CVs see broad rebound in FY26; war tensions a near-term drag

Chennai: After two sluggish years, the Indian commercial vehicle (CV) sector staged a broad-based recovery in FY26, driven by policy support and improving demand fundamentals. While the industry is hoping to sustain strong momentum in FY27, the ongoing West Asia conflict is likely to act as a near-term drag rather than a structural disruption.FY26 marked a turnaround year for the CV industry, with the demand inflection largely driven by the GST rate cut from 28% to 18%. The tax cut materially improved purchase economics by lowering upfront acquisition costs, thereby unlocking deferred demand. "This policy-led trigger, alongside improving freight availability, infrastructure and mining activity, and a revival in replacement demand, supported a broad-based recovery, translating into 10–11% volume growth for the overall CV industry. Within this, the M&HCV segment delivered 8%–9% growth, as freight-linked utilisation and replacement demand strengthened. Overall, the sector exited FY26 on a firm footing," said Poonam Upadhyay, director, Crisil Ratings. Following a marginal decline in FY25 and flat volumes in FY24, the fiscal ended March 31, 2026, saw most CV makers report strong volume growth across segments, even as final industry data is awaited. Top CV maker Tata Motors Commercial Vehicles reported a 12% rise in total domestic CV sales to over 4 lakh units in FY26, with heavy trucks and intermediate, light and medium truck segments growing 13% and 19%, respectively. Heavy truck sales rose to 1.20 lakh units from 1.06 lakh units in FY25. "FY26 saw a subdued first half for the CV industry, followed by a decisive recovery in H2 as demand conditions improved with the rollout of GST 2.0, gaining momentum through Q3 and Q4," said Girish Wagh, MD & CEO, Tata Motors. VE Commercial Vehicles Ltd (VECV) reported its highest-ever annual CV sales, crossing 1 lakh units for the first time, supported by double-digit growth across segments. Hinduja Group flagship Ashok Leyland reported 12% growth in M&HCV volumes to 1.28 lakh units. The impact of the West Asia conflict is expected to be felt through potential volatility in fuel costs, higher freight and logistics expenses, shipping delays, and pressure on working capital, which could weigh on fleet operator profitability and delay purchase decisions."This could reflect in a relatively softer Q1 FY27. However, core domestic demand drivers—particularly infrastructure-led freight, mining activity, and replacement demand—remain intact. As these headwinds stabilise, momentum is likely to revive in subsequent quarters," Upadhyay added.