Resurgence on the Road: Commercial Vehicle Industry's Projected Growth

The domestic commercial vehicle industry is projected to grow 3-5% in FY26 after a flat FY25. This growth is attributed to infrastructure projects, rural demand, and replacement sales. Medium and heavy commercial vehicles to see a marginal increase, with light commercial vehicles showing modest growth.

The domestic commercial vehicle industry is poised for growth, with wholesale volumes expected to increase by 3-5% in FY26, according to rating firm Icra. This forecast comes after a stagnant FY25, largely impacted by a demand slowdown during the first half of the fiscal year due to general elections.

Driving the anticipated growth is the resumption of construction and infrastructure activities, steady rural demand, and higher replacement sales because of aging vehicle fleets and government mandates, said Icra's Senior Vice President, Kinjal Shah. These factors are expected to propel volume expansion towards the end of FY2025 and throughout FY2026.

A continued focus on infrastructure development, increased mining activities, and improved road and highway connectivity are seen as supportive of this trend in the coming years. Medium and heavy commercial vehicles, in particular, will benefit from a healthy replacement demand due to their aging fleets, estimated at an average of 10 years, Shah noted.

(With inputs from agencies.)