Commercial Vehicle sales expected to rebound by up to 5% in FY26: CareEdge Ratings
CareEdge Ratings
. The turnaround is likely to be supported by increased infrastructure activity, favourable monsoon forecasts, improved financing conditions, and fleet replacement demand.
The Light Commercial Vehicle (LCV) segment is projected to grow by 2–4 per cent, while Medium and Heavy Commercial Vehicles (M&HCV s) are expected to see a stronger rebound of 4–6 per cent.
'The commercial vehicle industry is set for moderate growth, led by rising infrastructure spends, improved rural sentiment, and the easing of interest rates,' said Arti Roy, Associate Director, CareEdge Ratings. She added that factors such as road tax concessions under the scrappage policy and transition to electric buses will further boost demand, especially in the bus segment.
The Reserve Bank of India's 100 basis point cumulative repo rate cut between February and June 2025 is expected to ease financing costs in FY26, boosting affordability for buyers and encouraging demand. (One hundred basis points are equivalent to 1 per cent). States offering road tax concessions of 15–25 per cent under the
Vehicle Scrappage Policy
are also likely to support new vehicle sales.
M&HCV and LCV performance
In FY25,
M&HCV truck volumes
declined by 2.7 per cent, weighed down by election-related disruptions, delayed infrastructure projects, and high interest rates. In contrast, M&HCV bus volumes rose 21.6 per cent, driven by increased demand for public transport and government fleet renewals. Overall M&HCV volumes grew by a muted 1.2 per cent.
The LCV segment also faced headwinds, including weak rural demand, competition from electric cargo three-wheelers, and cautious financing for small fleet operators. While LCV passenger carriers grew 8 per cent, goods carriers declined by 1 per cent.
The sector will also navigate key regulatory changes in FY26–FY27, including the mandatory introduction of air-conditioned truck cabins from October 2025 and the rollout of TREM-V emission norms for non-road vehicles from April 2026. These changes may increase vehicle costs, potentially triggering a pre-buying rush in FY26.
Overall, CareEdge Ratings expects these combined factors to drive a gradual but sustained recovery in India's commercial vehicle industry in the year ahead.
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