Hero Motocorp, a key player in the two-wheeler industry, saw a 3 percent increase in its share price on May 14, bringing its market worth to above Rs 1 lakh crore for the first time. However, the automaker wants to accelerate business progress.
CEO Niranjan Gupta outlined the company’s expansion strategy for the electric vehicle (EV) segment in a conversation with the Economic Times (ET).
With a three-pronged approach, the company would concentrate on M&A growth, new product development and global footprint expansion.
Strategic Growth Through M&A:
Gupta said that they are always open to the possibility of mergers and acquisitions.
He mentioned that their finances are strong, and they are interested in acquiring companies, especially in the electric vehicle (EV) industry, if it makes sense strategically.
They might also target companies with technology or skills that can help them grow faster.
As per Gupta, their teams are always looking for opportunities to grow, both by themselves and through acquisitions.
Gupta used to lead Hero MotoCorp’s partnership with Harley Davidson. He also worked as the head of strategy and M&A and as the Chief Financial Officer for the company.
According to the report by ET, Hero MotoCorp owns more than 30 percent of Ather Energy, a company that focuses solely on EVs.
Focus on New Product Development:
The company plans to grow its VIDA business significantly by introducing new products at various prices, the report added.
They also aim to expand their sales and distribution network for EVs.
In 2022, it was reported by the Hindu that Hero MotoCorp would be introducing all its initiatives for emerging mobility solutions under the brand VIDA.
Following this, Hero MotoCorp has expanded its VIDA electric portfolio and now plans to launch affordable and mid-range variants of VIDA in the first half of this fiscal year.
Global Market Expansion:
Hero MotoCorp sold 13.92 lakh units of motorcycles and scooters in Q4/FY24, up from 12.70 lakh units in Q4/FY23, with a total of 56.21 lakh units sold in FY24, according to Manufacturing Today.
To grow its business worldwide, Hero MotoCorp is establishing Hero MotoCorp do Brasil, a new company in Brazil that will make and sell its motorcycles and scooters.
Hero is expanding its network and charging infrastructure, including Ather’s network, the ET report added.
The business currently has 2,500 charging stations spread over 200 cities.
Additionally, Hero plans to reduce costs for EVs. However, investments in EVs affected Hero MotoCorp’s margins last fiscal year. The company reported an overall EBITDA of 15.3 percent, which decreased to 14 percent due to a 130 basis point impact from EV-related expenditures, as reported by ET.
The report mentioned that benefits from the Production Linked Incentive (PLI) Scheme for new VIDA products could assist Hero MotoCorp in saving costs and reducing the impact of EV-related expenses on its overall margins.
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