Commercial Vehicle Sales Expected to Soar FY26

Commercial vehicle sales in India are projected to hit new highs in FY26 and FY27, driven by replacement demand following tax rationalisation and ongoing infrastructure development. Industry leaders expect this momentum to continue as the average age of the commercial vehicle fleet reaches an all-time high.

Replacement Demand Spurs Growth

After the GST cut on most commercial vehicles, including trucks, pick-ups, buses, and three-wheelers, from 28% to 18% effective September 22, 2025, sales surged. The Society of Indian Automobile Manufacturers (SIAM) reported a 21.5% year-on-year increase in CV sales to 290,085 units during the October-December 2025 quarter. From April to December, total CV sales rose 10% year-on-year to 754,067 units.

Shenu Agarwal, managing director and CEO of Ashok Leyland, highlighted that if the current momentum continues, FY26 and FY27 could mark the best years for the industry. The surge is expected to persist, particularly because the average age of CVs on Indian roads has risen to 11 years, significantly above the usual 7-8 years.

Infrastructure and Utilisation Drive Volumes

The increase in CV sales is further supported by higher utilisation levels, a revival in construction and mining activities post-monsoon, and continued government investment in infrastructure projects. Girish Wagh, managing director and CEO of Tata Motors, noted that intermediate, light, and medium commercial vehicles (ILMCVs) have seen the strongest growth, followed by small commercial vehicles and heavy-duty trucks.

He added that freight demand has been rising 5-6% in billion tonne-kilometre (BTKM) terms, reflecting growing carrying capacity and a shift toward larger multi-axle trucks. With economic activity and GDP growth, Wagh expects healthy volume increases in the months ahead.

Fleet Composition and Market Dynamics

Ashok Leyland estimates that 4.8 million medium, heavy, and light commercial vehicles aged between 10 and 15 years are currently on Indian roads, including 1.9 million MHCVs and 2.9 million LCVs. This replacement potential is a major factor supporting strong demand in FY26.

Tata Motors and Ashok Leyland together account for 53% of CV volume sales in India. With sectors such as automobiles, automotive components, steel, cement, and e-commerce showing rising transport demand, the overall market is expected to maintain strong growth.

Economic Outlook Supports Growth

India’s economy is projected to grow 7.4% in 2025-26, according to the National Statistics Office’s first advance GDP estimate. This acceleration compared to FY25’s 6.5% growth reinforces confidence in the commercial vehicle market as a barometer of economic activity.

With replacement demand, tax incentives, and government-backed infrastructure projects driving sales, FY26 is shaping up to be a landmark year for India’s commercial vehicle industry.