New Delhi [India], December 25 (ANI): According to a Nomura report, the Indian Medium and Heavy Commercial Vehicle (M&HCV) industry appears to be entering its next upcycle, with industry volumes projected to grow by approximately 8 percent year-on-year in FY26 and 10 percent in FY27, following a period of modest growth.
The report states that improved industry fundamentals are likely to support demand in the medium term. It says that rising freight rates, improved affordability due to lower GST, and the higher average age of trucks – currently estimated at around 10 years – are expected to boost replacement demand, particularly during FY27-28.
“The M&HCV industry appears to be entering its next upcycle… We believe these are still the early stages of the CV upcycle,” it added.
All these factors are collectively improving the economics for fleet operators and supporting a recovery in volumes.
Nomura’s analysis reveals a clear improvement in the profitability of fleet operators, driven by better freight rates and the benefits of GST-related cost efficiencies.
Consequently, fleet operators are experiencing stronger cash flows, leading to improved replacement demand and greater confidence in purchasing new vehicles.
The report states that it remains positive on the commercial vehicle sector, citing the strong potential for a cyclical upturn and improved demand visibility.
The report also notes that the current phase still represents the early stages of the CV upcycle, as industry volumes have not yet surpassed the peak levels seen in FY19.
According to Nomura, if economic growth accelerates, industry growth in FY27 could be even stronger, supported by higher consumption and lower interest rates.
Addressing concerns about the impact of the Dedicated Freight Corridor (DFC), Nomura stated that demand risks from the DFC are limited. The Eastern and Western Dedicated Freight Corridors (DFCs) are now approximately 96 percent operational, but non-bulk cargo—which accounts for about 30 percent of total freight—still largely relies on road transport.
Given the large and diverse freight base served by commercial vehicles, the report does not expect any significant impact on overall truck demand.
However, Nomura cautioned that some normalization might be observed in certain specific sub-segments. Tractor-trailers, which directly compete with bulk rail movement, have seen their share in the industry mix increase sharply, from approximately 9 percent in FY21 to 22 percent in FY25.
Overall, the report emphasized that structural drivers such as replacement demand, improved fleet economics, and supportive macroeconomic conditions position the Indian Medium and Heavy Commercial Vehicle (M&HCV) industry for a sustained recovery in the coming years.
