Ola Electric showrooms raided in India over trade certificate violations

That means more than 95% of the stores on which Bloomberg News saw the data, lacked basic certification needed to display, sell, offer test rides on or transport unregistered two-wheelers

By Alisha Sachdev

 

Ola Electric Mobility Ltd.’s rapid expansion into brick-and-mortar showrooms is running into regulatory trouble. 

The Bengaluru-based electric scooter maker, once a champion of the digital-only sales model, recently scaled up to 4,000 physical locations since 2022. A Bloomberg News investigation has found that out of roughly 3,400 showrooms for which data is available, a little over 100 locations had trade certificates required under India’s Motor Vehicles Act.

 

That means more than 95 per cent of the stores on which Bloomberg News saw the data, lacked basic certification needed to display, sell, offer test rides on or transport unregistered two-wheelers.

 

 

In response to customer complaints, transport authorities across Indian states have conducted raids, closed showrooms, seized vehicles and sent show-cause notices querying the Bhavish Aggarwal-led firm, according to internal documents and government warning letters seen by Bloomberg News.

 

The country’s Motor Vehicles Act mandates that every auto showroom, including two-wheelers, should have a trade certificate conspicuously displayed if it keeps unregistered vehicles, according to Hans Kumar, a retired assistant transport commissioner who worked in the western Indian state of Rajasthan.

 

At least six local transport officials in interviews with Bloomberg News said they were probing Ola for alleged violations, reflecting the dark underbelly of Ola’s aggressive expansion. 

 

“Your ‘investigation’ findings that there is non-compliance are misplaced and prejudiced,” an Ola spokesperson 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,” he added.

 

Ola’s response did not directly answer whether their public-facing stores had trade certificates or if the firm had seen the raids, seizures by local transport regulators.

 

Battling Crises 

The startup, once India’s biggest scooter maker, is now battling crises on multiple fronts. Shares have plunged over 60 per cent from its peak since listing in August. 

 

It has also faced buyer complaints on quality and service issues, social media backlash and widening losses in recent months. Aggarwal said in an October post on X that Ola was expanding its network to address customer complaints.

 

The regulatory challenges come as the company lays off over a thousand employees and contract workers, Bloomberg News reported this month, where Ola acknowledged that some roles were getting redundant as it recast and automated a part of its operations. 

 

It’s also racing to roll out its e-motorcycles, which are delayed since Aggarwal had indicated a January launch at an event last year. Ola spokesperson did not answer a query on the delayed motorcycle launch.

 

According to nearly two dozen notices sent by state-level transport officials and seen by Bloomberg News, transport officials across India have stepped up scrutiny and often found Ola falling short of the trade certificate requirement at the store level.