Commercial vehicle stocks at a turning point. Can Ashok Leyland, Tata Motors, and Force Motors deliver in 2026?

After a prolonged period of muted demand weighed down by high ownership costs, stubborn inflation, and an unfavourable interest rate environment, the commercial vehicle segment may finally be approaching a turning point in 2026. A combination of supportive factors, such as GST 2.0 and the government’s sustained push on infrastructure spending, is beginning to lift sentiment across the sector, offering renewed optimism for manufacturers as well as investors.

December sales data underscores this improving outlook. Leading players, including Ashok Leyland, Tata Motors, and Force Motors, reported year-on-year sales growth of up to 50% during the month. At an industry level, domestic commercial vehicle dispatches rose 26% year-on-year and 16% month-on-month, signalling a broad-based recovery in volumes and a strengthening demand environment. Investors have also been richly rewarded by the rally in these stocks, with Ashok Leyland gaining over 60% in 2025, while Force Motors emerged as a standout performer, delivering returns of more than 200% during the year.

The uptick in sales has not gone unnoticed by analysts, who believe the recent rebound could mark the early stages of a more sustained recovery for the sector. “Demand trends seem positive for all segments within CVs, with current demand momentum likely to remain intact in the coming months, given the positive sentiment and favourable lead indicators such as sustained public and private infrastructure demand,” Motilal Oswal said in a report dated January 1.

Analysts at Axis Securities echo the same optimism. The brokerage expects high single-digit industry growth for commercial vehicle players in FY26, supported largely by improving demand in the bus segment. To put things in perspective, Ashok Leyland reported a 44% YoY increase in M&HCV and bus sales in December.

Rising demand amid favourable levers has also been reflected in the strong performance of tractor players. In December alone, volumes grew 36% year-on-year, supported by favourable monsoons and healthy reservoir levels. Mahindra & Mahindra led the segment with a 37% year-on-year increase, followed by Escorts with 36% growth and VST Tillers with a 26% rise. Looking ahead to the second half, analysts expect the positive momentum to continue, aided by GST reductions, higher reservoir levels, strong rabi sowing, and an improved kharif harvest.

International brokerage BofA Securities said multiple structural drivers are supporting the tractor segment beyond the benefit of a good monsoon and the sentiment boost from the GST rate cut. These include increasing crop diversification, which is driving higher levels of farm mechanisation, continued policy support, and the emergence of additional rural income streams such as ethanol blending, livestock, and horticulture, supplementing traditional crop farming.For M&M, the world’s biggest tractor player by volume, HSBC analysts see strong positioning this year. “Its light commercial vehicle (LCV) business has nearly a 50% market share in the LCV goods industry and, in our view, is the most under-rated business,” the brokerage said.It isn’t just experts; management also sees strong prospects in the coming quarters. For instance, Tata Motors’ MD and CEO Girish Wagh said, “Tata Motors registered double-digit sales growth in Q3FY26, powered by a strong rebound in construction and mining activity post the extended monsoon, along with sustained demand from core sectors and auto logistics. Going forward, we expect demand to strengthen in Q4FY26 across most commercial vehicle segments. Key drivers in 2026 will include the government’s sustained infrastructure push and expansion in end-use sectors, both of which are expected to fuel positive momentum for the industry.”

“The CV industry continued its momentum in December across all segments, supported by favourable policy changes and supportive demand drivers. With the industry showing early signs of an upcycle, we expect further acceleration in Q4, “M&M’s management said while declaring its December sales.

The improving demand environment, supportive policy measures and encouraging commentary from both analysts and company management suggest that the commercial vehicle cycle may be at the cusp of a recovery. While risks from macro volatility and cost pressures remain, early indicators point to strengthening momentum heading into 2026

(Disclaimer: The recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times.)