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The Commercial Vehicle Cycle Turns: From Volume Illusion to Efficiency Reality
India’s commercial vehicle volumes are still below FY2019. Yet the CV ecosystem is behaving as if the cycle has already turned.
This apparent contradiction is the most important signal investors are missing. The Indian CV cycle is no longer a simple volume story. It has morphed into an efficiency, uptime, and content-led cycle, shaped by regulation, logistics reform, fleet consolidation, and technology. What looks like stagnation in unit numbers is, in reality, a deep structural reset that is now beginning to bear fruit.
This article integrates sector-wide structural insights, behavioural shifts, and company-level execution to explain why FY26 marks the inflection point for the CV ecosystem—and why suppliers like Kross Ltd, Automotive Axles, GNA Axles, Subros, and Jamna Auto are positioned far better than in any previous upcycle.
CVs as an Economic Barometer — But With a Caveat
Commercial vehicles remain the purest economic barometer: trucks sell only when goods move. However, the nature of goods movement itself has changed.
India’s logistics cost has fallen from ~14% of GDP to ~8–9% for organised players, driven by GST, FASTag, better highways, and digital planning. This improvement created an efficiency paradox:
This is why CV volumes stayed muted even as freight demand improved. The system was repairing itself.
A Lost Decade That Reset the Industry (2015–2025)
The CV sector did not merely face a downturn—it absorbed a sequence of structural shocks:
The recovery since then was K‑shaped. Large fleet operators survived and grew using technology and cheaper capital. Small operators (1–5 trucks) struggled under high interest rates, weak bargaining power, and falling spot rates.
By FY25, the industry was leaner, more consolidated, and structurally altered—but demand was still deferred.
What Changed in Late FY25–FY26: The Real Inflection
The recent GST rationalisation did not create demand—it released it.
Coupled with easing interest rates, election-related uncertainty fading, and resumed infra capex, the industry moved from waiting mode to execution mode. Management commentary across OEMs and Tier‑1 suppliers converges on one theme: visibility has returned.
Importantly, this recovery is:
The CV Market Has Split Into Three Economies
India no longer has one CV cycle—it has three:
1. M&HCV (Infrastructure & Capex Economy):
Heavy trucks are tied to roads, mining, steel, and government capex. Growth here is slow (0–3%), not because demand is dead, but because efficiency has improved. Bigger trucks (28T–49T+) are replacing smaller rigids. Cost per tonne-km matters more than volumes.
The bottleneck is structural: India still has too many rigid trucks and too few tractor-trailers because small operators cannot afford trailers or guarantee return loads.
2. LCV & SCV (Consumption Economy):
LCVs and SCVs are driven by e-commerce, rural demand, and last-mile logistics. However, growth is no longer linear:
Despite this, SCVs remain critical for urban logistics, especially as quick commerce expands.
3. Buses (Policy Economy):
Buses are the strongest segment structurally, growing 8–10%. State transport undertakings and government-backed electric bus tenders have created a long, visible order pipeline. Unlike trucks, buses can grow even when freight cycles are weak.
This fragmentation matters because component suppliers benefit across all three, while OEM volumes fluctuate.
The Big Structural Shift: From Selling Trucks to Selling Uptime
Historically, CV cycles were volume cycles. GDP up, truck sales up. That model is breaking. Today, a truck’s purchase price is only ~10–15% of its lifetime cost. The real money lies in:
This has created the Amazon effect: fleet owners care less about mileage and more about uptime. Predictive maintenance, connected axles, AC cabins, telematics, and service reliability now command pricing power.
This is the hidden engine behind rising content per vehicle.
Policy Is the Pain—and the Moat
Government policy has been the biggest disruptor—and the biggest long‑term enabler.
The short‑term pain is forcing consolidation. The long‑term result is a healthier industry dominated by organised players.
Company Integration: Why These Names Are Better Positioned
Auto-ancillary players that sit at different but complementary points of the Indian commercial vehicle (CV) value chain. The objective is not short-term forecasting, but to understand structural relevance, durability of demand, and long-term role as the CV industry transitions from a pure volume cycle to an efficiency, uptime, and higher-content-per-truck cycle.
Let’s integrate industry structure, regulatory tailwinds, OEM behavior, export optionality, and behavioral shifts in fleet economics.
Jamna Auto sits in the suspension and load-management layer of commercial vehicles through its leadership in leaf springs. While leaf springs may appear old-economy, they remain mission-critical for Indian CVs because of road conditions, overloading tendencies, and heavy-duty usage.
