Hero MotoCorp plans to invest ₹1,500 crore in expanding its scooter manufacturing capacities until FY27, where it targets doubling its output. The company is also setting aside more than ₹700 crore for a worldwide parts hub. These developments follow the threats of geopolitical uncertainty faced by Hero MotoCorp that include challenges in its supply chain operations, changes in customer demands, and stiff competition from its competitors like TVS Motor.
Scooter Expansion:
Hero MotoCorp is taking a bold step in reinforcing its position in the essential scooter segment. The company believes that scooters will be the primary growth driver for the industry in the coming years, despite a forecast of slower growth in the entire two-wheelers’ market during FY27.
Strategic Move towards Scooter Production:
Hero MotoCorp has allocated ₹1,500 crore towards the capital investment to achieve more than double its current production capacity of about 60,000 scooters per month and aims at achieving a monthly production of up to 100,000 scooters. This strategy is intended to achieve a 50% growth in the production capacity of ‘Destini’ and 100% increase in the production capacity of the ‘Xoom’. Hero MotoCorp has performed well in FY26 with a growth rate of 10% in terms of sales volume to achieve 64.69 lakh units with the fourth-quarter profit increasing by 26.1% to ₹1,474 crore. As of May 15, 2026, the market capitalization of Hero MotoCorp was around ₹101,335 crore with its stock price hovering around ₹5,064.50. The company has achieved a gain of 17.1% during the past year.
Hero MotoCorp EV Manufacturing Capacity and Parts Network Expansion:
While expanding the production capacity of internal combustion engine (ICE) scooters, Hero MotoCorp is also planning on increasing its EV manufacturing capacity. The current expansion will add 50% EV capacity this quarter, followed by a doubling in future quarters. Such an incremental approach suggests that the firm has adopted a strategy in the direction of electrification, consistent with industry trends where the adoption rate of EVs in two-wheelers is expected to grow substantially. In addition to manufacturing capacity expansions, Hero MotoCorp is also spending over ₹700 crore to develop a global parts center in South India.
Industry Dynamics & Competition:
Hero MotoCorp’s move may be bold; however, the entire Indian two wheeler industry seems set to experience moderate growth in the forecast range of 3-5% to 7-9% growth in FY27, indicating a growing competitive landscape for the market share battle. Moreover, there are other competitors who are putting money into the game as well. For instance, TVS Motor Co Ltd plans to invest a hefty amount of ₹3,500 crores in FY27, which will allow them to produce 8.3 million units annually, out of which the firm aims to sell 50,000 units of EVs each month. TVS Motor’s focus will be on high margin markets like EVs & scooters, in which the firm expects to achieve a monthly target of 50,000 units of EVs.
Strategizing in an Era of Geopolitical Risk and High Costs:
This expansion comes against the backdrop of increasing worries regarding instability in West Asia. Bodies such as SIAM and FADA have expressed their fears regarding potential risks posed by the situation to the functioning of the supply chain, which might result in increased costs in the form of elevated commodity costs (metals, petrochemicals) and increased logistics expenses. The prevailing strong demand situation notwithstanding, continued instability can generate uncertainty and influence consumer sentiments in the future. Car makers have already begun to experience increased input costs, with some even saying that “there has been a big change.”
