• Commodity cost pressures: Elevated raw material costs, particularly sharp increases in natural rubber despite softening in precious metals, are expected to weigh on Q2 margins. To mitigate this, price hikes of 2% to 3% on MHCVs and an additional 50 basis points on LCVs were implemented starting April.
• Industry growth guidance: After MHCV industry growth of 13% to 14% in Q1 and an expected stronger Q2, conservative estimates project full-year FY27 MHCV growth in the high single digits, with LCV growth tracking slightly higher.
• Fleet replacement tailwinds: The multi-quarter demand momentum is primarily supported by the average fleet age rising beyond 10 years compared to historical levels of 7 to 7.5 years. This replacement cycle was catalyzed by a 10% GST reduction on CVs and the superior operating efficiency of BS6 trucks.
• Electric vehicle adoption: Total cost of ownership for EVs is already proving superior to diesel in city buses and light commercial vehicles, with heavy-duty trucks expected to follow. Supported by government policy and incentives, EV penetration is projected to reach 15% to 20% of the CV market in 5 to 6 years.