The commercial vehicle (CV) industry is set to emerge as the biggest beneficiary of the government’s recent GST reform that slashed tax on commercial vehicles to 18% from 28%, according to Shenu Agarwal, managing director of Ashok Leyland.
He said the steep GST reduction could finally provide the long-awaited trigger for replacement demand in India’s ageing truck and bus fleet. If replacement demand gathers pace, India’s CV market could surpass its 2019 peak this year.
“Everybody looks at GST as a price cut, and rightly so. People who were hesitating will now come out and buy. In CVs too, especially in medium and heavy-duty trucks, this could unleash a replacement cycle we have not seen in years,” Agarwal explained.
The average age of India’s truck fleet has crept up to 10 years, compared to the historical norm of 7–8 years. Despite regulatory pushes like BS6 and the scrappage policy, Agarwal noted that the industry lacked a strong positive trigger. “This GST cut, nearly 10% of vehicle prices, is that trigger,” he said.
Beyond the direct price effect, Agarwal highlighted the wider economic boost the reform will deliver. “GST is touching every consumer, every business, every sector. If it results in higher consumption, it will directly translate into more freight traffic, which is the CV industry’s lifeblood,” he said.
Nearly 11–12 lakh medium and heavy trucks are estimated to be over a decade old and ripe for replacement. With lower acquisition costs and rising freight opportunities, small fleet operators and retail customers — who account for nearly 60% of the market — are expected to drive demand.
The benefits are likely to be broad-based. Light commercial vehicles and small CV operators, who have been under stress, could also see relief. Banks, too, are welcoming the move, as lower ticket sizes ease financing risks. The bus segment, already in high demand with state transport undertakings and private operators, is witnessing capacity constraints, prompting Ashok Leyland to expand its fully built bus capacity to 1,650 monthly by April 2026.
Still, Agarwal cautioned that the CV industry is highly rational and revenue-driven. “Unlike cars, our sector doesn’t react purely on sentiment. Trucks cost ₹30–50 lakh, so operators take time to decide. We should wait till October–November for clearer trends,” he said.
Even so, with freight prospects strong in mining, infrastructure, and highways, Agarwal sees little by way of red flags. “If everything goes well, this year’s volumes could finally surpass 2019 levels,” he added.