Commercial Vehicle Sales Volume to See Moderate Growth in FY26: CareEdge Ratings The report said that it expects the Light Commercial Vehicle (LCV) segment to grow by 2-4 per cent in FY26, while the Medium and Heavy Commercial Vehicle (MHCV) segment is projected to grow by 4-6 per cent during the same period.
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After two consecutive years of subdued growth, Commercial Vehicle (CV) wholesale volumes are expected to recover by around 2-5 per cent in FY26, according to CareEdge Ratings.
The report said that it expects the Light Commercial Vehicle (LCV) segment to grow by 2-4 per cent in FY26, while the Medium and Heavy Commercial Vehicle (MHCV) segment is projected to grow by 4-6 per cent during the same period.
Arti Roy, Associate Director, CareEdge Ratings, said, "The commercial vehicle (CV) industry is expected to experience moderate growth, with overall sales volume likely to improve by around 2-5 per cent y-o-y in FY26. The recovery will be driven by increased infrastructure activity, improved rural sentiment on the back of normal monsoon forecast, more attractive vehicle financing due to recent interest rate cuts, and ongoing fleet replacement—particularly in the bus segment—spurred by ageing vehicles, road tax concessions available for new vehicles under the scrappage policy for older vehicles and the transition to electric vehicles (EVs)."
CareEdge Ratings also noted that muted growth in FY25 was largely attributed to a slowdown in demand across both the Medium and Heavy Commercial Vehicle (MHCV) and Light Commercial Vehicle (LCV) segments, wherein MHCV volumes saw a modest increase of 1.2 per cent. In comparison, LCV volumes declined by 0.3 per cent. MHCV volumes had witnessed subdued growth in FY25 due to lower government spending on infrastructure, given the general elections last year and an extended monsoon delaying/disrupting construction work. The LCV segment was also impacted by increased competition from the electric cargo three-wheeler segment and a cautious financing sentiment among small fleet operators.
Hardik Shah, Director, CareEdge Ratings, said that the Indian CV industry had witnessed its highest sales volume in FY19, and after being adversely impacted by the Covid-19 pandemic, the industry appeared to be on track to surpass the all-time high on the back of significant growth in sales volumes in FY22 and FY23.
"However, it experienced a cyclical decline in FY24 and a largely flat volume in FY25 due to a multitude of factors, including higher channel inventory, a slowdown in infrastructure projects amid the general elections, the impact of the transition to BS-VI norms, rising vehicle costs, and high interest rates. Looking ahead, the sales volume is expected to grow marginally in FY26 with many of the issues behind us," said Shah.
The report also noted that in FY25, the Indian commercial vehicle (CV) industry faced a challenging environment marked by election-related disruptions, a slowdown in infrastructure spending, and elevated interest rates. Within the MHCV segment, buses (which constitute ~20 per cent of the total MHCV) exhibited a strong growth trajectory, registering a 21.6 per cent increase in FY25, driven by rising demand for public transport, government fleet replacement initiatives, and the ongoing transition to electric buses. In contrast, MHCV trucks (which constitute ~80 per cent of MHCV) recorded a decline of 2.7 per cent, primarily due to subdued freight activity, delayed infrastructure projects during the election period, and high interest rates. After experiencing marginal volume degrowth of 1 per cent and 3 per cent in FY24 and FY25, the MHCV truck segment is expected to recover in FY26.
This rebound will be supported by increased infrastructure activity in the country, the replacement of aged vehicles, and cumulative repo rate cuts of 100 bps in CY25 until June 2025, which is likely to boost vehicle financing. Additionally, rising volumes in the bus segment, driven by ongoing fleet replacement spurred by ageing vehicles, will further contribute to overall growth in MHCV sales. As a result of recovery in the trucks segment and continued growth in the bus segment, the MHCV segment is estimated to grow by 4-6 per cent during FY26.
