The domestic commercial vehicle industry's wholesale volumes are expected to register moderate growth of 4-6 per cent year-on-year this fiscal, according to ratings agency Icra. However, the broadened base effect in the second half of the previous financial year is likely to result in a year-on-year contraction in volumes in H2 FY27, as reported by Icra. This projection comes despite strong performance in recent months, with wholesale volumes showing 30.7 per cent year-on-year growth in August and retail volumes rising 20.1 per cent year-on-year. The agency expects the broadened base of H2 FY2026, due to the positive impact of GST rate cuts, is estimated to impact the growth momentum in H2 FY2027, creating a challenging environment for sustained growth.
According to Icra's analysis, medium and heavy commercial vehicles are estimated to record growth of 1-3 per cent, while light commercial vehicles are likely to see 6-8 per cent growth during the fiscal year. Bus volumes are expected to achieve 3-5 per cent year-on-year growth during the same period. The ratings agency noted that CV wholesale volumes grew by 23.4 per cent year-on-year in the first five months (April-August) of FY2027, demonstrating strong momentum in the sector. In August alone, volumes had grown 30.7 per cent YoY and 6.8 per cent sequentially, while domestic retail volumes increased 20.1 per cent YoY.
The growth momentum in domestic CV sales volume was supported by infrastructure execution, mining activity, e-commerce-linked logistics and steady financing availability, as reported by Icra. Strong growth in the light commercial vehicle segment, in particular, reflected healthy last-mile transportation activities. However, LCV retail volumes rose by 21.3 per cent year-on-year in August 2026, with a sequential decline of 9.2 per cent, indicating some moderation in demand. The volume growth momentum in the segment picked up after the implementation of the Goods & Services Tax (GST) rate cut with effect in September last year. GST rate cuts provided additional support to demand, along with improved last-mile freight movement and e-commerce activity, according to Icra.
Demand momentum for the LCV segment was positively impacted by the GST rate cuts, further supported by improved last-mile freight movement and healthy e-commerce-linked activities, according to Icra. However, elevated cost of ownership (even after the GST rate cuts) remains one of the key challenges for the segment. Retail volumes in the Medium and Heavy Commercial Vehicles (M&HCV) segment grew by 18.2 per cent year-on-year in the previous month with a sequential decline of 8.6 per cent, as reported by the ratings agency. Demand was particularly aided by increased movement of cement, steel and mining-related cargo, with rural demand, logistics activity and infrastructure-linked transportation requirements providing further support. The volume growth momentum in the segment picked up after the implementation of the Goods & Services Tax (GST) rate cut with effect in September last year.
