The commercial vehicle segment will most likely end flat or in the negative by the end of FY25 but this, manufacturers say, may be good news for the sector. During the April-January period, truck and bus volumes were lower by 2% year-on-year (y-o-y) at 768,000 units, according to data from Society of Indian Automobile Manufacturers (SIAM). The segment is expected to close at around 920,000 units by the end of FY25, which would be 5% lower than FY24.
Since FY25 will be the second consecutive year of muted performance by the CV segment, manufacturers are expecting high vehicle replacement demand in FY26 aided by restart of some government-funded projects that had remained static.
Speaking to FE recently, Girish Wagh, executive director, Tata Motors, said, “If Q4 is flat then that will actually be a good segue for the next year. Infrastructure projects are already coming back on track.”
Last year’s general elections followed by state polls created an impasse on new projects, especially those related to infrastructure development. With uncertainty over new project awards, the industry was anxious of investing in expanding the fleet.
“There were talks over how states allocate between capital expenditure and revenue expenditure to fund schemes. But the CV segment is cyclical and FY26 will begin after two years of muted growth,” said a top official of a CV company.
Shenu Aggarwal, MD, Ashok Leyland, said, “There is a slight bit of anxiousness on the commodity front but that should also subside within a couple of quarters. With the government capex now flowing in, with replacement demand expected to be high, next year should be a very good year.”
While CY24 saw the CV segment report 3% drop in volumes, January saw 4% rise in wholesale volumes. From an average of Rs 72,000 crore capex per month in the nine months to December, the expenditure may shoot up to Rs 92,000-95,000 crore per month in the March quarter.
“Slowdown is over now. Last 2 months we have seen a lot of activity and awarding of new projects. We have seen the government fixing some of the old projects which were not moving at the right pace,” Aggarwal added.
After hitting the all-time high sales volume of 1 million units in FY19, the CV sector has not been able to surpass that milestone ever since. However, manufacturers state that though volumes in FY24 and FY25 are lower than the peak, total tonnage during FY25 has surpassed FY19.
“The market has replaced two sub-one tonne trucks with one 5.5 tonne truck with much better power. Such changes are visible across segments. This is why the absolute CV volume may be low but tonnage is at an all-time high,” said another executive of a CV maker.
