Commercial Vehicle Industry Expected to Grow 3–5% in FY26: ICRA

India’s commercial vehicle (CV) industry is poised for a modest recovery in FY26, with 3–5% year-on-year (Y-o-Y) growth in wholesale volumes, according to a report released by credit rating agency ICRA. This anticipated rebound comes after a 1.2% decline in FY25 and is driven by improved construction, infrastructure activity, and a stable economic outlook. However, high inventory levels and muted demand in several CV segments continue to pose challenges.

Why in News?

This topic is relevant as The commercial vehicle sector is a key barometer for economic and industrial activity. The FY26 forecast by ICRA provides insights into demand trends, consumer behavior, and investment outlook. It reflects the impact of geopolitical factors, dealer inventory conditions, and market preferences for pre-owned vehicles. The report guides manufacturers, investors, and policymakers on future growth areas and potential bottlenecks.

Key Findings from the ICRA Report

Overall CV Industry Growth (FY26)

• Expected to grow by 3–5% Y-o-Y in wholesale volumes.
• Follows a 1.2% decline in FY25.

Retail Volumes (May 2025)

• Declined 3.7% Y-o-Y.
• Dropped 11.3% sequentially, indicating high dealer inventories.

Medium & Heavy Commercial Vehicles (M&HCV)

• Retail Sales (May): Fell 4.4% Y-o-Y; down 18.9% sequentially.
• Wholesale Volumes (FY26): Projected to grow by 0–3% (after a 4% drop in FY25).

Light Commercial Vehicles (LCV – Trucks)

• Retail Sales (May): Down 3.2% Y-o-Y and 4.9% sequentially.
• Wholesale Volumes (FY26): Estimated growth of 3–5%.
• Used vehicle preference continues to affect new sales.

Bus Segment

• Expected to post 8–10% growth in FY26.
• Replacement demand is a key driver.

Factors Driving Growth

• Resumption of Construction and Infrastructure Projects
• Stable Economic Environment
• Mining Sector Recovery
• Replacement Demand

Challenges and Risks

• Elevated Dealer Inventory: Indicates mismatch between production and retail demand.
• Geopolitical Disruptions: Have caused regional slowdowns, especially affecting heavy trucks.
• Consumer Preference for Used CVs: Impacts demand for new LCVs and adds pressure on original equipment manufacturers (OEMs).