Mon Oct 07 12:31:59 UTC 2024: ## Ola Electric Shares Plunge After Service Concerns Resurface
Ola Electric, India’s largest e-scooter maker, saw its shares tumble by 9% on Monday following a public spat between its founder and a comedian. The incident reignited concerns about the company’s service quality, which has been under scrutiny for months.
The controversy started when comedian Kunal Kamra posted a photo on X (formerly Twitter) showing numerous Ola scooters gathering dust outside a showroom. This triggered a wave of online complaints from other users, highlighting ongoing issues with service and repair.
Ola’s founder, Bhavish Aggarwal, responded by urging Kamra to remain silent and allow the company to focus on fixing problems. He emphasized their efforts to rapidly expand the service network. However, this response did little to appease investors or customers.
Ola’s share price has been on a downward trajectory since its stock market debut in August, plummeting 43% from its peak. This decline is largely attributed to widespread criticism on social media regarding service issues and concerns about the company’s shrinking market share. Notably, Ola’s market share has been decreasing for five consecutive months amidst growing competition and persistent service complaints.
Analysts are echoing these concerns. Kranthi Bathini, director of equity strategy at Wealthmills Securities, stated that the recent social media spat will have a “medium to short-term impact” on the company’s performance.
Last month, HSBC analysts released a report highlighting their visit to multiple Ola service stations. The analysts found the stations struggling to handle the influx of service requests and facing significant backlogs, ultimately impacting service quality.
In response, Aggarwal announced plans to double the company’s service center network by December, increasing the current number from 500. However, past reports from Reuters have shown that even with this expansion, many service centers are overwhelmed by demand, lacking sufficient staff and spare parts.
The growing frustration with Ola’s service is evident in recent events. Last month, a 26-year-old man was arrested for setting fire to an Ola showroom in a southern Indian state, citing unsatisfactory service as his motivation.
This latest incident serves as a stark reminder of the challenges Ola faces in addressing its service woes. The company’s ability to regain customer trust and stabilize its market share will depend heavily on its ability to effectively resolve these issues and improve its service infrastructure.
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