CV sales growth may slow to 4-6% in FY27 as high base, financing delays weigh on demand: ICRA

India’s domestic Commercial Vehicle (CV) industry is expected to record a moderate 4-6% growth in wholesale volumes in FY27, as a higher base and delays in vehicle financing temper the pace of expansion despite healthy freight movement and replacement demand.

The outlook, outlined in a research report by ICRA, indicates that the industry’s growth trajectory remains intact but is likely to normalise after the stronger momentum witnessed in FY26. The rating agency expects light commercial vehicles (LCVs) to continue driving growth, while medium and heavy commercial vehicles (MHCVs) are likely to post modest gains.

ICRA noted that continued infrastructure spending, improving freight movement and replacement demand are expected to support wholesale volumes during the fiscal, although higher fuel costs and financing challenges remain key headwinds.

LCVs to remain the growth engine

LCV wholesale volumes are projected to grow 6-8% in FY27, making them the fastest-growing segment within the domestic CV market.

ICRA said the segment continues to benefit from improved last-mile freight movement, stronger rural demand and GST rate rationalisation. However, longer turnaround times for vehicle financing remain a key challenge and could delay purchases despite healthy underlying demand.

The ratings agency also noted that commercial vehicle retail sales in rural markets are growing faster than in urban centres, indicating that demand for goods movement is broadening beyond metro regions.

Truck and bus segments continue to grow

Wholesale volumes of MHCVs are expected to rise 1-3% in FY27.

Demand is likely to be supported by infrastructure-led freight movement and replacement demand, including school buses. However, the higher comparison base and rising fuel prices are expected to cap growth during the year.

The bus segment is projected to grow 7-9% in FY27, outpacing the truck segment. Replacement demand and improving mobility trends are expected to support volume growth, although buses continue to account for a smaller share of the overall commercial vehicle market.

Recent industry data also points to healthy underlying demand. According to ICRA, domestic commercial vehicle wholesale volumes rose 13.5% year-on-year in May 2026, although they declined 1.1% sequentially. Retail volumes increased 5.3% year-on-year during the month but fell 18.3% sequentially, reflecting a moderation after the previous month's performance.

Growth to moderate after FY26

Overall, the domestic CV industry is expected to remain on a growth path in FY27, supported by freight movement, replacement demand and infrastructure activity. According to ICRA, financing conditions and the higher base of the previous year will be the key factors determining the pace of wholesale volume growth.

The rating agency said the broadened base of FY26 is likely to have a bearing on growth momentum in the current fiscal, even as underlying demand drivers remain supportive. As a result, the industry is expected to transition from the sharp post-pandemic recovery phase to a more stable and sustainable growth trajectory in FY27.