Ola Electric's Dealer U-Turn Is Too Little Too Late

By Shubhangi Bhatia

What?

Ola Electric reversed course on its five-year no-dealer sales model last Friday by signing up nine outlets across six states, spanning Tier-2 and Tier-3 towns rather than starting with big metros. It plans to scale this to over 500 dealerships in the coming quarters, with company-owned stores shrinking.

Dealers will become, in chairman Bhavish Aggarwal's words, "the backbone for volumes, transactions and service." The move comes alongside a board-approved fundraise of up to Rs 1,500 crore, and the same-day resignation of COO Hyun Shik Park, citing personal reasons, a combination experts say does little to help the company's governance optics.

Why?

Ola's Tesla-inspired direct-to-consumer (D2C) bet with no dealers, company-run experience centres, and app-based service has been failing to deliver customer trust. That strain showed as unit sales fell over 50% from their 2024 peak, market share collapsed to a single digit, and revenue declined for seven straight quarters. Complaints have piled up, and certain service centres have also shut down.

The breakdown isn't abstract for owners like Chennai-based Prasanna K Ram. His scooter sat non-functional for over ten days after its battery drained, with his nearest service centre shut and support calls taking roughly 15 minutes to connect, often with no follow-through. Even so, he keeps getting sales calls for new Ola scooters, increasingly from an AI voice agent posing as a human.

The D2C model also left Ola to single-handedly manage everything from sales to vehicle registrations, a job dealerships typically absorb.

Aggarwal framed the pivot as timing rather than failure, claiming dealers had wanted in "from almost the time we started this company five years ago," but that going through them earlier would have slowed growth.

Industry voices see it differently. Harshal Dasani of INVasset PMS called it "a tacit admission that the D2C thesis on which the IPO was priced did not work." Deepesh Rathore of Insight EV called the delay "unethical" given the years of accumulated service complaints dealers must now inherit.

Why It Matters

The pivot may fix Ola's structural distribution problem, but it doesn't automatically fix trust. Dealers are being asked to sell into a brand with a damaged reputation, and a customer base that has been let down for a long time.

Analysts point to a checklist for any real recovery, including market share stabilising above 10% for three straight months, the new dealer stores actually generating sales rather than just existing on paper, and the core business reaching profitability.

With TVS, Bajaj, Hero and Ather all gaining ground, the bigger risk is that Ola's decline stops being a temporary stumble and becomes a permanent loss of position in a market it once led.

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24.23 lakh units

That is how many vehicles were sold in August this year, marking 17.5% growth on a year-on-year basis, according to data from the Federation of Automobile Dealers Associations (FADA) released on Monday.

FADA President Sai Giridhar said alternative fuel vehicles, including CNG, hybrids, and electric vehicles (EVs), overtook petrol in passenger vehicles (PVs) for the first time, at 41.95% against 40.85%. Meanwhile, the share of diesel stood at 17.21%.

The Core had earlier reported how alternative fuel choices are gaining ground as users chase lower running costs, even as E20 fuel faces mounting concerns and consumer backlash.

Catch Up Quick: During August, rural demand outpaced urban across most segments, except tractor sales were flat. Giridhar cautioned that much of the growth comes on a soft 2025 base when customers deferred purchases on account of the GST cut, noting that PV inventory has risen to 38-40 days as festive season stocking begins.

Future: Dealer sentiment for September stays cautiously optimistic. For the next three months, 81.62% of dealers foresee growth, buoyed by Diwali-season demand, though against a high base of post-GST cuts last year.

Make Air India Great Again?

Air India is entering a new phase as incoming CEO and MD Tewolde Gebremariam prepares to take charge, with Tata Sons Chairman N Chandrasekaran setting out a mandate focused on safety, passenger trust, operational reliability and cost discipline.

The Lead: At an employee town hall, Chandrasekaran said Air India’s safety record should be “better than the best” airlines globally and called for stronger accountability. Gebremariam, the former CEO of Ethiopian Airlines, sought employees’ support and urged them to minimise disruptions and take care of passengers when they occur. “We will Make Air India Great Again (MAGA),” he told staff, recalling a time when he said Air India was among the industry’s leaders.

Backdrop: The leadership transition comes after a turbulent 18 months marked by the AI171 crash, other safety incidents, geopolitical disruptions and fuel-price volatility. Air India and Air India Express posted a combined Rs 22,238-crore net loss in FY26, more than double the previous year’s loss.

Gebremariam now inherits the task of turning Tata’s transformation of Air India into a safer, more reliable and financially sustainable airline.

LNG Race Tightens

Liquefied Natural Gas (LNG) prices have surged to $25.83 per million British thermal units (MMBtu), an almost four-year high in Asia, as the West Asia conflict disrupts supplies and pits European buyers against Asian importers.

Pivot: The war has crippled a significant share of global LNG supplies, with disruptions to exports from Qatar and the UAE compounded by the continued uncertainty around shipping through the Strait of Hormuz. Qatar, one of the world’s biggest LNG exporters, has extended force majeure on some shipments, forcing buyers to find replacement cargoes.

European buyers are also stepping up purchases ahead of winter, with EU gas storage at 65%—17 percentage points below the five-year average. That is intensifying competition with Asian buyers for available spot cargoes.

Impact: Indian LNG deliveries for October are already being assessed at more than $25/MMBtu. Higher import costs are squeezing city gas distributors and could put further pressure on CNG prices, while raising costs for other gas-dependent industries.

Strong Start Masks Growing Risks

India’s economy started FY27 on a stronger footing than expected, with Q1 GDP growing 7.8% and GVA rising 8.2%. But QuantEco expects momentum to moderate in the second half as a weak monsoon, intensifying El Niño, fading GST support and slower public capex weigh on growth.

Fast Facts: High-frequency indicators remain strong through July, with passenger vehicle sales up 34.3%, two-wheelers 22.7%, tractor sales 20.5% and government capex 53.7% year-on-year. But cracks are already showing with the manufacturing PMI having fallen for three straight months, while August tractor registrations plunged to just 0.6% growth from 33.6% in July.

Urban consumption, meanwhile, appears more credit-led than income-led, with job growth remaining subdued and inflation squeezing household purchasing power.

Forecast: QuantEco has raised its FY27 GDP forecast by 50 basis points to 6.9%, but sees rural consumption as particularly vulnerable. Inflation is also becoming less benign, with July CPI at 4.44% and core inflation at 3.9%. The firm expects the RBI to raise rates by 50 basis points to 5.75% over December-February, with an earlier October move now a possibility.

Coal Supply Crunch Eases

India is ramping up coal shipments to power plants by rail, after fuel inventories at several generators fell to critically low levels, the coal ministry said Monday. Coal fuels roughly three-quarters of India's power generation.

Heavy rainfall in coal-rich states including Odisha, Jharkhand and Chhattisgarh had earlier disrupted mining and delayed fuel transport to power plants.

The Lead: The ministry said corrective supply measures are underway, with coal loading rising daily since September 3 to 444 rakes on September 6, up from 370.

The number of plants holding less than 25% of required stocks rose sharply to 58 by September 5 from 46 at the end of August, with 53 of them domestic coal-fired units.

The Shift: Coal India Limited (CIL), the largest coal miner, has seen a rebound in coal production and supplies to power plants as rainfall eases across its mining areas.

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On Episode 972 of The Core Report, financial journalist Govindraj Ethiraj talks to Sheetal Sapale, Vice President at Pharmarack as well as Amar Sheth, Vice President of the Federation of Automobile Dealers Associations (FADA).

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