SATURDAY, APRIL 26, 2025
Commercial vehicle sales to reach 1 million units in FY26, reclaim pre-Covid level
Published on Apr 16, 2025
By IANS
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- NEW DELHI — The domestic commercial vehicle (CV) sales volume are projected to reach 1 million units this fiscal (FY26), reclaiming the pre-pandemic peak logged in fiscal 2019, a Crisil report said on Wednesday.
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- This is due to accelerating infrastructure execution, replacement demand and policy support from the PM-eBus Sewa scheme. The sector’s credit outlook remains stable, supported by strong liquidity and healthy cash flows.
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- Light commercial vehicles (LCVs), which will be 62 per cent of total volume, will lead the growth, driven by rising penetration of e-commerce and warehousing, while a pickup in freight-intensive sectors such as cement and mining will boost overall demand.
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- “Domestic CV volume should grow 3-5 per cent this fiscal, rebounding from last fiscal’s slowdown and aligning with the sector’s long-term growth trend,” said Anuj Sethi, Senior Director, Crisil Ratings.
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- The recovery will be driven by a revival in infrastructure execution – an anchor for CV demand – which gained momentum in the last quarter of fiscal 2025 and is likely to sustain on the back of a 10-11 per cent rise in central government capex.
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- “A strong replacement cycle, expected to account for about a fifth of the volume, will further support demand,” Sethi added.
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- Regulatory changes will reshape the CV landscape this fiscal, with mandatory air-conditioned cabins in trucks from October 2025 likely increasing costs by at least Rs 30,000 per unit, particularly for medium and heavy commercial vehicles (M&HCVs).
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- For the record, CV makers have already increased prices by 2-3 per cent in January to offset the rise in compliance costs.
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- Softening input costs should support an operating margin of 11-12 per cent in line with the decadal high logged last fiscal.
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- While capital expenditure (capex) for regulatory upgrades and electric platform development will rise 12-15 per cent, strong cash flows will keep debt levels low and balance sheets healthy.
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- The M&HCV volume, comprising 38 per cent of total volume, is expected to grow 2-4 per cent this fiscal, led by increased infrastructure spending across construction, roads and metro-rail projects.
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- LCVs may grow faster at 4-6 per cent, driven by ecommerce-led deliveries and expansion of warehouses in tier 2 and 3 cities.
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- Easing inflation and interest rates will boost deferred replacement demand from the ageing fleet bought during fiscals 2017-2019, thus supporting overall growth, said the report.
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- In the electric bus segment, the PM-eBus Sewa scheme will catalyse demand, albeit on the current base of 3,200 units.
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