Indian Commercial Vehicle Sector Set for a Multi-Year Upcycle as Report Forecasts Double-Digit Growth by FY27

After several years of cyclical volatility, the Indian commercial vehicle sector is entering what many analysts describe as a sustained upcycle. Recent industry reports and OEM outlooks point to double-digit growth by FY27, supported by improving freight demand, infrastructure spending, and fleet replacement cycles.

This phase is expected to be broader and more durable than previous recoveries, spanning medium and heavy commercial vehicles (M&HCVs) as well as select light commercial vehicle (LCV) segments.

What Is Driving the Commercial Vehicle Upcycle?

The current commercial vehicle upcycle is not being driven by a single factor. Instead, it reflects a convergence of structural and cyclical tailwinds.

First, freight demand in India has strengthened due to steady economic growth, manufacturing expansion, and rising e-commerce penetration. Sectors such as cement, steel, mining, and FMCG have reported higher road freight usage, directly benefiting truck utilisation.

Second, public infrastructure spending—especially on highways, logistics parks, ports, and urban development—has increased freight movement intensity. Improved road quality has also encouraged higher vehicle productivity, making fleet expansion economically viable.

Replacement Demand Returns to the Fore

One of the most important contributors to the CV industry outlook is replacement demand. During the pandemic and the BS-VI transition, many fleet operators deferred vehicle purchases. As a result, the average age of trucks on Indian roads increased.

With operating and maintenance costs rising for older vehicles, fleets are now returning to the market. This replacement cycle is particularly strong in the M&HCV segment, where aging vehicles face higher downtime and lower fuel efficiency.

M&HCV Segment Poised for Strong Growth

Most reports forecasting FY27 growth highlight the M&HCV growth forecast as a key pillar of the upcycle. Heavy trucks are closely linked to infrastructure activity, mining output, and industrial production—all of which show medium-term strength.

Improved financing availability, better resale values, and higher freight rates have also improved fleet profitability. This has restored confidence among transporters, leading to increased orders for multi-axle and tractor-trailer configurations.

Technology and Regulation Are Reshaping the Sector

Another factor influencing the Indian commercial vehicle sector is regulatory and technological change. Telematics, fleet management systems, and alternative fuels are increasingly becoming standard considerations rather than optional add-ons.

While diesel continues to dominate, the gradual introduction of electric and CNG trucks—especially in urban and short-haul applications—is reshaping fleet strategies. These trends may not drive volume growth immediately, but they are improving long-term efficiency and sustainability.

Risks That Could Temper the Upcycle

Despite the positive outlook, the upcycle is not without risks. Fluctuations in fuel prices, interest rates, and freight rates could impact fleet purchasing decisions. Global economic uncertainty may also affect export-linked freight and industrial output.

Additionally, supply chain disruptions or sharp regulatory changes could delay deliveries or raise ownership costs. However, most analysts view these risks as manageable rather than structural threats.

What This Means for Industry Stakeholders

For OEMs, the next few years represent an opportunity to scale volumes, improve margins, and introduce differentiated products. For fleet operators, this is a phase to modernise fleets and adopt efficiency-enhancing technologies.

Investors tracking the commercial vehicle upcycle should note that the recovery appears demand-led rather than inventory-driven—an important distinction that supports sustainability.

Outlook to FY27

With strong fundamentals, replacement demand, and policy support, the Indian commercial vehicle sector is positioned for steady expansion through FY27. While growth may vary by segment and year, the broader direction points toward a multi-year upcycle rather than a short-term rebound.