Ashok Leyland Ready with AC Trucks, Ready for Regulatory Shift

Ashok Leyland says it has fully geared up for the upcoming regulatory requirement, mandating air-conditioned (AC) cabins in all medium and heavy commercial vehicles (M&HCVs). According to Sanjeev Kumar, President and Head of M&HCV at Ashok Leyland,“Currently, all our factories are producing AC cap vehicles.”

The Chennai-based company, which manufactures the AVTR and BOSS range of trucks, is among the few OEMs that appear comfortably placed ahead of the October 2025 deadline—an extension from the originally proposed January 2025 date. The draft notification for the AC cabin rule was approved by Union Minister Nitin Gadkari back in July 2023, and its phased timeline has provided the industry with room to recalibrate.

The idea of mandatory air-conditioning in truck cabins was first floated in 2016, but regulatory enforcement was delayed following industry concerns over rising vehicle costs. The new implementation is expected to raise vehicle prices by approximately 1% to 1.5%, depending on the segment and application. The mandate will apply to trucks weighing between 7.5 to 55 tonnes.

Despite initial pushback, Kumar believes the industry has evolved enough to absorb the transition. “AC penetration in segments like tractors and tippers was already between 15 to 20% before the mandate,” he said. “In mining trucks and tippers, AC adoption was much faster—much ahead of the rest of the segments.”

That head start, Kumar explained, has meant that financing institutions and NBFCs (Non-Banking Financial Companies) are already equipped to handle the marginal uptick in vehicle costs, and are adjusting their loan models accordingly.

While the regulation sets a minimum requirement for air-conditioning, OEMs have the liberty to go beyond compliance. “We are actively working on providing 'performance AC' as well as HVAC (heating, ventilation, and air cooling) as an option for our customers,” Kumar said. 

He added that HVAC systems, often seen in passenger vehicles, offer heating capabilities too—useful in sub-zero temperatures, and indicative of Ashok Leyland’s plan to offer comfort across varying climates.

Turning to the broader market picture, Kumar acknowledged a minor setback in FY25. The last financial year saw a degrowth of 3%. But that’s not a big degrowth compared to its historical cycles.

He remains cautiously optimistic about FY26. “We project lower single-digit positive growth,” he said, citing government capital expenditure, recovery in core sectors like cement and steel, and consistent demand from the e-commerce industry as primary drivers.

The second quarter of FY25 saw a slowdown in infrastructure and road construction activity, but Kumar said the trend reversed sharply in Q4. “This led to good demand on our tippers currently, with cement prices stabilizing and steel expected to pick up,” he said. According to Kumar, the first two months of FY26 have already shown promising volume trends, and he expects broader industry growth to accelerate post-monsoon in the second half of the year.

On the passenger side of the commercial vehicle segment, demand for buses has also remained steady, especially from schools and staff transport services. This, Kumar said, is largely due to a backlog of demand that persisted post-COVID. “We expect the bus segment to grow by at least 3 to 5% in the current financial year,” he added. State transport undertakings have also been active, with robust order visibility contributing to the momentum.

The recent move by the Reserve Bank of India to cut interest rates could serve as another tailwind for the industry. Kumar described it as “a very welcome move,” noting that “as banks pass on these benefits, it will lower the total cost of ownership of our products and it can lead to improved buying sentiments from our customers.”

With regulatory clarity, manufacturing preparedness, and macroeconomic cues aligning in its favor, Ashok Leyland seems to be steering into FY26 with a measured but confident approach.