's roughly 3,400 showrooms (for which data is available) actually had the basic certification needed to display, sell, offer test rides on or transport unregistered two-wheelers, Bloomberg reported, citing internal documents and government warning letters.
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HT.com could not independently verify the information contained in the report.
This comes after the company recently scaled up to 4,000 physical locations.
India's Motor Vehicles Act mandates that every auto showroom, including that of two-wheelers, should have a trade certificate conspicuously displayed if it keeps unregistered vehicles.
As a result, at least six local transport officials told Bloomberg that they were probing Ola for the alleged violations. The first warning of the violations go back to at least 2023, with more recent ones coming in early March, according to the report.
{{/usCountry}}As a result, at least six local transport officials told Bloomberg that they were probing Ola for the alleged violations. The first warning of the violations go back to at least 2023, with more recent ones coming in early March, according to the report.
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Ola had also told transport authorities since at least late 2023 that its experience centres are merely for “customer engagement” and not for direct sales, according to the report.
The company also denied the allegations. “Your ‘investigation’ findings that there is non-compliance are misplaced and prejudiced,” the report quoted an Ola spokesperson as having said in an emailed response.
Ola maintains an inventory of unregistered vehicles at its distribution centers and warehouses across Indian states “which are fully compliant with the guidelines of the Motor Vehicles Act, and have the necessary approvals,” the spokesperson added.
Meanwhile, the company had also sporadically applied and obtained trade certificates in some locations in response to the transport department’s notices or raids, according to the report.
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Ola has also been battling with other issues. It has faced widespread user complaints on quality and service issues, it has lost its top spot in terms of market share to Bajaj Auto and TVS Motor Co, its electric motorcycle launch was delayed, and just this month, it had planned a layoff affecting more than a thousand employees.
As a result, its shares have plunged more than 60% from its peak since it got listed in August last year.
At 11:15 am, the company's shares were trading at ₹54.56 on the Bombay Stock Exchange (BSE). This was a drop of 3.50% or ₹1.98.