PACCAR Inc
Analysis
PACCAR spent these four calls turning a tariff cost into a tariff advantage. Margins have climbed back as build rates rise, but the recovery leans on a 2027 emissions pre-buy that regulators have just shrunk. How much of the second-half build is pre-buy rather than replacement?
- Tariffs flipped from PACCAR's biggest cost to a competitive edge.
Gross margin on trucks, parts and other fell to 12% in Q4 FY2025 as tariff costs peaked, then climbed to 14.4% by Q2 FY2026. Section 232 relief and US-built trucks, once a cost disadvantage, now give PACCAR an edge rivals lack. How much of the margin gain comes from tariff relief versus volume?
- The truck market has turned and build rates are climbing.
First-half US and Canada retail ran about 105,000 trucks, with roughly 145,000 expected in the second half. Orders ran well above build and the year is nearly sold out, so the limit is now how fast suppliers can ramp.
- Parts growth keeps getting trimmed, and parts carries the profit.
Management has cut its full-year parts growth forecast twice since January, to 3% to 5%. Parts is the most profitable part of PACCAR and is meant to cushion weak truck sales, so its slowdown leaves the recovery resting on trucks. Is the parts slowdown fleet deferrals, or a smaller service market?
- Freight rates keep rising and fleets finally replace aging trucks. Fleets ran trucks longer than planned, so better freight profits turn into orders instead of more repairs.
- The tariff advantage holds as rivals price in their own costs. US-built trucks now cost PACCAR less than importing, so each sale carries more profit than a year ago.
- Parts growth reaccelerates as more trucks go back to work. Parts earns more per dollar than trucks do and is what keeps profit up when truck sales slow down.
- The second-half strength is customers buying early, and it fades in 2027. If they only moved purchases forward to beat the emissions rules, orders dry up once that reason disappears.
- Suppliers and hiring cannot keep pace with the faster build. PACCAR already missed deliveries on supplier shortages, so the upside goes to whoever can actually ship trucks.
- Parts growth keeps sliding as fleets put off maintenance. Parts is the profit that holds up when truck sales do not, so its slowdown leaves earnings resting on the truck cycle.
| Politician | Transaction | Amount | Traded | Filed |
|---|---|---|---|---|
Donald Trump Republican · Executive | Purchase | ≥$1K | Mar 23 | May 13 |
Ro Khanna Democratic · House · CA-17 | Purchase | ≥$1K | Jul 7 | Aug 7 |
Alan Armstrong Republican · Senate · OK | Purchase | ≥$1K | Mar 27 | Jul 21 |
Ro Khanna Democratic · House · CA-17 | Purchase | ≥$1K | Jun 2 | Jul 6 |
Ro Khanna Democratic · House · CA-17 | Sale | ≥$1K | Jun 30 | Jul 6 |
Congressional trading data provided by QuiverQuant
How PACCAR Inc turned $28.4B of revenue into $3.0B of operating income.
| Revenue | ||
|---|---|---|
| Truck Parts And Other | $26.2B | ▼ 18.21% YoY |
| Financial Services | $2.2B | ▲ 5.25% YoY |
| Total revenue | $28.4B | |
| Gross profit | $5.7B | 20.1% |
| Operating income | $3.0B | 10.4% |