Will India's MHCV Industry Regain Momentum Next Year? Nomura Weighs In

After India's commercial vehicle (CV) sales registered 20% growth in November, brokerage firm Nomura expected a renewed momentum and deliver 8% to 10% year-on-year (YoY) growth in the upcoming fiscal year, as against 4% to 5% recorded earlier.

The key players in MHCV industry that stand to benefit largely "from the domestic CV up trend are Ashok Leyland, and Tata Motors CV (TMCV). 

The newly-listed commercial vehicle entity of Tata Motors. continues to have an edge “despite its high overseas exposure, as we estimate its acquisition of IVECO’s CV business to be value”. 

What Could Bolsters Sales of Medium & Heavy Commercial Vehicles (MHCV) ?

Freight rates: Firmer freight rates could help strengthen the profitability of fleet operators across the ecosystem creating a more favourable backdrop for new CV purchases and, in turn, could help trigger replacement demand.

GST cuts: The next-gen GST have improved operator margins and have also enabled affordability amongst higher-tonnage trucks, thereby aiding industry momentum.

Average fleet age: The average age of trucks is now close to 10 years, significantly above the long-term norm of ~7.5 years, thus highlighting the likelihood of a replacement cycle.

Regulatory norms: A series of safety and braking regulations becoming effective around FY27F–FY28F are likely to trigger pre-buying. This, we believe, could lift MHCV volumes in the near term due to pre-buying, as these norms could further increase the cost of vehicles.

As a result, the global brokerage entity estimated "MHCV volumes at 404k units, +8%/ 444k units, +10% /466k units, +5% for FY26F/27F/28F, respectively."

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Meanwhile, for Light Commercial Vehicles (LCVs) it expected “volumes at 646k units, +8% /698k units, +8% /733k units, +5% for the same period.”