Allison Cuts 2025 Guidance on Weak On-Highway Truck Demand
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Allison Transmission profit nudged higher in the second quarter of 2025, but ongoing U.S. on-highway truck demand weakness led the automatic transmission specialist to cut its full-year profit and sales guidance.
Indianapolis-based Allison posted net income for the most recent quarter of $195 million, a 4.3% increase compared with $187 million in the same quarter 12 months earlier, the company said after the market closed Aug. 4.
Allison reported sales of $814 million in Q2, a decrease of 0.25% from $816 million in the year-ago period, as defense spending jumped, offsetting weaker figures in the North American on-highway market.
Sales in the North American on-highway market, Allison’s largest reporting segment, fell 8.6% to $417 million in Q2 from $456 million.
The $39 million decrease in North American on-highway sales was driven by lower demand for medium-duty trucks and continued over-the-road softness, Allison said, adding that this was partially offset by price increases for some products.
A 46.5% jump in defense market sales to $63 million from $43 million due to growth initiatives offset even more of the downturn in on-highway sales.
On-highway sales outside North America, meanwhile, increased 10.9% to $142 million in the most recent three-month period from $128 million a year earlier.
As a result, revenue exceeded consensus analyst expectations, according to multiple data providers.
However, Allison cut its full-year sales and profit guidance due to the elongated freight market recession in North America.
Allison now expects sales to be in the range of $3.08 billion to $3.18 billion and a full-year net profit of $640 million to $680 million, citing production cuts at truck manufacturers.
When releasing the company’s first-quarter 2025 earnings, Allison reaffirmed earlier guidance of sales in a range of $3.2 billion to $3.3 billion and net income in a range of $735 to $785 million.
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“Revisions in North America on-highway build rates are significant. So as we entered late Q2, early Q3, you started to see announcements of layoffs, shift reductions, down days extended, summer shutdowns,” CEO David Graziosi said during Allison’s quarterly earnings call. “We probably haven’t seen anything quite like that in several years.”
“The fact is [original equipment manufacturers] are responding to near-term market demand conditions,” the company’s top executive told analysts Aug. 4. “You’ll notice plenty of comments, I think, from the OEMs relative to supporting market demand from dealer inventory. Inventories are relatively elevated. We talked earlier in the year about the expectation of medium-duty softening this year. That in fact has been the case.
“OEM comments for Q2 also indicated some level of moderation on the Class 8 straight [truck] vocational side as well.”
Where Allison expects a boost is from the the off-highway business of automotive components manufacturer Dana for about $2.7 billion. The deal is expected to close late in the fourth quarter of 2025.
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“The acquisition of Dana’s off-highway business will strengthen our position as a premier industrial company, accelerating current growth objectives while multiplying future global growth opportunities,” Chief Operating Officer Frederick Bohley told analysts.
“We believe that the combined businesses’ increased set of capabilities and products will allow Allison to penetrate and expand into markets that are growing yet currently underserved by our core business, such as the agricultural and construction markets,” Bohley added.
After the deal closes, the company will employ nearly 15,000 staff. Some 90% of Allison’s employees are based in the U.S. Most of the employees of the new unit will be based elsewhere in the world.
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