Two-wheeler makers across electric and internal combustion engine (ICE) segments have lined up near-term capital expenditure of over Rs 11,000 crore, including the current financial year, towards capacity expansion. The expansion plans come despite supply chain disruptions arising from ongoing geopolitical tensions in West Asia and a moderate growth outlook for the current fiscal.
TVS Motor has earmarked Rs 3,500 crore in capex for FY27 – its largest in recent years – to add 1.5 million units of two-and three-wheeler capacity during the current fiscal. The company will invest close to Rs 2,000 crore in product development and new products, and another Rs 1,000 crore towards adding 1.5 million units. “We are also expanding our R&D. All put together the capital for next year for TVS Motor will likely be around Rs 3,500 crore,” Director & CEO KN Radhakrishnan, said during the fourth-quarter earnings call last week.
The expansion comes after TVS Motor posted a record annual sales of 5.9 million units in FY26. The company plans to scale up total capacity to 8.3 million units from about 7 million units in FY26.
India’s largest two-wheeler maker Hero MotoCorp has also lined up Rs 1,500 crore of capital expenditure for FY27. “This capex is going to expand our capacity in scooters, where for some of our models that are doing very well, we are doubling our capacity,” Hero MotoCorp CEO Harshavardhan Chitale said during the latest analyst call. Hero MotoCorp currently sells around 60,000 scooters a month and aims to nearly double the figure to reach monthly production of around 100,000 units.
Capacity as Utilization
“At 21.7 million domestic units in FY26 and overall capacity utilisation already above 80%, manufacturers are investing ahead of the next demand wave,” said Poonam Upadhyay, Director, Crisil Ratings. She added that strong earnings and healthy balance sheets have also given OEMs the financial bandwidth to stay committed, with new capacity expected to come on stream in a phased manner.
Apart from brownfield expansion, motorcycle makers are also setting up greenfield manufacturing facilities. Royal Enfield is investing Rs 2,200 crore in Andhra Pradesh for a new manufacturing facility. The capex outlay, however, is beyond the current fiscal. The company will build the facility in two phases, adding nearly 900,000 units to its manufacturing capacity. The first phase is targeted for completion by 2029 and the second by 2032.
Electric two-wheeler makers, who reported record annual sales of 1.4 million units in FY26, are also ramping up capacity to sustain growth driven by faster EV adoption.
Next Growth Wave
Ola Electric’s board on Friday approved Rs 2,000 crore of investments into its electric vehicles and battery cell manufacturing subsidiaries towards capacity expansion. Trial production at Ather Energy’s new manufacturing plant at Aurangabad Industrial City (Auric) in Maharashtra is also likely to be operationalised by the end of this calendar year.
The facility will initially have a monthly capacity of about 42,000 units, adding to the 420,000 annual scooter capacity at its Hosur manufacturing plant. “This (Auric unit) is our largest factory till date, planned for a total capacity of 1 million units, with 500,000 units of capacity going live in phase one itself,” Ather Energy co-founder Tarun Mehta said.
“EV penetration at 6-7% leaves significant headroom, and continued fuel price uncertainty stemming from West Asia only adds to the case for electric demand gaining further ground,” Upadhyay added.