The medium- and heavy-commercial-vehicle (MHCV) cycle is turning after a prolonged slowdown. The GST cut from 28% to 18% has lowered ownership costs and improved fleet profitability. This is expected to translate into higher demand, with Ambit Capital estimating that MHCV industry volumes will grow at a 4.2% CAGR over FY25–FY28.

The demand environment is becoming more supportive. Higher government capital expenditure, infrastructure spending, and the revival of mining and construction activity should aid incremental volumes, particularly in heavy and off-road trucks. Improving freight economics, coupled with GST-led savings, is likely to drive a replacement-led recovery over the next few years. Rising consumption and the expansion of e-commerce add support to freight demand.

A structural shift toward higher-tonnage vehicles continues, following the 2018 axle-load norm revisions. Fleet operators are moving to larger trucks to improve operating leverage. Higher-tonnage vehicles carry a higher average selling price. Ashok Leyland has reflected this trend, delivering 50% returns year to date.

Against this backdrop, the question is whether Tata Motors Commercial Vehicle (TMCV) offers an opportunity to participate in the next phase of the MHCV cycle.