India’s commercial vehicle industry is on the verge of a massive transformation, as the country’s medium and heavy commercial vehicle (M&HCV) fleet hits a 10-year average age—the oldest in two decades. This milestone marks a critical tipping point for the sector, with replacement demand expected to skyrocket.

According to data from leading manufacturers and credit ratings agency ICRA, the ageing of India’s truck fleet is not just a statistic but a signal of major business opportunities for original equipment manufacturers (OEMs), component suppliers, and logistics service providers.

Fleet Age Hits Record High: A Decade on the Road

As per recent insights, the average M&HCV truck on Indian roads is now 10 years old, reflecting deferred purchases during the COVID-19 pandemic and subsequent years of subdued sales. The shift was further aggravated by economic uncertainty, slow recovery in freight demand, and cost pressures from regulatory changes like BS6 emission norms.

Kinjal Shah, Senior Vice-President at ICRA, elaborated that:

• Domestic M&HCV sales were flat YoY in FY24, and

• Declined by 4% in FY25, showing lingering effects of the slowdown.

However, the stage is now set for a robust market rebound, with replacement sales already accounting for 60% of total M&HCV transactions.

Scrappage Policy: A Mid-Term Demand Trigger

Adding fuel to this emerging demand is the mandatory scrappage policy, which came into effect on April 1, 2023. The policy mandates that all government-owned vehicles older than 15 years be scrapped, with private commercial vehicles expected to follow suit under state-specific guidelines.

This regulation is anticipated to:

• Spur medium-term replacement demand, especially in Tier-1 and Tier-2 logistics hubs.

• Improve road safety and environmental compliance.

• Provide a strong incentive for fleet modernization, especially for freight companies seeking cost and operational efficiency.

The scrappage policy is also expected to benefit automotive OEMs, scrapyards, and recycling businesses, creating a multi-tiered impact across the ecosystem.

Fleet Modernization: Why the Industry is Excited

Shenu Agarwal, MD & CEO of Ashok Leyland, highlighted that the ongoing trend of fleet ageing is now reversing, particularly in the M&HCV segment, as fleet operators prioritize replacement with more technologically advanced models.

According to industry data:

• Approximately 3.7 million trucks have been sold in India since FY10, spanning BS0 to BS6 norms.

• Over 1 million BS6-compliant trucks entered the market in the past four years.

• Nearly 50% of trucks sold over the past 15 years are now older than 11 years.

This fleet profile strongly suggests an imminent, cyclical replacement wave, especially as freight movement rises and total cost of ownership (TCO) becomes central to operator decisions.

Technology and Infrastructure Fueling Demand

Modern trucks today are equipped with telematics, automated transmissions, real-time diagnostics, and fuel-efficient powertrains, making them significantly more productive.

Vinod Aggarwal, MD & CEO of Volvo Eicher Commercial Vehicles, explained:

• Older trucks average 8,000 to 10,000 km/month, while newer models clock 15,000 to 20,000 km/month, thanks to enhanced drivability and improved road infrastructure.

• Advanced trucks offer better mileage, longer uptime, predictive maintenance, and lower emissions, helping logistics companies reduce operating costs.

This technology leap makes the replacement of older trucks not just a matter of necessity but a strategic business upgrade.

FY25 Sales Show Recovery Signs

While total truck sales are still below the pre-pandemic FY19 peak of 2,95,000 units, FY25 saw 2,48,000 units sold, with a 10% growth in sales measured by payload capacity. This reflects a shift toward high-tonnage trucks, which are more cost-efficient per tonne-km of freight moved.

Replacement trends in FY25 have been characterized by:

• Increased fleet rationalization in organized logistics.

• A shift from volume-based to value-based sales, focusing on higher margin, tech-enabled vehicles.

• Greater penetration of BS6 trucks in long-haul and last-mile delivery segments.

This is likely to continue into FY26 and beyond, especially as macroeconomic conditions stabilize and freight movement rebounds with industrial growth.

Industry’s Response: Gearing Up for a Boom

OEMs are now realigning their production pipelines, dealer networks, and service ecosystems to handle the coming surge in replacement demand.

Major steps include:

• Localization of critical components to reduce costs.

• Expansion of truck financing options for small fleet operators.

• Launch of telemetry-integrated service models, offering predictive maintenance and uptime guarantees.

• Rolling out scrappage-linked exchange offers and loyalty programs.

In addition, aftermarket suppliers and tyre manufacturers are also preparing for increased demand from newly acquired fleets requiring service, spares, and accessories.

Challenges and Caveats

Despite the optimism, there are challenges the industry must navigate:

• High cost of BS6 trucks remains a deterrent for small operators.

• Financing remains tight for operators with limited credit histories.

• Variability in state-level implementation of scrappage policies creates operational ambiguity.

• The second-hand truck market may temporarily delay full-scale replacement as operators continue to seek cheaper alternatives.

However, with government support, the continued implementation of National Logistics Policy, and improvements in road connectivity, these concerns are expected to abate in the medium term.

Implications Across the Ecosystem

The replacement boom is poised to benefit multiple segments:

• OEMs will gain from volume recovery and better margins through advanced model sales.

• Fleet operators will achieve cost efficiency, uptime improvement, and regulatory compliance.

• Finance companies will see renewed demand for commercial vehicle loans.

• Scrap yards and recyclers will benefit from vehicle disposal mandates.

• Technology providers can tap into rising telematics and predictive analytics adoption.

Conclusion: Golden Opportunity on Indian Roads

As India’s truck fleet hits a 10-year high in average age, the commercial vehicle industry is bracing for a once-in-a-decade replacement cycle. With 60% of new sales already coming from replacements, the trend is expected to accelerate due to scrappage policy triggers, technological evolution, and improved road networks.

FY25 may not yet mark a return to pre-COVID peaks, but the foundation has been laid for a strong rebound in the M&HCV segment. The industry smells a jackpot, and with the right mix of policy support, technological innovation, and capital investment, India’s roads will soon be home to a younger, smarter, and greener fleet—steering the economy into its next phase of growth.

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