ICRA, one of the leading ratings agency, expects the domestic commercial vehicle industry’s wholesale volumes to witness a nominal YoY growth of 0-3 percent in FY2025, against the earlier estimated decline of 4-7 percent. This follows a better-than-expected volume growth in 4M FY2025 and expectations of a marginal uptick in demand in the second half of the fiscal. 

FY2025 will be the second consecutive year of muted growth after a 1 percent and 3 percent YoY growth in wholesale and retail sales, respectively, in FY2024.

Kinjal Shah, Senior Vice-President & Co-Group Head – Corporate Ratings, ICRA: “A range of factors such as the slowdown in infrastructure activities during the General Elections, as well as extreme heatwaves across the country, had some bearing on demand in Q1 FY2025. However, volumes in this period exceeded ICRA’s expectations. Looking ahead, ICRA expects a recovery in volumes in H2 FY2025 aided by a back-ended government capex, some pick-up in private capex across manufacturing sectors, and an improvement in rural demand, following visibility around the Kharif crop output and farm cash flows. The replacement demand would also remain healthy (primarily due to the ageing fleet) and is expected to support the industry volumes in the medium term.”

“The long-term growth drivers for the domestic CV industry remain intact, like the sustained push in infrastructure development (evidenced by retaining the higher infrastructure capital outlay in the July 2024 budgetary allocation), a steady increase in mining activities, and the improvement in roads/highway connectivity.”

ICRA states that medium and heavy commercial vehicles (M&HCV) (trucks) volumes in FY2025 are expected to report a nominal growth of 0-3 percent YoY, given the high base effect and the impact of the General Elections on infrastructure activities in the first few months of the fiscal. The segment had ended FY2024 with flattish volumes. Within this sub-segment, while the tipper volumes reported 4 percent YoY contraction in Q1 FY2025, the haulage sub-segment showed a modest 3 percent YoY growth for the quarter. Tractor-trailers reported a modest 7 percent YoY volume growth in Q1 FY2025.

Domestic light commercial vehicles (LCV) (trucks) wholesale volumes are expected to show a tepid YoY growth of -1 percent to 2 percent in FY2025 due to factors such as a high base effect, sustained slowdown in e-commerce and cannibalisation from electric three-wheelers. The segment had witnessed a mild decline of 3 percent on a YoY basis in FY2024, owing to the above factors, in addition to a deficit rainfall impacting the rural economy. Increased total cost of ownership of LCVs has also led to a rising preference for pre-owned vehicles by the small fleet operators, which may impact the demand, going forward.

The scrappage of older government vehicles is expected to drive replacement demand for the bus segment from state road transport undertakings (SRTUs) in FY2025, supporting a YoY growth of 8-11 percent. The sub-segment volumes gained considerable traction in FY2024 and exceeded the pre-covid levels.

In terms of powertrain mix, conventional fuels (primarily diesel) continue to dominate the domestic CV industry with a penetration of over 90 percent, while alternative fuels (CNG, LNG and electric) had driven around 9 percent sales in FY2024. Relatively higher penetration of electric vehicles (EVs) has been witnessed in buses (as e-buses were covered under FAME-II subsidies but not the other sub-segments), followed by LCV goods, with a penetration of 7 percent and 1 percent, respectively, in FY2024.

ICRA expects the operating profit margin (OPM) of the domestic CV original equipment manufacturers to remain range bound in FY2025 to 9.5 percent to 10.5 percent on the back of muted volumes and higher competitive pricing pressures, although factors such as cost improvement, favourable raw material costs and better product discipline are expected to lend some support to the profitability. 

The operating margins in FY2024 had improved by almost 300 bps to 10.7 percent supported by operating leverage benefits and better product mix. In addition, lower discounting and benign commodity prices aided in the margin expansion in FY2024. The capex and investments for the industry are likely to increase to around INR 56-58 billion in FY2025, against about INR 34 billion in FY2024. These will be mainly towards product development, especially in the areas of alternate powertrains, technology upgradation and maintenance-related activities.

“ICRA foresees the credit metrics of the industry to remain stable in FY2025 even as margins may contract marginally and capex outlay is anticipated to increase. The continued strong operating performance is expected to support the coverage metrics of the industry, with Total Debt / OPBITDA projected at 1.2-1.4 times as on March 31, 2025, against 1.5 times in as on 31 March, 2024 and interest coverage at 6.8-7.2x in FY2025, against 7.2 times in FY2024,” concluded Shah.

CNH Industrial has revealed a comprehensive Strategic Business Plan (SBP) during its 2025 Investor Day, aiming to cement its leadership in agriculture and construction machinery, significantly improve margins, and return more value to shareholders.

