Hero MotoCorp sees commuter bike demand rebound, plans Rs 3,200 crore expansion

New Delhi: Demand for commuter motorcycles, which was hit hard during the pandemic, has come back signalling a revival in consumption among entry-level customers, Hero MotoCorp chairman Pawan Munjal said.

The company, the country’s largest two-wheeler maker, is scaling up investments to expand production capacity as it expects the growth momentum in the local market to remain “healthy” despite global uncertainties.

It has firmed up plans to invest Rs 3,200 crore in Andhra Pradesh over the next 3-5 years, to more than double production capacity to 1.2-1.5 million units a year at its Tirupati facility from about 0.6 million now. The resources will also be utilised to set up the company’s largest global parts centre in Andhra Pradesh, which will serve South Indian and overseas markets.


Munjal dismissed ongoing global uncertainties as “a temporary hiccup” and said “demand is pretty good” even today. “If you look at our monthly numbers, it's really going well. And my own expectation is the two-wheeler industry will continue to grow at a very healthy pace”, he told ET, adding: “We are taking our capacities upwards in Tirupati. We are also expanding the Colombia factory. Bangladesh too is doing very well for us…we are now the highest seller in the country.”

Munjal said there is buoyancy in the domestic market, aided by a conducive economic environment and low two-wheeler penetration levels, which is supporting growth.

“If you recollect, during the pandemic, especially after the pandemic, it was the entry levels and executive which were hurting more. But the premium segment—more expensive cars and bikes—were growing,” he said, adding: “Because that consumer in the commuter segment was not wanting to spend monies. They were not sure of the future, so they were saving monies. Now everything is growing.”

At the premium end of the market, Munjal said the company is seeing good traction and will launch several products in collaboration with Harley-Davidson starting this fiscal year.

“The partnership is going very well. Harley is happy with what we are doing for them. And they are only going to increase the size of the business with us,” he said. “We have a number of products that will be launched soon. And then in the mid to long term, there are a large number of variants in products in the pipeline.”

On its association with US-based Zero Motorcycles, Munjal said work is ongoing to develop an electric motorcycle which is likely to be showcased at the two-wheeler show in Milan later this year.

But even though the electric motorcycle the company is co-developing with Zero is still some time away from a commercial launch, Munjal said Hero MotoCorp is “extremely bullish” on electrification and working towards introducing multiple clean technologies in the two-wheeler segment. “Firstly, we are all for electrification. We are all for alternative fuels. In our R&D, at CIT (Centre for Innovation and Technology), and Tech Centre (Germany), we're doing a lot of work on new technologies. We are preparing ourselves for the future. Before we ourselves started with EVs, we invested in Ather, which is doing really well,” Munjal said.

Hero MotoCorp has so far invested Rs 6,000 crore on its VIDA in-house brand for electric vehicles, Ather Energy and Euler Motors.

Munjal said the EVs segment will take some time to mature. “It's a great solution for the long term, for sustainability, for cleaner mobility. However, till the time it matures, multiple technologies will need to be evaluated and explored. And that's where, as an organisation, we are having a play,” he said.

Hero Motorcycle is scaling up exports despite several countries raising tariff barriers and Munjal said the business will grow multi-fold. He said: “I'm taking you back to 1985, when we started manufacturing with Honda, we had a five-year programme of localisation. Phased manufacturing programme was what we called it. So, Colombia calls it integration. Every country has that kind of a programme, and we go by that programme.”

The company starts by sending completely built units to a new market, he said. “Then as we see the market grow, as we see the taxation impacting our sales, we start local manufacturing of some parts and then the rest.”