Every truck—SCV, LCV, or M&HCV—needs a suspension system. And in India, leaf springs dominate because they are:
This places Jamna Auto at the intersection of OEM supply and a very large aftermarket.
A common misconception is that newer technologies will eliminate leaf springs. In reality:
As trucks become heavier and run longer distances with higher utilisation, replacement frequency increases, not decreases.
Jamna therefore benefits from both:
One of Jamna Auto’s most underappreciated strengths is its replacement-heavy revenue mix.
Replacement demand has very different characteristics:
In weak CV cycles, fleet owners delay buying new trucks—but they cannot avoid replacing worn suspension. This makes Jamna structurally more resilient than most CV-linked businesses.
Jamna Auto New Developments and esteemed customers
1. Higher Tonnage Migration
The shift toward 28T–49T+ vehicles directly increases:
2. Premiumisation & Safety Focus
OEMs are moving toward better ride stability and durability, pushing higher-spec suspension systems.
3. Formalisation of Fleets
Larger fleets prefer reliable, branded components to minimise downtime, strengthening Jamna’s aftermarket leadership.
Jamna Auto enjoys several durable advantages:
Smaller unorganised players struggle to match consistency, metallurgy, and supply reliability—especially as compliance and quality standards rise.
Recent capacity additions and modernisation efforts position Jamna for:
Importantly, Jamna’s growth does not require a boom cycle. Even moderate CV activity combined with high utilisation supports earnings compounding.
However, these risks are mitigated by Jamna’s replacement exposure and pricing discipline.
Kross operates in the critical load-bearing layer of commercial vehicles: axles, suspension systems, and forged components. These are non-discretionary parts—every truck needs them, and higher payloads increase stress, complexity, and value per vehicle.
As the industry shifts from smaller rigid trucks toward 28T–49T+ multi-axle vehicles, axle and suspension systems become more complex, heavier, and of higher value. This structurally expands Kross’s addressable opportunity even if industry volumes remain flat.
Kross stands out as one of the fastest-growing axle players, benefiting from:
Over the next 5–7 years, Kross is less a bet on truck volumes and more a bet on:
Management POV - Expecting orders from a European large-tier-1 company
In a world where CV demand is value-led, not volume-led, axle suppliers like Kross sit at the heart of compounding.
3. Automotive Axles — Quiet Margin Expansion
Automotive Axles is deeply embedded in the drivetrain ecosystem—particularly drive axles for medium and heavy commercial vehicles. Drive axles directly influence torque, fuel efficiency, durability, and payload economics. As fleet operators optimize for cost per tonne-kilometer, drivetrain efficiency becomes as important as engine power.
Even if M&HCV volumes grow only 0–3%, content per vehicle continues to rise. Automotive Axles benefits from:
Its role is foundational: without reliable drive axles, the entire logistics efficiency thesis collapses.
4. GNA Axles — Cycle Plus Export Hedge
GNA Axles sits upstream in the forging and precision axle/shaft manufacturing layer. Forgings are the starting point for most heavy CV components, making GNA an early beneficiary of both domestic and global CV cycles.
Unlike pure domestic ancillary plays, GNA combines:
This diversification reduces dependence on any single Indian CV cycle.
As CVs become heavier, cleaner (BS-VI+), and more durable, forging quality becomes mission-critical. GNA’s future relevance lies in being a trusted global supplier in a world that prioritizes reliability and compliance over lowest cost.
5. Subros — Regulation Creates Demand
Subros is a textbook example of policy‑driven content growth. Subros operates in the thermal management layer—air-conditioning systems for vehicles. Historically seen as a discretionary feature, AC in trucks has now become mandatory due to safety and driver welfare regulations.
This transforms Subros from a cyclical auto ancillary into a policy-backed structural beneficiary.
Subros benefits even if:
Management’s POV:
Because every new commercial truck must include AC. This makes Subros a regulatory annuity rather than a volume-driven bet.
CV volumes need not surge for Subros to grow—penetration itself is the growth driver.
The Commercial Vehicle Value Chain: Where Value Is Created — and Where It Is Migrating
To truly understand why this CV cycle is different, one must stop looking at vehicles and start looking at the value chain. The Indian commercial vehicle ecosystem is no longer a linear chain that ends with the sale of a truck. It has evolved into a multi-layered stack, where value is increasingly created before and after the truck is sold.
Below is a structured walkthrough of the CV value chain — from raw materials to data platforms — and how economics, risk, and compounding differ at each layer.
Upstream: Raw Materials & Commodity Suppliers
Who they are: Steel, aluminium, rubber, forgings, castings
Economics:
Why they matter:
Investor takeaway: This is not where structural compounding happens. Commodity exposure amplifies cycles rather than smoothens them.
