The domestic commercial vehicle (CV) industry is expected to witness a 3-5% year-on-year growth in wholesale volumes in FY26, according to a report by rating agency ICRA released on Monday. This projection follows a flat volume movement in FY25, attributed to a demand slowdown in the first half of the fiscal year due to general elections.
Key Growth Drivers for FY26
According to ICRA Senior Vice President & Co-Group Head Kinjal Shah, the industry is set for a rebound in late FY25 and through FY26, driven by multiple factors:
- Resumption of construction and infrastructure activities post-election uncertainty.
- Steady rural demand, supporting vehicle sales.
- Higher replacement demand from ageing vehicle fleets.
- Government mandates influencing fleet upgrades.
“The sustained push in infrastructure development, an increase in mining activities, and the improvement in road and highway connectivity will be crucial in supporting CV volumes going forward,” Shah stated.
Segment-Wise Growth Projections
- Medium and Heavy Commercial Vehicles (M&HCV) Trucks: Expected to grow 0-3% YoY in FY26, following flat or marginal contraction in FY25.
- Light Commercial Vehicles (LCV) Trucks: Anticipated to expand 3-5% YoY in FY26, recovering from a flattish growth or slight decline in FY25.
Replacement Demand to Play a Crucial Role
Aging vehicle fleets are expected to fuel replacement demand, particularly in the M&HCV segment, where the average fleet age is estimated to be around 10 years. This will aid industry expansion in the medium term, ensuring continued momentum beyond FY26.
Outlook for the Commercial Vehicle Industry
With government policies favoring infrastructure expansion, improving economic activity, and steady fleet replacement cycles, ICRA’s projections signal a gradual but stable recovery in commercial vehicle demand. The industry’s performance in FY26 will be shaped by macroeconomic conditions, investment in infrastructure, and policy-driven fleet modernization initiatives.
