Indian Commercial Vehicle Sector Set for Multi-Year Upcycle; Report Forecasts Double-Digit Growth by FY27
The Indian Medium and Heavy Commercial Vehicle (M&HCV) industry is entering a new phase of expansion, driven by a massive wave of replacement demand and improving fleet economics. According to a comprehensive report by Nomura, the sector is projected to shake off recent modest growth to post volume gains of 8% in FY26 and 10% in FY27.
Key Growth Drivers
The primary engine behind this recovery is the aging national truck fleet. The report estimates the average age of trucks in India is currently around 10 years, a threshold that traditionally triggers a massive replacement cycle. This demand is expected to peak between FY27 and FY28.
Several other fundamental factors are aligning to support this upcycle:
Rising Freight Rates: Higher rates are bolstering the bottom lines of fleet operators, providing them with the necessary cash flow to upgrade their fleets.
GST Efficiencies: Tax rationalization has improved vehicle affordability and reduced operational bottlenecks, further incentivizing new purchases.
Macroeconomic Tailwinds: Anticipated acceleration in economic growth, coupled with potential interest rate cuts and rising consumption, could push FY27 growth even higher than current estimates.
Limited Impact from Dedicated Freight Corridors (DFC)
Addressing industry concerns that the expansion of rail-based freight corridors might cannibalize road transport, Nomura remains optimistic. The report notes that while the Eastern and Western DFCs are now roughly 96% operational, they primarily handle bulk cargo.
Crucially, non-bulk cargo—which accounts for approximately 30% of total freight—remains heavily dependent on road transportation. Due to the highly diversified nature of the Indian freight market, the brokerage expects the overall impact on truck demand to remain limited.
Market Leaders Positioned to Gain
The report highlights Tata Motors (TMCV) as a major beneficiary of this trend. With a dominant 46% market share in the domestic M&HCV segment, the company is well-positioned to capture the lion’s share of the recovery.
A Note of Caution: Sub-Segment Normalization
While the outlook is overwhelmingly positive, Nomura did flag potential normalization in the tractor-trailer segment. This specific sub-segment saw its market share leap from 9% in FY21 to 22% in FY25. Because tractor-trailers compete more directly with rail for bulk movement, growth in this specific niche may stabilize as the broader industry catches up.
The report characterizes the current environment as the “early stages” of an upcycle. With industry volumes still below the peak levels seen in FY19, there is significant “headroom” for growth, making the commercial vehicle sector a key space for investors to watch as India’s infrastructure and logistics sectors continue to modernize.
