PACCAR NASDAQ: PCAR reported first-quarter 2026 revenue of $6.8 billion and net income of $605 million, supported by strong results from its parts and financial services businesses alongside what management described as “solid growth” in its truck operations.
Chief Executive Officer Preston Feight credited the company’s workforce for “increas[ing] build rates in our factories all around the world” while delivering trucks and transportation solutions to customers. Management also provided market outlooks for North America, Europe, and South America and discussed trends in pricing, parts demand, and the industry’s preparations for the 2027 U.S. low-NOx emissions standard.
Segment performance: Parts and Financial Services led profitability
PACCAR Parts posted quarterly revenue of $1.7 billion and pretax income of $402 million, with gross margins of 29.6%, according to President Kevin Baney. Baney said PACCAR expects parts sales to grow about 3% in the second quarter and in a range of 3% to 6% for the full year.
During the Q&A, Baney characterized the parts market as “remaining soft,” attributing it to “fleet consolidations and the higher fuel prices” and broader operating cost volatility. He said customers have continued required maintenance but “delayed their optional parts purchases,” adding that PACCAR expects parts results to “accelerat[e] through the rest of the year” as customer health improves and more trucks are on the road.
PACCAR Financial Services generated pretax income of $116 million. Baney said performance reflected “solid asset growth, improving margins and a used truck market that is beginning to strengthen.” Later in the call, Feight pointed to strengthening indicators in the used market, citing “price utilization and volume demand starting to strengthen.”
Truck deliveries, margins, and production cadence
PACCAR delivered 33,100 trucks in the first quarter and forecast second-quarter deliveries of 37,000 to 38,000 vehicles. Feight said truck, parts and other gross margins rose to 13.1% from 12% in the first quarter on “improved truck segment performance,” and the company forecast second-quarter margins of “around 13.5% as global production volumes increase.”
Asked about the sequential margin outlook, Feight said increasing volumes should help, though he also cited offsetting pressures from “the price of energy, steel, aluminum, other raw material pricing,” and added that customers may not yet have “seen the full effect of tariffs.” He said the company feels good about the “cadence throughout the year” as the market and customers improve.
Feight also addressed profitability dynamics in the truck business. In response to a question about profit per truck, he said the quarter benefited from “price cost advantage” and that PACCAR was “up…over 1% in price cost.” He also highlighted the company’s production position, saying PACCAR “built 31.8% of the market” in the first quarter. CFO Brice Poplawski added that results included a “favorable product mix,” including selling more Kenworth and Peterbilt trucks following typical year-end holiday shutdown dynamics, and noted DAF’s inventory practices at year-end.
On supply chain risks, Feight said the company was monitoring “energy-related exposure” affecting supplier material costs and emphasized the importance of suppliers’ hiring and training cadence for the ramp. He did not point to a specific constraint but tied readiness to supplier visibility and labor availability.
Market outlooks and demand drivers
Management reiterated its estimate for the 2026 U.S. and Canadian Class 8 market at 230,000 to 270,000 units. Feight said the market is strengthening as “driver and fleet capacity becomes limited and customers begin to realize higher freight rates,” though he said this is “somewhat moderated by fuel and other operating cost volatility.” In response to questions about strong order data, Feight said the first quarter’s build cadence implied the full-year range would require “a rapid acceleration” and noted that suppliers must be able to “spin up their operations.”
For Europe, PACCAR projected the 2026 above-16-ton market at 280,000 to 320,000 units. For South America’s above-16-ton market, the company forecast 100,000 to 110,000 vehicles. Feight said DAF’s premium aerodynamic trucks provide “the latest technology and best operating efficiency.”
On Europe, Feight said the war in the Middle East has drawn attention from a confidence standpoint, but he said PACCAR has seen “less impact” on demand, with “continued good order intake throughout the last couple of months.” Baney added that geopolitical factors have affected fuel prices in Europe, increasing interest and discussion around battery-electric trucks there.
Technology, new products, and investment plans
Feight highlighted product introductions and awards during the quarter. Kenworth launched the new C580 heavy-duty vocational truck, introduced at CONEXPO, which Feight described as “a unique super heavy-duty truck used in severe service applications around the world.” He also noted DAF’s electric truck recognition, reiterating that the DAF XF and XD electric vehicles won “International Truck of the Year 2026,” and said DAF introduced new flagship XG and XG+ Electric vehicles in the first quarter. Feight added that the XF electric also earned “the 2026 Eco-Friendly Truck of the Year in Spain.”
Baney said PACCAR plans capital investments of $725 million to $775 million in 2026 and R&D expenses of $450 million to $500 million. He said investment priorities include:
- Advanced flexible manufacturing technologies
- Next-generation powertrains
- PACCAR’s autonomous vehicle platform
- Integrated connected vehicle services
On electric trucks, management described stronger momentum in Europe than in the U.S. Feight said that in the U.S., “without subsidies,” widespread adoption is “probably less likely,” though he cited urban and regional delivery use cases and said PACCAR recently launched new medium-duty EV models for Kenworth and Peterbilt.
Tariffs, pricing environment, and 2027 emissions timeline
On tariffs, Feight said simplified metal tariffs that went into effect in early April did not meaningfully change PACCAR’s view, citing truck-specific Section 232 provisions with “specific offsets.” He said the impact was “moderate… but not significant,” and Baney said the same was true for parts.
When asked about a USMCA-related credit, Feight said the 3.75% credit under Section 232 is “fairly well-defined” for the truck side and that timing now depends on applying for and receiving it, which he expected in the “not distant future.”
Management also discussed pricing and competitive conditions. Feight said pricing remains competitive, and in response to questions about why pricing has not improved faster despite stronger reported orders, he argued that “orders isn’t the cleanest thing to measure,” emphasizing build and retail as better indicators.
Regarding the 2027 emissions standard, Feight said EPA’s formalized position is a “35 milligram standard come 2027,” adding that “there’s not any kind of modification expected to that” for new engines. He said additional parameters may be contemplated based on market feedback. Feight also said the company is “really pleased” with engine development programs and expressed confidence in PACCAR’s teams, while noting Cummins as a key partner.
Feight summarized the demand outlook as a mix of “buy versus pre-buy,” saying replacement demand is rising as fleets seek a healthier age profile, while some customers may also pull forward purchases ahead of the cost impact associated with the 2027 low-NOx standard. Baney added that the second half appeared “pretty well balanced” between the third and fourth quarters, suggesting the year is not overly weighted to an end-of-year pre-buy.
About PACCAR NASDAQ: PCAR
PACCAR Inc is a global technology leader in the design, manufacture and customer support of light-, medium- and heavy-duty commercial vehicles. The company's products are marketed under well-known brand names including Kenworth, Peterbilt and DAF and span vocational and long-haul applications. PACCAR's core business includes vehicle engineering and assembly as well as the supply of components and proprietary powertrain systems designed to meet regulatory and customer performance requirements.
In addition to truck manufacturing, PACCAR operates a comprehensive aftermarket parts business, distributes used trucks and provides commercial vehicle financing and leasing through its financial services operations.
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