Daijiworld Media Network- Mumbai
Mumbai, Apr 16: India's domestic commercial vehicle (CV) market is set to roar back to pre-Covid levels, with sales expected to touch 1 million units in FY26, as per a report released by Crisil Ratings on Wednesday. This marks a significant rebound, matching the peak volumes of fiscal 2019, driven by accelerating infrastructure projects, growing replacement demand, and supportive government policies such as the PM-eBus Sewa scheme.
Light commercial vehicles (LCVs) are poised to be the major growth driver, contributing to 62% of the total volume, fueled by booming e-commerce logistics and warehousing expansion, especially in tier 2 and 3 cities.
“Domestic CV volume should grow 3-5% this fiscal, rebounding from last year’s sluggish performance and syncing with the sector’s long-term trajectory,” stated Anuj Sethi, Senior Director, Crisil Ratings.
The revival is attributed to the sharp pickup in infrastructure execution seen towards the end of FY25, with central government capital expenditure projected to rise 10-11%, spurring demand for both LCVs and medium & heavy commercial vehicles (M&HCVs). Crisil estimates that replacement demand alone will account for about 20% of total sales this year.
However, regulatory shifts are also on the horizon. From October 2025, air-conditioned cabins will be mandatory in trucks, likely hiking M&HCV costs by around ?30,000 per unit. Manufacturers have already increased vehicle prices by 2-3% in January to cushion rising compliance expenses.
Despite the cost pressures, softening input prices and improved operating efficiency are expected to help the industry maintain robust operating margins of 11-12%, near the decade-high levels seen in FY25.
Crisil also notes that capex in the CV sector will jump 12-15%, aimed at regulatory upgrades and the development of electric vehicle (EV) platforms. However, strong liquidity and stable cash flows will ensure low debt levels and a healthy financial outlook for the industry.
While M&HCV volumes are projected to grow 2-4%, riding on rising investment in roads, metros, and construction, LCVs are expected to outperform with a growth rate of 4-6%, thanks to the steady rise of online retail and logistics.
In the electric bus category, the PM-eBus Sewa scheme is set to act as a catalyst, building on the current modest base of 3,200 units, the report added.