Tier-1 & Tier-2 Auto Components: The Structural Sweet Spot
Who they are: Axles, suspensions, braking systems, HVAC, drivetrain components, electronics
Representative names: Kross Ltd, Automotive Axles, GNA Axles, Jamna Auto, Subros
Why this layer is winning:
Structural shift:
Earlier, components were volume-linked. Today, they are complexity-linked.
Every regulation increases:
This converts components into annuity-like businesses.
OEMs: From Manufacturers to Solution Providers
Who they are: Tata Motors, Ashok Leyland, Mahindra, Eicher
What has changed:
Economic reality:
Strategic pivot: OEMs are trying to move downstream into services because that is where margins are migrating.
Investor takeaway: OEMs remain essential, but structurally capped. They are participants in the new value pools, not natural owners of them.
Fleet Owners: The Great Consolidation Layer
Large fleets (winners):
Small fleets (losers):
Why this matters: Consolidation creates bigger buyers, fewer buyers, and higher-spec trucks — ideal conditions for component suppliers.
NBFCs & CV Financiers: Making Money on Every Turn
Who they are: Shriram Finance, banks, captive NBFCs
Why they thrive:
Hidden advantage:
NBFCs monetise volatility. Every disruption — BS-VI, scrappage, EV transition — creates financing demand.
Downstream Platforms: Data Is the New Axle Load
Who they are: Logistics tech platforms, telematics providers, fuel & FASTag aggregators
What they control:
Why this layer is powerful:
Structural insight:
Whoever owns truck data owns the trucker’s lifetime wallet. This is where the industry is quietly moving.
Scrappage & Circular Economy: Slow Today, Inevitable Tomorrow
Who they are: Vehicle recyclers, scrap processors, green steel players
Current reality:
Long-term importance:
This layer will matter more post-2027.
Putting It All Together: Where Compounding Actually Happens
Components sit at the intersection of regulation, efficiency, exports, and replacement demand. That is why they form the most resilient and rewarding part of the CV value chain in this cycle.
When an industry shifts from selling units to optimising uptime, value migrates away from the chassis and into the components that keep it running.
Historically, CV OEMs captured most of the value during upcycles. Volumes rose sharply, operating leverage kicked in, and market share gains mattered more than margins. That framework no longer holds.
This cycle is structurally different — and that is precisely why auto component manufacturers are better positioned than OEMs.
1. Components Benefit From Every Cycle — New or Old
OEMs depend primarily on new vehicle sales. Component players participate in both worlds:
With fleet age still high and utilisation intense, replacement and maintenance demand is structurally strong — even if OEM volumes stay range-bound.
2. Rising Content Per Vehicle Is a One-Way Street
Regulation and economics are permanently increasing component intensity:
Even flat CV volumes now translate into higher component revenue per truck. This was not true in previous cycles.
3. OEMs Compete. Components Compound.
OEM profitability is structurally constrained by:
Component manufacturers, by contrast:
They compound quietly while OEMs fight loudly.
4. Policy Hurts OEMs First, Helps Components Eventually
Every major policy shock — BS-VI, AC cabins, safety norms — initially disrupts OEM volumes.
But once absorbed, these policies lock in higher component demand for years. Components turn regulatory pain into annuity-like revenue streams.
5. Better Risk-Reward at the Same Point in the Cycle
In early-to-mid recovery:
This asymmetry makes components the cleaner, lower-risk way to play a CV recovery.
Conviction Lies Where the Noise Is Absent
The Indian commercial vehicle cycle has turned — not with exuberance, but with intent.
Volumes are recovering slowly, almost reluctantly. Yet beneath the surface, the ecosystem is healthier than it has been in a decade. Fleets are larger, better capitalised, and focused on uptime. Regulation has raised barriers. Content per vehicle is rising, exports are real, and managements are investing with discipline, not bravado.
This is not a cycle that rewards chasing headlines or counting monthly dispatch numbers.
It rewards understanding where value has migrated.
For learners like us willing to look past OEM volume charts and focus on component intensity, operating leverage, and management behaviour, the current phase of the CV cycle offers something rare: the chance to participate in a long recovery before it becomes obvious.
The loud cycles create stories.
The quiet ones create compounding.
Disclaimer: The information provided is for educational purposes only and should not be considered investment advice. We are SEBI-registered research analysts.
We believe that investment decisions should be based on personal conviction and not borrowed from external sources. Therefore, we do not assume any liability or responsibility for any investment decisions made based on the information provided in this reference.
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