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After years of slowdown, India’s truck and bus market may be turning a corner: Nomura
India’s commercial vehicle sector may be entering an upcycle as freight rates improve, GST cuts aid affordability and replacement demand builds, Nomura said.
India’s commercial vehicle (CV) industry is showing early signs of a cyclical recovery, supported by improving operating conditions and structural tailwinds, according to a recent report by Nomura.
The brokerage expects the upturn to play out over the next two to three years after a prolonged phase of subdued growth. Nomura estimates that volumes in the medium and heavy commercial vehicle (M&HCV) segment could grow at an annual rate of 8–10 per cent between FY26 and FY28, marking the start of the next upcycle for the industry.
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Why fleet operators are in a better place now
A key driver identified in the report is the improvement in fleet operator economics. Nomura notes that freight rates have strengthened while operating costs have remained largely stable, resulting in better profitability across the logistics ecosystem. Despite only moderate growth in revenues, profits after financing costs have improved meaningfully, helping operators repair balance sheets and strengthen cash flows.
Policy changes related to taxation have also played a role in supporting demand. Recent GST reductions have lowered the upfront cost of acquiring trucks, improving affordability and easing monthly repayment pressures. According to Nomura, these changes have structurally improved return profiles for fleet owners, particularly in the medium and heavy segments, encouraging a gradual return of purchase activity.
The replacement cycle is coming back into focus
The ageing nature of India’s truck fleet is another important factor underpinning the recovery outlook. Nomura estimates that the average age of trucks on Indian roads is now close to 10 years, significantly higher than historical replacement benchmarks. This sets the stage for replacement-led demand over the medium term, as older vehicles become costlier to maintain and less efficient to operate.
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What regulations and exports could add to the momentum?
Regulatory changes are also expected to influence buying behaviour. Nomura pointed to upcoming safety and braking norms scheduled over the next few years, which are likely to push vehicle prices higher. This could lead to pre-buying ahead of regulatory deadlines, providing a temporary boost to volumes.
The report also flagged improving export trends and a pickup in infrastructure spending as additional positives. Demand in the light commercial vehicle segment has already improved following GST cuts, while new model launches across powertrains are expected to support the near-term outlook.
Overall, Nomura believes the combination of stronger fundamentals, policy support and replacement demand has improved visibility for a sustained recovery in India’s commercial vehicle market.
(With inputs from ANI)