The company’s new roadmap includes ambitious targets such as achieving a 16–17 percent mid-cycle adjusted EBIT margin in agriculture by 2030 and delivering over USD 550 million in operational and quality cost improvements. It also seeks a 25 percent increase in through-cycle industrial cash generation. It also aims to consolidate its position as the No.1 or No. 2 player in all major markets.

Gerrit Marx, CEO, CNH Industrial, said, “The strategy that we presented today shows that we have a clear path to achieve our goals. We are committed to delivering strong growth, in tandem with our cost efficiency targets. We have demonstrated our capability to deliver steady margin improvements in the past, and we will take that to the next level in this new phase of our journey.”

Key initiatives include enhancing integration between hardware and Precision Tech systems, a full refresh of the tractor lineup, an expanded combine harvester range and doubling Precision Tech’s share of agriculture net sales. CNH will also revamp its go-to-market approach with a new dual-brand dealer strategy and greater focus on customer service.

On construction, CNH targets a 7–8 percent EBIT margin by 2030 through new product launches, sourcing efficiencies, and aftermarket growth.

The plan prioritises organic growth, but leaves room for strategic M&A.

German component company JOST Werke, a leading supplier of safety-critical systems for commercial vehicles, has further strengthened its foothold in the industry with the acquisition of Hyva for USD 398 million.

The strategic move enhances JOST’s capacity to serve India’s rapidly growing commercial vehicle market while reinforcing its position as a leading supplier for on-highway (transport) and off-highway (agriculture, construction) applications worldwide.

Hyva’s portfolio includes front-end tipping cylinders and supplies a full range of double-acting cylinders, container lifting systems (hookloaders and skiploaders), waste handling solutions (refuse collection bodies and compactors), and truck-mounted crane, whichs will further complement JOST’s comprehensive range of products for on-highway applications in the transport industry as well as off-highway applications in the agriculture and construction industries.

With this, JOST will strengthen its regional presence, particularly in Asia and the Americas, along with entering new market segments.

Pradeep Gorur Sheshagiri, Managing Director, JOST India, said, “As India’s automotive component sector evolves into a pivotal growth driver, this acquisition aligns perfectly with the nation’s focus on infrastructure modernization and sustainable mobility. Hyva’s hydraulic expertise empowers us to accelerate ‘Make in India’ ambitions, deliver tailored solutions for rugged Indian operating conditions, and strengthen collaborations with domestic OEMs. This partnership reinforces our commitment to advancing India’s commercial vehicle ecosystem with globally benchmarked technologies.”

Jeffrey Zuidgeest, Regional Director India, BU Components, Hyva, added, “The integration of JOST and Hyva’s product portfolios creates a significantly broader range of solutions, enabling us to better serve our customers and end users. Leveraging our existing sales and after-sales network, we are well-positioned to drive further growth and enhance service excellence. This strategic synergy represents a win-win situation for all stakeholders.”

The partners will also pool together R&D to further provide customer-centric solutions. In the last 70 years, JOST has grown from a small forge into a global company with over 25 locations through strategic acquisitions such as Rockinger (2001), Tridec (2008), Mercedes-Benz TrailerAxleSystems (2014), Alö (2020), Crenlo do Brasil (2023) and LH Lift (2023).

A new nationwide initiative in the United Kingdom is set to standardise and elevate maintenance standards in the commercial vehicle sector, which has completed its pilot phase and is set for wider rollout. The Maintenance Provision Rating Scheme (MPRS), unveiled at the Commercial Vehicle Show, introduces a tiered rating system for HGV workshops across the UK, aiming to improve safety, reduce MOT failures, and boost compliance.

The scheme offers five levels – Entry, Bronze, Silver, Gold, and Platinum – providing commercial vehicle operators with a clear and independent assessment of a workshop’s competency and facilities. By offering greater transparency, the MPRS allows fleet operators to make better-informed decisions on where to service and maintain their vehicles.

The MPRS was jointly developed by a coalition of key industry bodies: Logistics UK, the Road Haulage Association (RHA), Confederation of Passenger Transport (CPT), Institute of Road Transport Engineers (IRTE), Society of Motor Manufacturers and Traders (SMMT), British Vehicle Rental and Leasing Association (BVRLA) and the National Franchised Dealers Association (NFDA). It is also backed by government authorities, including the Office of the Traffic Commissioner, the Driver and Vehicle Standards Agency (DVSA) and the Department for Transport (DfT).

A key component of the scheme’s development was an 18-month pilot programme, with Daimler Truck workshops used as a benchmark to define scoring criteria for competency and facility standards. Daimler Truck played a close advisory and operational role throughout the process.

