Hero Motocorp Expects High Single-digit Growth for 2-wheeler Industry in Fy27

Hero MotoCorp expects growth in India’s two-wheeler industry to moderate to high single digits in the financial year 2027 after a double-digit expansion last year, with scooters continuing to outpace motorcycles. The company aims to grow faster than the broader market and is ramping up scooter manufacturing capacity amid rising demand in the segment.

“The industry growth in FY27 is expected to be in high single-digits. It will be a combination of growth, both in motorcycles and scooters. Having said that, we do expect scooters to grow a couple of points more than motorcycles,” Hero MotoCorp’s management said in a post-earnings call on Wednesday.

During the financial year 2026, India’s two-wheeler industry volume grew 26.4% on year to 21.71 million units. The GST cut in the mid of last year boosted the demand and helped the segment volume to cross the pre-pandemic high. Motorcycle volumes rose 6.6% to 13.06 million units, while the scooter segment grew at 18.5% to 8.12 million units.

The market continues to see healthy demand momentum despite rising inflationary pressures amid the war in West Asia. The management noted that retail trends have remained stable with demand in April and early May resilient, even as concerns persist around the potential impact of the West Asia conflict on fuel prices and consumer sentiment.

They said there has been no meaningful impact on volumes so far, as fuel prices have largely remained stable, although companies continue to closely monitor the evolving situation. The management indicated that the demand outlook could change if inflationary pressures sustain or fuel prices rise materially in the coming months.

“With the urbanisation, increasing penetration of e-commerce and gig economy, two wheelers remain a primary source of mobility for the bulk of the country... that structural momentum is still there and hence the industry's bullishness towards this volume growth,” the management said.

Meanwhile, Hero MotoCorp expects to outpace the broader market growth with a slew of product updates planned for this year. Last year, the automaker introduced nine products and multiple refreshes, which the company says helped them fill “critical white spaces” in both motorcycle and scooter portfolios.

Hero retained its position as the country’s largest two-wheeler manufacturer last year amid tight competition from Honda. Demand in the entry motorcycle segment improved during the year, supported by GST-led affordability, with the Hero Splendor contributing to volume recovery. However, competitive pressures have increased, particularly in scooters, where TVS Motor and Suzuki Motorcycle India have gained share.

The management indicated an aggressive product offensive going forward across internal combustion and electric vehicle segments, with launches planned across scooters, commuter motorcycles and premium motorcycles in line with the market trend.

To support the demand, Hero MotoCorp is stepping up its investments with a planned capital expenditure of over Rs 1,500 crore in the financial year 2027. This will primarily be used to expand its manufacturing capacity in EVs and high-growth scooter segments, as well as prepare for new product launches. 

In scooters, the company has already increased production capacity for the Destiny scooter by 50% and is in the process of doubling capacity for the Xoom range. On electric vehicles, the automaker is close to completing a capacity expansion that would raise EV manufacturing capacity by 50% over the previous quarter within a month, with plans to double by the end of this year.

With inputs from Ketan Thakkar