Domestic Commercial Vehicle Industry to Reach Record 12.4 Lakh Units in Current Fiscal Year: Crisil

Domestic Commercial Vehicle Industry Expected to Reach Record Volume in Fiscal 2027

The domestic commercial vehicle (CV) industry is projected to achieve a record overall volume of approximately 12.4 lakh units in fiscal 2027, surpassing the previous peak of fiscal 2019, according to ratings agency Crisil.

Crisil attributes this expected growth in the domestic CV industry to a strong 13 per cent rebound in the just-concluded fiscal year 2026. Several factors contributed to this recovery, including the reduction in the Goods and Services Tax (GST) rate from 28 per cent to 18 per cent in September 2025, which significantly improved purchase economics.

Additionally, the easing of interest rates, improving freight utilisation, and a pickup in infrastructure and mining activity reinforced the recovery. Domestic demand momentum is expected to continue in fiscal 2027, albeit with some growth moderation due to the higher base.

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LCVs, accounting for around 60 per cent of industry volume, are projected to grow 5-6 per cent, driven by e-commerce and last-mile delivery demand. MHCV volumes are expected to expand 4-5 per cent, supported by freight movement and infrastructure spending.

Domestic demand will remain supportive, driven by infrastructure-led activity, steady replacement demand, and continued benefits from improved affordability following the rationalisation of GST rates last year. However, exports may see some near-term disruptions due to the ongoing developments in West Asia.

Crisil's analysis is based on four CV manufacturers, who account for as much as around 94 per cent of industry volumes. The CV industry is broadly categorised into LCVs and MHCVs, with buses forming a sub-segment within each.

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Exports, at around 8 per cent of overall CV volume, may see a sharp deceleration to 2-4 per cent growth in fiscal 2027 from around 17 per cent in fiscal 2026. West Asia, accounting for nearly a quarter of exports, is the key reason, with shipping disruptions deferring dispatches rather than reflecting lost demand.

The bus segment is expected to grow 3-4 per cent in fiscal 2027, supported by replacement demand and government-led electric bus procurement. Although buses remain a small sub-segment, electrification in this category is expected to progress faster than in any other CV category.

However, rising input costs (such as steel, aluminium, and fuel) due to the geopolitical situation in West Asia may compress operating margins by 40-50 basis points, from around 12 per cent in fiscal 2026.