Hero MotoCorp said on Monday that it will invest a total of Rs 5,000 crore across five manufacturing plants and its new R&D centre. The country’s largest two wheeler maker aims to grow its market share in two-wheelers to over 50% at home, at a time when erstwhile partner Honda is gaining strength, and expand presence in overseas markets like South America, the US and Europe.
While a plant is being built each in Colombia and Bangladesh, three of the new plants will come up in India, starting with Neemrana that will open this week and will be dedicated to premium bikes. Construction at Hero’s fifth plant at Halol, Gujarat will also start next month, while a sixth domestic plant in Andhra Pradesh will be built starting next year. Hero, which currently has around 42% domestic market share, will see its production capacity go up from 6.9 million today to 7.65 million next year and 12 million by 2017.
Pawan Munjal, vice chairman, MD & CEO at Hero MotoCorp said that all the domestic plants will be built as ‘green concept’ manufacturing sites that feature technologies for water and energy optimization. “We may be investing more by 10-15%, but in the long term our costs will come down as the energy bills fall. Workers will feel happier working here, so I’m sure productivity will increase,” he said at the inauguration of the Neemrana plant. About Rs 1,050 crore has been spent on the site, which includes an automated global parts distribution centre.
Next year Hero will also invest in a plant in Argentina, followed by Brazil in 2016. Sales in Europe will start by end-2015 with its hybrid scooter Leap, while it will also launch 125cc bikes in the US the same year.