“As an OEM, Daimler Truck UK has welcomed being involved in the development of the MPRS as we believe it is important for the commercial vehicle industry to be setting new standards,” said Amy Carter, Head of Product, Daimler Truck UK. “It has needed a consistent, nationwide rating scheme for a long time.”

Carter added that Daimler Truck sees the MPRS as a crucial step forward in aftersales service. “In the longer term, we hope customers start asking workshops for their MPRS ratings and that dealers start promoting their own scores,” she said. “The MPRS now provides a useful independent benchmark to prove that when a customer sends their fleet into our workshops, they’re being looked after to the highest standards.”

Daimler Truck UK has committed to having MPRS ratings for every dealer in its network by the end of 2025.

Workshops that participate in the MPRS will not only demonstrate their commitment to excellence but also gain a competitive advantage through enhanced reputation. The scheme is expected to drive further investment in staff training and workshop facilities across the commercial vehicle maintenance sector.

Mumbai-headquartered automotive major Mahindra & Mahindra has announced an ambitious growth plan for its commercial vehicle (CV) business, thanks to the recent strategic acquisition of a majority stake in SML Isuzu. The company aims to leverage this acquisition to accelerate its ‘Deliver Scale’ strategy across segments where it believes it has a strong ‘right to win.’

Dr Anish Shah, Managing Director and CEO, Mahindra Group, emphasised that the group’s disciplined focus on capital allocation remains intact. "We have seen significant growth across several businesses, and now, as we enter our third phase, the focus is on delivering scale," he said.

Shah also noted that Mahindra has turned around its CV business, once under scrutiny five years ago, and sees the acquisition of SML Isuzu as a strategic opportunity to cement its position further.

Today, Mahindra is the market leader in SUVs with a 23 percent market share and ranks fifth in the CV segment above 3.5 tonnes with a 3 percent share. Through the acquisition, Mahindra aims to become a more formidable player in the CV space.

"We are targeting a combined market share of 10-12 percent by FY2031 and over 20 percent by FY2036," said Rajesh Jejurikar, Executive Director and CEO – Auto and Farm Sectors, Mahindra & Mahindra. He acknowledged that Mahindra’s CV share, which stood at around 4-5 percent in FY2020, had dropped due to the impact of Covid-19. However, with renewed focus, especially in the LCV and ILCV segments, Mahindra is planning an aggressive recovery.

SML Isuzu brings strength in the intermediate LCV bus segment, holding a 16 percent market share. Mahindra expects that, combined, they could command a 21 percent share. "The synergies are substantial across cost structures, platforms, aggregates, supplier networks, and operations," Jejurikar added.

Growth, Not Cost-Cutting

Mahindra leaders were clear that the SML Isuzu acquisition is not about cost-cutting, but about building scale. "This deal is about growth, not about taking costs out," stressed Amarjyoti Barua, Chief Financial Officer, Mahindra Group. He highlighted that SML Isuzu will remain a separately listed entity and that Mahindra has no plans to rebrand it under the Swaraj name, even though it sees potential for the Swaraj brand in certain export markets.

Financially, Mahindra believes the deal makes strategic sense. Shah pointed out that the SML Isuzu business will be self-sustaining in generating cash for future investments.

The company sees SML Isuzu's operations as a ‘well-run and frugal factory,’ with most future investments primarily required to ramp up capacity.

Vinod Sahay, President - Aerospace & Defence, Trucks, Buses & CE, Mahindra, underlined how the product portfolios of Mahindra and SML Isuzu complement each other. SML Isuzu, for instance, is at an advanced stage in developing electric buses for school, staff and executive coach applications, an area where Mahindra's electrification expertise can add substantial value.

Sahay further highlighted how combining Mahindra and SML Isuzu’s supplier ecosystems will strengthen bargaining power, especially in critical areas like tyres, batteries and key aggregates. While Mahindra boasts strong sourcing power in tyres and batteries, SML Isuzu has an edge in CV parts.

Product synergy is another opportunity. SML’s strong CNG product line and Mahindra’s newer Furio and Cruzio models – offering 8-10 percent better fuel efficiency – will allow the combined business to offer compelling choices to customers across the LCV, ILCV and M&HCV categories.

With over 200 dealers and 400 touchpoints between them, Mahindra plans to optimise and expand network coverage for a wider reach.

While Mahindra is bullish on growth, Shah made it clear that there are no immediate plans for further acquisitions. "Now the business must prove itself," he said, reiterating the company’s strategic belief in building businesses that have a clear right to win, strong financial metrics and differentiated products.

Looking ahead, Mahindra is betting that a stable yet evolving CV market – especially in buses and light trucks, which the management stated will provide the runway needed for long-term growth, as the group consolidates its position as a dominant player across automotive categories.