Anticipated Moderate Expansion in LCV and MHCV Sales for FY26, According to CareEdge Ratings Report
India's commercial vehicle sector is gearing up for a rebound year in the financial year 2026 (FY26), according to a report by CareEdge Ratings. The predicted growth is moderate, with an overall expansion of between 2% and 5%.
Breaking down the growth projections by segment, the Light Commercial Vehicles (LCV) are expected to grow by 2–4%, driven by demand from e-commerce, farm logistics, small businesses, and improved financing conditions for small fleet operators. The Medium and Heavy Commercial Vehicles (MHCV) segment, on the other hand, is projected to grow slightly higher, at 4–6%. This growth is supported by increased infrastructure activity, vehicle replacement due to aging fleets, particularly in the bus segment, road tax concessions under the scrappage policy, and the transition to electric vehicles.
The overall outlook for the industry is cautiously optimistic, with supportive factors such as policy reforms, easier financing due to recent interest rate cuts, stronger rural demand backed by a normal monsoon forecast, and ongoing technological advances, including electric vehicle adoption.
The recovery in commercial vehicle (CV) sales is expected to be driven by increased infrastructure activity, improved rural sentiment, and more attractive vehicle financing. The MHCV segment, which constitutes 80% of the MHCV segment, recorded a decline of 2.7% in FY25 due to subdued freight activity, delayed infrastructure projects, and high interest rates. However, the report notes that the Indian CV industry is expected to grow marginally in FY26 with many of the issues behind us.
In FY25, the MHCV trucks segment was affected by lower government spending on infrastructure, the general elections, and an extended monsoon. However, the buses within the MHCV segment registered a 21.6% increase, driven by rising demand for public transport, government fleet replacement initiatives, and the ongoing transition to electric buses.
The LCV segment, impacted by increased competition from the electric cargo three-wheeler segment and cautious financing sentiment among small fleet operators, is expected to grow by 2-4% in FY26. Rising volumes in the bus segment, driven by ongoing fleet replacement, will further contribute to overall growth in MHCV sales in FY26.
Road tax concessions available for new vehicles under the scrappage policy for older vehicles are also contributing to the recovery. The transition to electric vehicles is also a factor in the recovery of the CV industry.
The article is published by India, an international franchise of Media, marking a positive outlook for the Indian commercial vehicle sector in the coming year.
Sales growth in the Light Commercial Vehicles (LCV) segment is projected to be driven by factors such as demand from e-commerce, farm logistics, small businesses, and improved financing conditions for small fleet operators, potentially reaching a growth of 2–4%.
The overall sales growth in the sports of sports utility vehicles (SUVs) and passenger vehicles (PVs), though not explicitly mentioned in the text, might also benefit from the supportive factors such as policy reforms, easier financing due to recent interest rate cuts, stronger rural demand backed by a normal monsoon forecast, and ongoing technological advances, including electric vehicle adoption, which can indirectly contribute to these sectors.
