2W industry to grow high single digits despite West Asia crisis: Hero

About 21.71 mn two-wheelers were sold in India in FY26, recording a 10.7% year-on-year growth, primarily driven by the GST rate cuts implemented in September 2025

India’s two-wheeler industry is expected to post high single-digit volume growth in FY27, driven by nationwide demand for motorcycles and scooters despite the West Asia conflict pushing up commodity costs, Harshavardhan Chitale, chief executive officer (CEO) of Hero MotoCorp, said on Wednesday.

 

About 21.71 million two-wheelers were sold in India in FY26, recording a 10.7 per cent year-on-year growth that was driven by cuts in goods and services tax rates in September 2025.

 

“Industry expects high single-digit volume growth in FY27 and growth in motorcycles as well as scooters,” Chitale said, adding that the sector has “started the year on a positive note, continuing the momentum that we saw in the second half of FY26”.

   

Chitale, while talking to market analysts in a post-results call, said there has been “no softening of demand yet” in April and early May as input cost increases have not been fully passed on to customers.

 

He said last year’s strong second half provided support to growth momentum in 2026, while underlying drivers such as ecommerce expansion and gig economy demand help volumes.

 

Detailing the company’s priorities, Chitale said scooters, electric vehicles (EVs), alternative low-emission technologies, and exports will drive the next phase of growth, alongside capacity expansion.

 

Hero increased manufacturing capacity for Destini scooters by 50 per cent in FY26 and aims to double it for Xoom scooters within a quarter.

 

“We will have even stronger play going forward in scooters,” he said, adding that EVs remain “a second area of focus” as the company continues to invest in product development.

 

EV manufacturing capacity is being ramped up from about 15,000 units a month to 25,000 units, with plans to double it again by the end of the year.

 

Chitale said “other low-emission powertrains” was an area of focus, and the company will launch vehicles that can run on higher ethanol blends. Currently, Indian vehicles run on E25 blend (25 per cent ethanol mixed with petrol).

 

He said exports offer significant room to grow, with strong presence in Latin America, expansion plans across Africa, leadership position in Bangladesh with presence in about half the market, and a re-entry in Sri Lanka that is gaining traction.

 

Chitale said the company’s focus on scooters is structural. “Scooterisation has happened to the industry and scooters as a share of two-wheeler industry have grown by a couple of [percentage] points every year,” he said, adding that this trend is expected to continue in the near term. He clarified that motorcycles and scooters serve different purposes.

 

On external risks, Chitale said the ongoing West Asia conflict is pushing up input costs. “The broader economy is navigating certain short-term uncertainties due to the developments in West Asia,” he said, adding that this has increased costs of metals, gas, and labour.

 

He said commodity pressures since March will affect profitability in the near term. “We expect that there will be a transitionary impact on our margins in the short term.”

 

He said the company has already increased prices of its products. “The price hike that we have taken is close to two per cent,” Chitale said, translating to increases of about Rs 700 to Rs 3,500 per vehicle depending on the model, while noting that this will not fully offset the rise in input costs.

 

Hero MotoCorp, India’s largest two-wheeler maker, is tightening its belt, especially by cutting its discretionary spending, to manage margins.

 

The CEO added that dealer inventory has been trimmed to about five weeks, while that for electric scooters remains low, demonstrating strong demand.

 

Despite near-term pressures, Chitale reiterated the company’s margin outlook. “We are committed to our margin guidance of maintaining 14 per cent to 16 per cent,” he said, even as investments continue in EVs, capacity expansion, and new product development.