Hero MotoCorp to Invest Rs 1,500 Crore in FY27, Seeks to Double Scooter Production Capacity

Hero MotoCorp to Invest Rs 1,500 Crore in Capacity Expansion

Hero MotoCorp, the leading two-wheeler manufacturer in India, has outlined its plans for significant investments in capacity expansion and a new global parts centre in South India. According to the company's CEO, Harshavardhan Chitale, the company has earmarked Rs 1,500 crore for capital expenditures (capex) in FY27 to double its scooter production capacity.

The company is also investing over Rs 700 crore in building a global parts centre in South India, which will help further expand its parts and accessories business. Hero MotoCorp has already seen a significant increase in demand, with a monthly scooter volume run rate of 60,000 units. The company's ambition is to double this capacity, with Chitale stating that this could mean reaching closer to 1 lakh units per month.

In terms of capacity expansion, Hero MotoCorp has already increased the capacity of its 'Destini' model by 50 per cent and is in the process of doubling the capacity of its Xoom model. On the electric vehicle (EV) front, the company is close to completing an expansion that will increase its capacity by 50 per cent compared to the last quarter. Additionally, Hero MotoCorp plans to further double its EV capacity in the coming quarters, which will take its production from 15,000 units to 30,000 units by the end of the year.

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The company's expansion plans come amidst the uncertainty created by the ongoing West Asia war. While demand momentum continued in April and the first week of May, there is a need to monitor the situation to assess its impact on demand. Before the war broke out, the two-wheeler industry was expecting high single-digit volume growth in FY27. However, the evolving situation requires close monitoring to understand its impact on demand.