Commercial Vehicle Segment Set For 3-5% Growth In Wholesale Volumes In FY26: ICRA

India's commercial vehicle sector is poised for a moderate recovery with projected wholesale volume growth of 3-5 per cent year-on-year (YoY) in the current fiscal, supported by renewed construction and infrastructure development alongside stable economic conditions, according to ICRA's latest industry report.

The rating agency's analysis indicates a turnaround for the sector following mixed performance in the recent months. 

Domestic commercial vehicle wholesale volumes registered minimal growth of just 0.1 per cent year-on-year in May 2025, though sequential growth reached approximately 1.6 per cent. The cumulative performance for the initial two months of FY2026 (April-May 2025) showed wholesale volumes declining 0.7 per cent compared to the same period last year.

However, retail sales presented a more challenging picture, with commercial vehicle retail volumes dropping 3.7 per cent year-on-year in May 2025. 

The sequential decline proved more severe at 11.3 per cent, attributed to excessive inventory accumulation at dealership locations across the country.

Segment-Wise Growth

The medium and heavy commercial vehicle (M&HCV) category experienced varied results in May 2025. Retail sales volumes recorded a moderate 4.4 per cent year-on-year decrease while posting a substantial 18.9 per cent sequential decline due to regional disruptions and geopolitical uncertainties affecting market conditions.

ICRA estimated that M&HCV (trucks) wholesale volumes will achieve 0-3 per cent year-on-year growth in FY2026, representing a recovery from the 4 per cent decline recorded in FY2025.

The light commercial vehicle (LCV) segment faced similar headwinds in May 2025, with retail volumes falling 3.2 per cent year-on-year and 4.9 per cent sequentially, indicating subdued demand across this category. LCV (trucks) wholesale volumes are anticipated to show limited growth of 3-5 per cent year-on-year in FY2026. 

The segment has been impacted by growing consumer preference for pre-owned vehicles over new purchases, affecting demand patterns in recent years.

Growth Outlook

ICRA expects the domestic commercial vehicle industry to achieve modest year-on-year growth of 3-5 per cent in wholesale volumes during FY2026, marking a recovery from the marginal 1.2 per cent year-on-year decline witnessed in FY2025.

The bus segment emerges as the standout performer with projected growth of 8-10 per cent year-on-year for the current fiscal, significantly outpacing other commercial vehicle categories.

The recovery is primarily driven by the resumption of construction and mining operations, which directly impacts demand for commercial vehicles used in these sectors. The stable economic environment provides additional support for businesses to invest in fleet expansion and replacement.

"While M&HCV (trucks) and LCV (trucks) segments are expected to witness modest YoY volume growth of 0-3 per cent and 3-5 per cent, respectively, the buses segment is likely to see a relatively higher growth of 8-10 per cent YoY for this fiscal. While pickup in construction and mining activities, coupled with a steady economic environment, will support demand prospects for the LCV (light commercial vehicles) and M&HCV (medium and heavy commercial vehicles) segments, replacement demand is likely to support volume growth for the buses segment," ICRA noted.