Whalesbook
Margin Pressure Mounts
Hero MotoCorp's management noted that while demand is steady, the business environment presents challenges. Fluctuating prices for raw materials like aluminum, steel, rubber, and plastics are beginning to affect profits. In the January-March quarter, material costs increased by an average of about ₹2,100 per vehicle. Price increases of roughly 2% have only partially offset these rising costs.
Strategic Investment for Future Growth
Despite these pressures, Hero MotoCorp is substantially increasing its investments. The company plans capital expenditure of over ₹1,500 crore for FY27. These funds will expand manufacturing capacity for electric vehicles and popular scooter models. Investments will also support new product launches in EVs, premium motorcycles, and scooters, plus advances in connected vehicle systems, AI-driven customer tools, and advanced low-emission engines like flex-fuel technology.
Electric Vehicle Expansion
This investment aims to double electric two-wheeler manufacturing capacity at its Sri City plant in Andhra Pradesh. Hero MotoCorp is preparing several new electric models under its Vida brand, which is gaining traction. The company has already boosted the capacity of its Destiny scooter by 50% and will double production capacity for its gasoline scooter, the Zoom. EV scooter sales grew 2.5 times in FY26, supported by an increase in monthly manufacturing capacity from 15,000 to 25,000 units.