CV wholesales rise in May, though ICRA forecasts slower growth in FY27

Commercial vehicle wholesales rose 13.5 per cent in May, supported by GST cuts and a favourable base, but ICRA expects growth to moderate to 4-6 per cent in FY27

India's commercial vehicle (CV) industry maintained its growth momentum in May, with wholesale volumes rising 13.5 per cent year-on-year (Y-o-Y), supported by the lingering impact of goods and services tax (GST) rate cuts and a favourable base. However, sales eased marginally on a sequential basis, indicating a gradual normalisation in demand after a strong recovery in recent months.

 

According to Icra, domestic CV wholesale volumes declined 1.1 per cent from the previous month but remained robust on an annual basis. In the first two months of FY27, wholesale volumes were up 15 per cent Y-o-Y. Retail sales also remained positive, growing 5.3 per cent Y-o-Y in May, although they fell 18.3 per cent sequentially.

 

The ratings agency said demand was broadening beyond urban centres, with rural markets recording stronger year-on-year retail growth than cities, reflecting improving freight movement across non-metro regions.

 

The light commercial vehicle (LCV) segment continued to outperform, with retail volumes increasing 7.7 per cent Y-o-Y in May, aided by GST-driven demand and stronger last-mile logistics activity. However, financing delays remain a challenge for the segment. LCV retail sales had grown 12.4 per cent in FY26.

 

The medium and heavy commercial vehicle (M&HCV) segment reported a more modest 1.9 per cent Y-o-Y increase in retail volumes. While infrastructure-led freight demand and school bus replacement supported sales, higher fuel prices during May weighed on fleet operators' purchasing decisions. M&HCV retail volumes had risen 10.1 per cent in FY26.

 

Looking ahead, Icra expects the domestic CV industry to register a moderate 4-6 per cent growth in wholesale volumes during FY27 as the high base of FY26 tempers growth. The agency expects M&HCV truck volumes to grow 1-3 per cent, LCV trucks 6-8 per cent, while the buses segment is projected to expand 7-9 per cent during the fiscal. The outlook broadly aligns with industry expectations, with Tata Motors also forecasting single-digit growth for the domestic CV market this year, supported by replacement demand, infrastructure spending and improving freight movement, even as commodity inflation and fuel prices remain near-term challenges.

 

The agency said that although replacement demand, infrastructure spending and improved freight movement should continue to support the industry, the broadened base of the previous fiscal and cost pressures are likely to moderate the pace of growth.