Today’s Pickup: Parts growth fuels Paccar earnings

Paccar Parts

Good day,

Paccar reported strong earnings yesterday, in particular growing its parts revenue 8.8% year-over-year for the second quarter. That growth is due in large part to the inclusion of a proprietary drivetrain including the Paccar MX engine, which is now being spec’d in the majority of Kenworth and Peterbilt trucks.

The use of proprietary engines is not new to truck manufacturers, but it is a growing source of revenue, particularly due to after-sales support, which is driving revenue for all manufacturers. A Stifel analyst note, though, praised Paccar for doing a good job in this area.

“Nearly all the commercial vehicle companies we cover have stated initiatives to grow their parts businesses, but we believe that Paccar is in a stronger position than most industry participants to actually do so,” the note said. “Paccar is benefitting primarily from growth in the number of Kenworth and Peterbilt trucks in operation that utilize a Paccar MX engine entering the maintenance-intensive part of the truck’s life. The company is also opening retail locations that sell parts and is increasing the scale of its parts distribution capabilities. In addition, we believe the company owns a strong premium brand with its Paccar Genuine Parts and is making inroads in selling a wider range of all-makes parts.”

Did you know?

According to the National Transportation Safety Board, there were 112,580 speed-related deaths on U.S. highways from 2005 and 2014. That is nearly identical to the same number of alcohol-related crash deaths (112,948) in the same time period.

Quotable:

“We have to face the fact that heavy-duty vehicles can cause a disproportionate impact in certain events. We have the potential to use game-changing technology today, but we’ve got to invest in that technology in fleets and commit to improving that technology with operational experience.”

- Deborah Hersman, National Safety Council president & CEO

In other news:­

Government targets speeding

The federal government is pushing states to more aggressively target speeders and encouraging adoption of technologies designed to catch speeders. (Fleet Owner)

Trucking association tries to slow biodiesel adoption

The Minnesota Trucking Association is calling on legislators to delay a law that will require the conversion of all diesel fuel in the state to a B20 biodiesel blend. (Transport Topics)

Advanced safety topic of panel

The National Safety Council and the National Transportation Safety Board hosted a roundtable discussion this week, discussing the future applicability of advanced driver assistance systems. (Heavy Duty Trucking)

Interest rates likely to hold steady

The Federal Reserve is expected to hold interest rates unchanged when it announces its formal decision this afternoon. (Reuters)

3D printing and its supply chain impact

A startup 3D printing company is hoping that its technology will nearly eliminate the need to source parts from far locales, dramatically altering the supply chain. (Supply Chain Dive)

Final Thoughts

Paccar’s strong earnings performance in its parts division in the second quarter is a reminder of what a strong support system can do. In addition to including more proprietary components on vehicles, strong customer support remains critical and with more locations being added each year, Paccar is positioning itself to provide that support.

Hammer down everyone!

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Brian Straight

Brian Straight has covered the U.S. trucking and transportation community for more than 10 years, winning numerous regional and national editorial awards, including a Jesse. H. Neal Award. Prior to working on FreightWaves, Brian spent 10 years at industry trade magazine Fleet Owner, and prior to that managed daily newspaper editorial operations.