PACCAR anticipates 2026 North American truck market of up to 270,000 units as Section 232 tariffs improve outlook

Earnings Call Insights: PACCAR Inc (PCAR) Q3 2025

MANAGEMENT VIEW

* Preston Feight, CEO, opened by highlighting "good third quarter financial results and business highlights" and thanked employees for their efforts in dynamic market conditions. He reported, "PACCAR achieved revenues of $6.7 billion and net income of $590 million." Feight emphasized the performance of Peterbilt, Kenworth, DAF Trucks, PACCAR Parts, and PACCAR Financial Services, noting "PACCAR Parts achieved record quarterly revenues of $1.72 billion and excellent quarterly pretax income of $410 million" with 4% parts revenue growth. PACCAR delivered 31,900 trucks in the quarter and expects about 32,000 deliveries in Q4. He cited strong customer demand in less-than-truckload and vocational segments but ongoing uncertainty in the truckload market.
* Feight stated, "PACCAR's Truck, Parts and Other gross margins were 12.5% in the third quarter," and pointed out tariff impacts, saying, "Margins were affected by the August steel and aluminum tariff increases and the tariff costs on trucks that were built in the United States."
* Brice Poplawski, CFO, stated, "PACCAR Financial Services pretax income was a robust $126 million, 18% growth over the $107 million reported a year earlier." He provided capital expenditure projections: "This year's capital expenditures are projected to be between $750 million and $775 million, and research and development expenses will be $450 million to $465 million."
* Kevin Baney, Executive Vice President, noted, "PACCAR Parts achieved gross margins of 29.5% and record third quarter revenue of $1.72 billion," and announced a new parts distribution center in Calgary and an engine remanufacturing center in Columbus, Mississippi, both opening next year.

OUTLOOK

* PACCAR estimates the 2025 U.S. and Canadian Class 8 market at 230,000 to 245,000 trucks and projects the 2026 market at 230,000 to 270,000. Feight explained, "Next year's U.S. and Canadian truck market could be higher than this year as we realize clarity around tariffs, emissions policy and potential improvements in the freight market."
* In Europe, PACCAR projects the above 16-tonne market for 2026 to be 270,000 to 300,000 vehicles, while South America is projected to be in the range of 95,000 to 105,000 vehicles.
* Feight signaled continued investment, with next year’s capital projects estimated at $725 million to $775 million and research and development at $450 million to $500 million, focusing on alternative powertrains and advanced driver assistance systems.

FINANCIAL RESULTS

* PACCAR's revenues for the quarter were $6.7 billion, with net income of $590 million. PACCAR Parts achieved quarterly revenues of $1.72 billion and pretax income of $410 million. PACCAR Financial Services delivered pretax income of $126 million.
* PACCAR delivered 31,900 trucks during the third quarter. Gross margins for the Truck, Parts and Other segment were 12.5%. Feight indicated that Q4 margins could be around 12% due to peaking tariffs in October.
* Baney reported PACCAR Parts gross margins at 29.5% and highlighted 4% parts revenue growth compared to the same period last year.

Q&A

* Robert Wertheimer, Melius Research LLC: Asked about Section 232’s impact on competitive position and financials. Feight responded that Section 232 "will be good for PACCAR's customers" and "should improve our competitive position as we look forward into next year." He explained implementation will be gradual, with full benefit expected by early next year.
* Wertheimer followed up on pricing. Feight mentioned, "I think that our customers appreciate the stability in the market right now with how emissions haven't changed in a while," and expects opportunities for price increases as the year progresses.
* David Raso, Evercore ISI: Inquired about North American growth outlook and bonus depreciation. CFO Poplawski cited programs to encourage customers to take advantage of 100% bonus depreciation, expecting it to spur demand in Q4. Feight noted, "What we're getting from customers is it's very mixed from a customer standpoint," with vocational and LTL markets showing more positive demand.
* Jeffrey Kauffman, Vertical Research Partners: Questioned the flow of Section 232 rebates. Feight clarified rebates will apply as parts qualify, with reduced tariff costs realized through the quarter and full benefit by early next year.
* Michael Feniger, BofA Securities: Asked about cost advantage from Section 232. Feight stated, "I think it helps PACCAR significantly, and that should be good for our customers and PACCAR."
* Feniger also asked about Parts margins for 2026. Baney said, "There's still tremendous opportunity for growth... we see there's definitely opportunity for future growth."
* Timothy Thein, Raymond James: Asked about pricing in the Truck business. Poplawski reported, "For the third quarter compared to last year's third quarter, our pricing was down 1.3% and the costs were up 4.6%."
* Jamie Cook, Truist Securities: Asked about market share potential and margin trajectory. Feight confirmed, "We feel like we can gain share, and we feel like we have the capacity to support gaining share in the coming time frame," and expects positive margin trends as tariffs abate.

