Despite bumpy ride, India's CV industry hopeful of growth in FY25

India’s commercial vehicle (CV) sector has had a bumpy ride in the first half of fiscal year 2025, but industry leaders remain optimistic about the road ahead. While tepid demand marked the initial six months, the second half is poised for recovery buoyed by infrastructure spending and evolving market dynamics.

Girish Wagh, executive director at Tata Motors, was cautiously optimistic during a recent earnings call. “Looking ahead, we expect the gradual increase in infrastructure spending to boost consumption and improve the demand,” he remarked. Wagh anticipates a revival across most CV segments, particularly in buses and vans, which are set to outperform last year’s levels. Intermediate, light and medium commercial vehicles (ILMCVs) are also likely to record similar or improved growth compared to fiscal year 2024.

“We have a positive bias on H2 numbers for small commercial vehicle (SCV), pickups and heavy commercial vehicles (HCVs),” Wagh added, referencing October’s data that suggests flat to marginally positive growth for these segment. Buses, in particular, have seen “very healthy utilisation,” with strong demand driven by school transportation and intra- and inter-city travel.

The evolution of customer preferences is also shaping segment-specific growth patterns. Within ILMCVs, demand is increasingly concentrated in the 19-tonne category, the largest sub-segment. Similarly, HCVs are witnessing a shift toward 55-tonne tractor-trailers, reflecting greater reliance on these vehicles for cargo transport. SCVs, meanwhile, are trending toward higher payload pickups, signalling a focus on enhanced efficiency and productivity.

Shenu Agarwal, managing director and CEO of Ashok Leyland, highlighted the mixed performance in the medium and heavy commercial vehicle (MHCV) segment. “The MHCV industry started off on a good note this year with 10% growth in Q1,” he noted during an analyst call. However, Q2 saw a 12% decline that’s largely attributable to seasonal disruptions such as extreme weather, erratic rainfall and slow execution of government capital expenditure projects.

“These are temporary factors,” Agarwal reassured. “We remain optimistic about industry prospects for H2 and also for the medium term.” He cited a report by credit rating agency ICRA, which projects modest annual growth of 0-3% for MHCV trucks. Achieving this, however, hinges on an H2 expansion of 6-10%. “There is a positive narrative building up,” Agarwal emphasised, underscoring the broad industry consensus that Q2 challenges were transitory.

Meanwhile, Vinod Aggarwal, managing director and CEO of VE Commercial Vehicles Ltd., struck a similar note of resilience. He pointed to the Indian economy’s relative stability despite geopolitical turbulence, uneven monsoons, and disruptions linked to elections. “With the pro-growth budget prioritising investments in infrastructure, we expect commercial vehicle demand to rebound in the second half of this fiscal year,” Aggarwal said during a recent analyst call. He emphasised that infrastructure spending remains a crucial driver for the CV industry, which relies heavily on government-led investments to sustain demand.

While fiscal 2025 began with muted activity in the CV sector, the outlook for the latter half of the year appears more encouraging. A combination of increasing infrastructure investments, recovering market confidence, and shifting consumer preferences is expected to steer the industry back on track. Yet, challenges such as unpredictable weather patterns and lingering policy delays underscore the need for vigilance. For now, optimism among India’s CV leaders suggests that, after a cautious H1, the wheels of growth are set to turn faster in H2.