Hero MotoCorp to invest ₹3,200 cr in Andhra Pradesh, emphasis on EV footprint expansion

Hero MotoCorp, the biggest two-wheeler manufacturer in India, will invest ₹3,200 crore in Andhra Pradesh over the next three to five years to expand its operations in the state. The investment will include setting up a global parts centre and hiking production capacity at its Tirupati facility, said the automaker's Executive Chairman Pawan Munjal.

As part of this investment plan, Hero MotoCorp is setting up its second global parts centre (GPC 2.0) at Tirupati with an investment of ₹750 crore that will help the company in enhancing its accessories and merchandise business besides augmenting supplies of parts in other global markets. The company already has one GPC at Neemrana in Rajasthan. The OEM also said that it will increase the annual production capacity of the Tirupati plant as part of this investment strategy.

Emphasis on EV footprint expansion

Hero MotoCorp has been increasingly focusing on electric mobility. The company has just introduced a refreshed brand identity for its EV vertical, Vida, marking a visual shift four years after the brand's initial global debut in 2022. The new brand identity is intended to reflect the expanding operational scope of the electric mobility unit, which has transitioned from a product line into a broader ecosystem. Also, Hero MotoCorp has stated that this visual brand identity overhaul accompanies expansion into off-road and future mobility platforms, as the portfolio now encompasses commuter electric scooters, the Dirt.E off-road range, and the Novus future-mobility platform.

A significant part of the total investment earmarked for Andhra Pradesh will focus on the annual production capacity expansion at Hero's Tirupati plant. The capacity will be expanded to 1.2-1.5 million units per annum. With all of the company's electric vehicle portfolio being designed, engineered, and manufactured at this plant, the EV range of the brand will certainly get a renewed focus under this investment strategy.

The Tirupati factory currently produces both ICE (internal combustion engine) powered models and all of the company's electric vehicles as well. Speaking about the investment plan and capacity expansion strategy there, Munjal said that the OEM has a large campus and there is a lot of scope for expansion. "We currently have a capacity of about 0.6 million, and we are taking it up to 1.2 million to 1.5 million units soon. Again, it will require substantial investment and generate substantial employment," Munjal said.

Hero MotoCorp has also said that the fresh investment aims to transform Tirupati into a world-class manufacturing and electric mobility hub, while strengthening Hero MotoCorp's global supply chain and reinforcing India's position in the automotive and EV ecosystem.

Enhanced focus on parts and merchandise business

Another key part of this investment strategy is to enhance focus on the parts and merchandise business. Hero MotoCorp revealed that one of the key aspects of the GPC 2.0 will be to cater to the company's growing ambition for increasing accessories and merchandising business, inspired by its partner Harley-Davidson.

Munjal said that almost 30% of Harley-Davidson's revenue comes from parts. He also hinted that, taking a lesson from that, Hero MotoCorp is aiming to enhance its parts and merchandise business to ramp up its revenue stream. "From our current engagement partnership with Harley-Davidson, we are learning more and more about accessories and merchandising. Harley-Davidson is very big on these things; almost 30% of their revenue comes from parts, accessories, and merchandising, so we are going to be upping our ante on accessories and merchandising," he said, while also adding, “Right now, our accessories and merchandising business is very small. I'm not putting a number to it, but clearly we have decided to focus and grow this business... We do have plans to grow it really big; from where we are, it will be manifold."

While the GPC in Neemrana is already servicing the current set of dealers and consumers, he said, “With the GPC 2.0, we are going to be increasing our accessories business and revenue." He further said completely knocked down (CKD) parts would also be exported from the Tirupati GPC to Hero MotoCorp's other global markets as well.

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