ICRA Projects 3-5% Growth in Commercial Vehicle Sales for FY26

Introduction

India’s commercial vehicle industry may grow 3-5% in FY26, ICRA said on Monday. This comes after a 1.2% fall in FY25 wholesale volumes. The expected recovery reflects a stable economy and rising infrastructure vehicle demand.

ICRA’s latest report shows that a pickup in construction and mining activities will likely support the CV industry outlook. A strong base in infrastructure, along with steady macroeconomic conditions, will help the industry grow.

Weak Start to FY26, But Signs of Recovery

In April–May FY26, CV wholesale volumes dropped 0.7% year-on-year. However, in May alone, sequential growth stood at 1.6%, with a minor 0.1% rise year-on-year. This mixed trend reflects an uneven start to the fiscal year.

Retail volumes tell a similar story. In May 2025, CV retail sales dropped 3.7% year-on-year and 11.3% month-on-month. Dealerships are seeing high inventory levels, which are slowing down new demand.

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Segment Outlook: M&HCV and LCV trucks stay weak; buses rebound.

In May, medium and heavy commercial vehicle (M&HCV) retail sales declined 4.4% year-on-year and 18.9% sequentially. ICRA expects this segment’s wholesale volumes to grow 0–3% in FY26, after a 4% drop in FY25.

For light commercial vehicles (LCV trucks), retail volumes in May dropped 3.2% year over year and 4.9% month over month. The segment has been affected by a growing preference for pre-owned vehicles, which has weakened demand for new units. Still, ICRA forecasts 3–5% growth in LCV truck wholesale volumes this fiscal year.

The bus segment shows stronger momentum. Here, ICRA expects 8–10% year-on-year growth in FY26. Fleet operators and public transit agencies, in particular, will drive this growth.

Growth-anchored economic activity

ICRA identifies several key growth drivers:

• Steady construction and mining projects, which need more vehicles.
  
• Improving economic sentiment boosts demand.
  
• Fleet replacements, particularly in the bus segment, support volume growth.
  

Despite regional disruptions and geopolitical noise recently, the industry shows signs of recovery. The ICRA commercial forecast indicates that wholesale volumes for commercial vehicles in FY26 will rebound as macro conditions remain stable.

Conclusion

The commercial vehicle growth forecast reflects cautious optimism. Although the year started with soft numbers, ICRA’s projections show a clear recovery path, led by infrastructure and economic stability. For both M&HCV and LCV buses, the road ahead seems better aligned with market demand and fleet renewal needs.

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