SENTIMENT ANALYSIS

* Analysts pressed management on tariffs, market share prospects, pricing, and inventory, with a focus on how Section 232 impacts competitive positioning and profitability. The tone was probing but constructive, with particular interest in margin recovery and demand catalysts.
* Management maintained a slightly positive tone, expressing confidence in tariff relief, margin improvement, and demand recovery. Feight frequently emphasized stability, opportunity, and strategic positioning, using phrases such as "we feel very good," "should help our competitive position," and "all feels very good."
* Compared to the previous quarter, management’s tone was more confident regarding regulatory clarity and the positive impact of Section 232, while analysts maintained a consistent level of scrutiny.

QUARTER-OVER-QUARTER COMPARISON

* Q3 guidance was more specific about Section 232’s effects, with management projecting Q4 margins around 12% and highlighting tariff relief as a key driver for improvement in early 2026, compared to Q2’s more uncertain margin outlook.
* Q3 featured a more optimistic discussion on market share gains and capitalizing on U.S.-centric manufacturing, while Q2 focused more on navigating uncertainty and cost pressures.
* Analysts in both quarters sought clarity on regulatory and tariff impacts, but the current quarter saw greater focus on competitive advantages and future demand catalysts.
* Management’s confidence grew, citing investments in capacity and innovation and a clearer regulatory path.

RISKS AND CONCERNS

* Management cited tariff costs, with Feight stating, "Margins were affected by the August steel and aluminum tariff increases and the tariff costs on trucks that were built in the United States."
* Gross margin guidance for Q4 is lower due to tariffs peaking, but Section 232 is expected to bring relief.
* Regulatory uncertainty around emissions standards and freight market recovery remain areas of concern.
* Analysts raised questions about demand visibility for 2026, inventory levels, and the pace of prebuying related to new regulations.

FINAL TAKEAWAY

PACCAR management emphasized that Section 232 tariff relief and robust U.S. manufacturing capacity position the company for margin recovery and potential market share gains in 2026. With strong performance in Parts and Financial Services, ongoing investments in technology and distribution, and clarity around regulatory and tariff environments, PACCAR remains focused on delivering value to customers and shareholders as market dynamics improve.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/pcar/earnings/transcripts]

MORE ON PACCAR

* PACCAR Inc (PCAR) Q3 2025 Earnings Call Transcript [https://seekingalpha.com/article/4831563-paccar-inc-pcar-q3-2025-earnings-call-transcript]
* PACCAR: Strong Mix, Steady Margins, But Upside Capped [https://seekingalpha.com/article/4816439-paccar-strong-mix-steady-margins-but-upside-capped]
* Paccar: A Weakening Economy Will Not Bode Well For This Prospect (Rating Downgrade) [https://seekingalpha.com/article/4816186-paccar-a-weakening-economy-will-not-bode-well-for-this-prospect-downgrade]
* PACCAR GAAP EPS of $1.12 misses by $0.03, revenue of $6.67B beats by $680M [https://seekingalpha.com/news/4505932-paccar-gaap-eps-of-112-misses-by-003-revenue-of-667b-beats-by-680m]
* PACCAR Q3 2025 Earnings Preview [https://seekingalpha.com/news/4505684-paccar-q3-2025-earnings-preview]