Commercial Vehicle Industry Poised For 3-5% Growth In FY26: Icra

India's commercial vehicle sector is set to rebound from recent challenges, with rating agency Icra projecting a moderate yet positive growth trajectory for the current financial year. The industry, which serves as a key barometer for economic activity, is poised to see dealer dispatches increase by 3-5 per cent year-on-year in FY2026.

Mixed Signals For Commercial Vehicle Market

Recent market data reveals a complex picture for the commercial vehicle industry. Domestic wholesale volumes registered a modest 6.1 per cent year-on-year growth in July 2025, though this was tempered by a sequential decline of 2.7 per cent compared to the previous month.

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This performance comes as the industry works to overcome the challenges of the previous fiscal year, which saw volumes contract by 1.2 per cent in FY2025.

Segment-Wise Growth Projections

Icra's analysis breaks down growth expectations across different commercial vehicle categories, revealing distinct trends within the sector.

"ICRA expects the domestic CV industry to post a modest year-on-year growth of 3-5 per cent in wholesale volumes in FY2026, following a marginal 1.2 per cent decline recorded in FY2025," the rating agency noted in its latest report.

Medium, Heavy Commercial Vehicles Growth Outlook

The medium and heavy commercial vehicle (M&HCV) truck segment is anticipated to experience the most conservative growth, with projections ranging from 0-3 per cent for the current fiscal year. This subdued outlook reflects ongoing market conditions and the segment's sensitivity to infrastructure development cycles.

Light commercial vehicle (LCV) trucks are expected to perform marginally better, with growth estimates of 3-5 per cent during FY2026, indicating stronger demand in the smaller truck category.

Bus Segment Emerges As Growth Leader

The buses segment stands out as the strongest performer in Icra's projections, with expectations of 8-10 per cent growth in FY2026. This robust forecast significantly outpaces other commercial vehicle categories and suggests strong underlying demand drivers.

The positive outlook for buses is attributed to multiple factors, including replacement demand cycles and increased institutional procurement activities.

Several economic factors are expected to underpin the commercial vehicle industry's recovery trajectory. Construction and mining sector activities are showing signs of improvement, which traditionally drives demand for both LCV and M&HCV truck segments.

The rating agency highlighted that a stable economic environment will be crucial for sustaining this growth momentum throughout the fiscal year.

Institutional Demand to Boost Second-Half Performance

The commercial vehicle sector, particularly the buses segment, is likely to benefit from increased institutional demand during the latter part of FY2026. State transport undertakings and private operators are expected to contribute to higher procurement volumes.

"The segment could also benefit from higher institutional demand from state transport undertakings and private operators, aiding overall volume momentum in the second half of the fiscal," Icra stated in its report.

This institutional support is expected to provide stability to the market and help sustain growth momentum beyond immediate replacement needs.

Industry Outlook

The commercial vehicle industry's moderate growth forecast aligns with broader economic indicators suggesting gradual recovery in India's industrial and infrastructure sectors. The sector's performance will continue to serve as an important indicator of economic activity levels across various industries.

The projected 3-5 per cent growth, while modest, represents a positive turnaround from the previous year's decline and suggests renewed confidence in India's commercial transportation needs.