CV Demand Resilient Despite West Asia Shock: Ashok Leyland CEO

Ashok Leyland said demand in India’s commercial vehicle industry remains resilient despite rising diesel prices and global geopolitical uncertainty, driven by GST-led price cuts and an ageing truck fleet that is triggering replacement demand.

Speaking during a post-earnings media call, Managing Director and CEO Shenu Agarwal said industry demand remained resilient in the first two months of FY27 despite global uncertainties. “The CV industry remained quite strong in April, and May is also looking like it will be either at par with or better than last year,” he said.

He said replacement demand in heavy trucks remained particularly strong because fleet ageing levels were at record highs. “The resilience is quite amazing,” Agarwal said. “GST rate cut and the fact that we have a very aged fleet are really creating a lot of resilience at the base of the CV industry.”

India’s medium and heavy commercial vehicle industry witnessed a sharp recovery in the second half of FY26 after the implementation of GST 2.0 reduced ownership costs for several truck categories. Industry executives have said replacement demand accelerated as fleet operators deferred purchases for several years after the pandemic.

Agarwal said structural demand drivers continued to remain intact even as rising oil prices created near-term concerns. “There is no doubt that fundamental factors are still in favour,” he said. “However, there are some disturbances, mainly because of the oil price at the retail level.”

The Indian government-backed oil retailers have effectively raised diesel prices by around ₹7-8 per litre in May 2026 through multiple hikes. Ashok Leyland’s management believes the increase remains manageable for fleet operators.

“So far, the government has increased the price by approximately 7 rupees, which is quite affordable in the way that it will not have any major impact, we believe, on the CV industry,” Agarwal said.

Chairman Dheeraj Hinduja said the recent diesel price hikes had also increased customer interest in electric commercial vehicles, though not enough to trigger a major shift in buying behaviour yet.

“There is definitely a lot more interest in electric vehicles,” Hinduja said. “I wouldn't say that it has led to a substantial change, but there is a lot more interest towards it.”

Ashok Leyland said it remains cautious about geopolitical risks and cost pressures emerging from the West Asia crisis. “Looking forward, we are cautious of global uncertainties but we are confident of navigating these based on strong foundations we have built over the last few years,” Hinduja said.

Chief Financial Officer K.M. Balaji said the company had already started internal cost-control measures to counter potential disruptions from the crisis. “Whatever could be the kind of steps which we can take in the cost containment, we have started taking those steps now,” Balaji said.

The company has also guided for FY27 capex of around ₹800 crore to ₹1,000 crore as it continues investments across products, technology and alternate fuel programmes.