Indian commercial vehicle industry to see 3-5% growth in FY26: Icra

ICRA projects modest 3-5 per cent growth for CV sector in FY26 on infrastructure revival, with buses outpacing other segments at 8-10 per cent growth

The Indian commercial vehicle (CV) industry is expected to register a modest 3–5 per cent year-on-year (YoY) growth in wholesale volumes in FY2026, driven by the revival in construction and infrastructure activities and a stable macroeconomic environment, according to ratings agency ICRA.

 

This comes after the industry saw a marginal 1.2 per cent decline in volumes in FY2025. While the light commercial vehicle (LCV) and medium and heavy commercial vehicle (M&HCV) segments are likely to see limited growth of 3–5 per cent and 0–3 per cent, respectively, the bus segment is projected to lead with a sharper 8–10 per cent YoY increase in volumes, supported by replacement demand and fleet expansion. 

 

In May 2025, overall domestic CV wholesale volumes remained flat with a marginal 0.1 per cent YoY uptick, while retail volumes declined by 3.7 per cent YoY and 11.3 per cent sequentially. For the first two months of FY2026 (April–May), wholesale volumes contracted 0.7 per cent YoY, reflecting continued inventory build-up and subdued retail sentiment.

 

The LCV segment saw a 3.2 per cent drop in retail sales in May 2025 compared to the same month last year, and a 4.9 per cent dip sequentially, with demand impacted by increasing customer preference for pre-owned vehicles. Wholesale volumes for LCV (trucks) are expected to grow 3–5 per cent in FY2026.

 

In the M&HCV category, retail volumes fell 4.4 per cent YoY and nearly 19 per cent month-on-month in May 2025, affected by regional disruptions and ongoing geopolitical challenges. Wholesale volumes for the segment are projected to grow by only 0–3 per cent in FY2026, after a 4 per cent decline in FY2025.

 

Despite the near-term weakness, ICRA expects the industry’s growth momentum to gradually improve, supported by resumed infrastructure and mining activities and a stable economic outlook that could help rebalance inventory levels and revive demand.