Synopsis
The domestic commercial vehicle (CV) market is forecasted to achieve sales of 1 million units in FY26, returning to pre-COVID levels. This growth is driven by infrastructure projects, increased demand, and supportive policies, according to a Crisil report.Key Takeaways
- Projected CV sales of 1 million units in FY26.
- LCVs expected to constitute 62% of total volume.
- Infrastructure projects driving demand recovery.
- Regulatory changes may increase costs for M&HCVs.
- Strong cash flows to maintain healthy balance sheets.
New Delhi, April 16 (NationPress) The anticipated sales of domestic commercial vehicles (CV) are set to hit 1 million units in this fiscal year (FY26), marking a return to the pre-pandemic highs achieved in fiscal 2019, according to a report by Crisil released on Wednesday.
This growth is attributed to the swift execution of infrastructure projects, a surge in replacement demand, and supportive policies from the PM-eBus Sewa scheme. The credit outlook for the sector remains stable, bolstered by robust liquidity and solid cash flows.
Light commercial vehicles (LCVs), which are projected to constitute 62 percent of the total sales volume, are expected to drive this growth due to the increasing penetration of e-commerce and warehousing. Additionally, an upswing in demand from freight-intensive industries such as cement and mining will further enhance overall demand.
“We expect domestic CV sales to grow by 3-5 percent this fiscal, bouncing back from last fiscal’s downturn and aligning with the sector’s long-term growth trajectory,” stated Anuj Sethi, Senior Director at Crisil Ratings.
The recovery is anticipated to be fueled by a revival in infrastructure execution, a key driver of CV demand, which gained traction in the last quarter of fiscal 2025 and is likely to continue, supported by a projected 10-11 percent rise in central government capital expenditures.
“A robust replacement cycle, expected to contribute about one-fifth of the total volume, will further reinforce demand,” Sethi elaborated.
This fiscal year, regulatory changes are set to transform the CV landscape, with the introduction of mandatory air-conditioned cabins in trucks by October 2025, which is likely to increase costs by at least Rs 30,000 per unit, especially for medium and heavy commercial vehicles (M&HCVs).
As a point of reference, CV manufacturers have already raised prices by 2-3 percent in January to counterbalance the rising compliance costs.
A decrease in input costs is expected to support an operating margin of 11-12 percent, consistent with the decade-high margins achieved last fiscal.
While capital expenditures for regulatory compliance and electric platform development will see a rise of 12-15 percent, strong cash flows are likely to keep debt levels low and balance sheets in good shape.
Volume for M&HCVs, which represent 38 percent of total sales, is projected to grow by 2-4 percent this fiscal, driven by increased infrastructure investment across construction, roads, and metro-rail projects.
LCVs are expected to grow at a faster rate of 4-6 percent, propelled by e-commerce-driven deliveries and the expansion of warehouses in tier 2 and tier 3 cities.
Falling inflation and interest rates are anticipated to stimulate deferred replacement demand from the aging fleet acquired during fiscals 2017-2019, thereby supporting overall growth, as noted in the report.
In the electric bus market, the PM-eBus Sewa scheme is expected to boost demand, although starting from a base of just 3,200 units.
