LCV segment set for modest rebound in FY26 amid economic tailwinds

Bada Dost, Ashok Leyland’s small commercial vehicle

After a subdued performance in FY25, India’s light commercial vehicle (LCV) segment is poised for a rebound in FY26, with industry representatives and analysts projecting single-digit growth on the back of improving economic indicators and rising demand from consumption-led sectors.

While the overall commercial vehicle (CV) market showed mixed trends, the LCV segment, in particular, reported flat year-on-year growth in the fourth quarter of FY25. However, sequentially, it registered a 7 per cent uptick —signaling early signs of a recovery.

The industry believes that multiple tailwinds could drive growth in FY26. “We see mid-single-digit growth in contrast to a mild de-growth that was seen last year,” said Amandeep Singh, President – LCV, International Operations, Defence and Power Solutions, Ashok Leyland.

“The full-year decline of 2 per cent was largely due to a sharp dip in Q2 FY25, compounded by base effects and rising competition from electric three-wheelers in the sub-1-tonne small commercial vehicle (SCV) segment, which makes up 20-22 per cent of total LCV volumes,” said Poonam Upadhyay, Director at Crisil Ratings. “However, this competitive pressure is mainly limited to the lower-tonnage SCV category.”

According to Upadhyay, LCV volumes are expected to rebound by 4-6 per cent, supported by replacement demand, improved economic activity, last-mile delivery requirements, and the expansion of warehousing facilities in Tier-2 and -3 cities.

M&HCV segment rebounds

In contrast, the Medium and Heavy Commercial Vehicle (M&HCV) segment has already started showing signs of a structural recovery. The segment posted a 4 per cent increase in Q4 FY25, buoyed by infrastructure execution in roads, metro, and construction projects. With a projected 10-11 per cent increase in central government capital expenditure, the momentum in the M&HCV segment is expected to continue into FY26. Replacement demand, particularly from ageing bus fleets, is also expected to support volume growth.

Overall, domestic commercial vehicle volumes — including both LCV and M&HCV segments — are projected to grow by 3-5 per cent in FY26, with the passenger segment (both LCV and M&HCV) also contributing to the recovery.

Published on April 18, 2025