Festival cheer, tax cuts fuelled strong commercial vehicle recovery in Oct

India's commercial vehicle market logged its best post-pandemic retail growth in over two years as GST cuts, freight recovery, and festive buying lifted demand across segments

India’s commercial vehicle (CV) market saw a strong festive recovery in October 2025, with retail sales rising 17.7 per cent year-on-year (Y-o-Y) to 107,841 units, according to the Federation of Automobile Dealers Associations (FADA).

 

It was the strongest post-pandemic retail performance in over two years, driven by GST rate cuts, replacement demand, and a revival in freight and infrastructure activity.

 

The overall commercial vehicle retail sales during the 42-day festive period between Dussehra and Diwali in 2025 rose 15 per cent year-on-year to 1,39,586 units as per FADA data.

 

 

The light commercial vehicle (LCV) segment led the upturn after several subdued quarters, supported by festive buying, improved freight availability, a pick-up in rural logistics, and higher e-commerce movement. Medium and heavy commercial vehicles (M&HCVs) and buses also gained traction on the back of ongoing infrastructure projects, fleet replacement, and rising inter-state passenger movement.

 

On the electrification front, EV registrations crossed the two-lakh mark for the first time, driven by strong adoption of electric three-wheelers and small commercial EVs — marking a record month for the broader EV segment.

 

Retail growth outpaced factory dispatches for most manufacturers, signalling genuine end-user demand rather than inventory push.

 

Which companies led the commercial vehicle sales recovery?

 

In October, Mahindra & Mahindra topped wholesale volumes with 44,503 units, up 18 per cent Y-o-Y, followed by Tata Motors at 35,108 units (up 7 per cent), Ashok Leyland at 16,314 units (up 16 per cent), and Maruti Suzuki’s Super Carry LCV at 4,357 units (up 23 per cent).

 

“The GST rate rationalisation, which reduced the tax rate on ICE commercial vehicles from 28 per cent to 18 per cent, is likely the key reason for the substantial Y-o-Y growth in domestic CV retail sales volumes in October 2025,” said Kinjal Shah, senior vice-president and co-group head, corporate ratings, ICRA.

 

She added that while infrastructure activity, freight movement, and rural recovery continue to support long-term growth, the tax cut has had a direct, immediate impact on buyer sentiment, particularly among small fleet operators and owner-drivers in the LCV segment.

 

Which segment drove the strongest growth in CV sales?

 

Among segments, LCVs posted the highest Y-o-Y growth at 30 per cent, aided by lower prices and improved financing. Medium commercial vehicles (MCVs) grew around 20 per cent, while heavy commercial vehicle (HCV) retail volumes declined 6 per cent, indicating a mild slowdown in large fleet replacement.

 

“The LCV segment is highly price-sensitive, dominated by small fleet owners for whom affordability plays a critical role,” Shah said. “In contrast, demand for M&HCVs depends on infrastructure, construction, and logistics sectors, which have remained stable but haven’t accelerated at the same pace.”

 

How is EV adoption shaping India’s CV market?

 

ICRA data shows EV penetration rising in buses and LCVs under the PM E-DRIVE scheme. As of mid-October 2025, electric buses accounted for 5 per cent of total bus sales, while LCV trucks and M&HCV trucks stood at 2 per cent and near zero, respectively.

 

“Since the GST rate for EVs remained unchanged at 5 per cent, there was no incremental tax-driven boost to EV demand, but adoption continues to rise, led by state transport tenders and urban delivery fleets,” Shah noted.

 

CNG/LNG models also maintained traction, particularly in LCV trucks, with 14 per cent penetration.

 

What is the growth outlook for the CV market in FY26?

 

ICRA expects domestic CV wholesale volumes to grow 3–5 per cent Y-o-Y in FY26 after two years of flattish trends. “An improving economic environment, ongoing infrastructure activity, GST rate cuts, and replacement demand from ageing fleets will support growth this fiscal,” Shah said. 

a