Domestic Commercial Vehicle Sales Expected To Hit Pre-Pandemic High In FY26: Crisil

India's domestic commercial vehicle (CV) sales are set to cross the 1-million-unit mark in FY26, matching the peak last seen in FY19, according to a recent report by Crisil Ratings. The forecast reflects a rebound in demand driven by infrastructure activity, vehicle replacement needs, and supportive government initiatives, including the PM-eBus Sewa scheme.

The credit outlook for the sector remains stable, supported by robust liquidity positions and steady cash flows. Light commercial vehicles (LCVs) are expected to play a dominant role in this resurgence, accounting for around 62 per cent of total volumes. Their growth is being fuelled by the expanding e-commerce sector and increased warehousing, especially in smaller cities.

Crisil projects overall CV volume growth at 3–5 per cent in the current fiscal year, recovering from a slowdown in FY25. This growth aligns with the industry’s long-term trend, said Anuj Sethi, Senior Director at Crisil Ratings. A key driver behind this recovery is the pickup in infrastructure execution, which gained pace in the final quarter of FY25 and is expected to remain strong, backed by a 10–11 per cent increase in central government capital expenditure.

Additionally, a robust replacement cycle is forecast to contribute nearly 20 per cent of total volumes this year. Meanwhile, regulatory changes such as the mandatory implementation of air-conditioned cabins in trucks from October 2025 are expected to raise vehicle costs by at least Rs 30,000 per unit, particularly impacting medium and heavy commercial vehicles (M&HCVs).

To offset these rising compliance costs, manufacturers implemented a price hike of 2–3 per cent in January. Nonetheless, easing input costs are likely to help maintain operating margins in the range of 11–12 per cent, comparable to the high levels seen last year.

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Regulatory Upgrades

Despite increased capital expenditure, estimated to grow by 12–15 per cent on regulatory upgrades and electric vehicle platform development, the sector is expected to remain financially resilient. Strong operating performance is likely to keep debt levels in check and balance sheets healthy.

Segment-wise, M&HCV volumes, which constitute about 38 per cent of total sales, are expected to grow 2–4 per cent this year, supported by investments in roads, construction, and metro rail projects. LCVs are projected to grow faster at 4–6 per cent, driven by last-mile delivery demand and warehouse expansion in tier-2 and tier-3 cities.

Crisil also noted that moderating inflation and interest rates would likely trigger deferred replacement demand, especially for vehicles acquired during FY17–FY19. In the electric bus category, the PM-eBus Sewa initiative is expected to spur incremental demand, building on the current fleet of around 3,200 units.

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