RoshanThe domestic commercial vehicle industry is set to witness a modest growth of 3-5% in FY26, as per the latest analysis by ICRA. This follows a period of stagnation in FY25, primarily influenced by a slowdown in demand during the first half of the fiscal year due to the general elections.
Factors Driving Growth in FY26
According to Kinjal Shah, Senior Vice President & Co-Group Head at ICRA, the anticipated recovery in commercial vehicle sales can be attributed to several key factors:
- Revival in construction and infrastructure activities
- Stable rural demand
- Higher replacement sales due to ageing fleets and regulatory mandates
- Government’s continued focus on infrastructure development
- Expansion of mining activities
- Improved road and highway connectivity
With these favorable conditions, the industry is expected to witness increased demand towards the end of FY25 and sustain its growth momentum through FY26.
Replacement Demand to Boost Growth
The ageing commercial vehicle fleet, especially in the medium and heavy commercial vehicles (M&HCVs) segment, remains a significant driver for replacement demand. The average age of commercial vehicle fleets is estimated at 10 years, indicating a strong need for fleet renewal. This trend is likely to provide a major boost to industry volumes in the medium term.
Segment-Wise Growth Projection
- Medium & Heavy Commercial Vehicles (M&HCV – Trucks): Wholesale volumes are forecasted to grow by 0-3% YoY in FY26, following either stagnant growth or slight contraction in FY25.
- Light Commercial Vehicles (LCV – Trucks): A more optimistic growth of 3-5% YoY is expected in FY26, after experiencing flat or marginally negative growth in FY25.
Future Outlook for the Commercial Vehicle Industry
The long-term outlook for the commercial vehicle industry remains positive, driven by:
- Increased government spending on infrastructure projects
- Expanding mining and construction activities
- Higher demand for logistics and last-mile transportation
- The natural cycle of fleet replacement and upgrades
Despite a slow start in FY25, the industry is expected to gain momentum as economic activities pick up, and investments in infrastructure accelerate. The projected 3-5% growth in FY26 signals a steady recovery, reinforcing the crucial role of the commercial vehicle sector in the country’s economic landscape.
