Commercial Vehicle Sales In India Set To Hit Pre-Pandemic Levels In FY26: Crisil

According to a new Crisil report released Wednesday, India’s domestic commercial vehicle (CV) sales are likely to touch 1 million units in FY26, reaching the levels last seen before the pandemic in FY19.

The projected recovery is driven by faster execution of infrastructure projects, rising replacement demand, and government backing through initiatives like the PM-eBus Sewa scheme.

Crisil added that the sector maintains a stable credit outlook, thanks to strong liquidity and steady cash flows.

Light commercial vehicles (LCVs) are to contribute 62% of the total volume, fueled by growing e-commerce activity and warehouse expansion.

Meanwhile, demand in freight-heavy sectors like cement and mining is also likely to play a key role.

Steady Growth Expected In FY26

Anuj Sethi, Senior Director at Crisil Ratings, stated, “Domestic CV volume should grow 3-5 percent this fiscal, rebounding from last fiscal’s slowdown and aligning with the sector’s long-term growth trend.”

He noted that the pickup in infrastructure projects, especially in the last quarter of FY25, would likely continue due to a projected 10-11% rise in central government capital expenditure.

“A strong replacement cycle, expected to account for about a fifth of the volume, will further support demand,” Sethi further noted.

The report also highlights upcoming regulatory shifts, including the mandatory installation of air-conditioned cabins in trucks starting October 2025.

This is likely to raise vehicle costs by at least Rs 30,000, especially for medium and heavy commercial vehicles (M&HCVs).

To address rising compliance expenses, CV manufacturers had already raised prices by 2-3% in January.

Margins Hold Despite Cost Pressures

Despite these changes, lower input costs are likely to help manufacturers maintain operating margins of 11-12%, similar to last year’s high levels.

Capital expenditure is to rise by 12-15% due to investment in regulatory compliance and the development of electric vehicle platforms.

However, strong cash flows should help keep debt levels in check and maintain healthy balance sheets.

M&HCVs, which make up 38% of overall CV volume, are likely to grow by 2-4% this year, thanks to increased infrastructure investment in areas like construction, road building, and metro rail systems.

LCVs are likely to outpace M&HCVs with growth between 4-6%, driven by the rise of e-commerce and warehouse expansion in tier-2 and tier-3 cities.

With inflation and interest rates easing, deferred replacement of aging vehicles purchased during FY17 to FY19 will also help boost demand.

In the electric segment, the PM-eBus Sewa scheme is likely to drive growth, although current volumes remain modest at around 3,200 units.

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