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Allison posted net income for the most recent quarter of $137 million, a decrease of 31.5% compared with $200 million in the year-ago period. (Allison Transmission)

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Ongoing freight market weakness hammered Allison Transmission profit and revenue in the third quarter of 2025 while also precipitating a cut in full-year earnings guidance.

Indianapolis-based Allison posted net income for the most recent quarter of $137 million, a decrease of 31.5% compared with $200 million in the same period 12 months earlier.

Allison’s sales in Q3 totaled $693 million, down $131 million or 15.9% compared with $824 million in the year-ago period. Nearly the entirety of that slump was the purview of Allison’s on-highway division, where sales plummeted 28.5% to $327 million from $457 million. The decrease was principally driven by lower demand for Class 8 vocational and medium-duty trucks, Allison said, although this was partly offset by price increases on certain products.

“Throughout 2025, our largest end market, North America on-highway, has been negatively affected by global macroeconomic factors leading to demand uncertainty and shifting customer behaviors,” CEO David Graziosi said in comments accompanying the results, which were released after the market closed Oct. 29.

“During this period, we are fully focused on the things we can control, including our commitment to operational excellence, quality, customer service and maintaining strong execution across our business,” the company’s top executive said. “We also continue to work diligently on closing the acquisition of Dana’s off-highway business and are pleased with the progress to date.”

the off-highway business of automotive components manufacturer Dana in June for about $2.7 billion. The deal is expected to close late in the fourth quarter.

The company’s existing off-highway business, meanwhile, saw a $13 million decrease in sales to $7 million from $20 million in the year-ago period. Allison said the slump in off-highway sales was mostly due to lower demand from the energy, mining and construction sectors outside North America.

While analysts expected a decline in overall and on-highway revenue, Allison fell short of consensus expectations of $756 million and $368 million, respectively, according to Zacks Equity Research.

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Graziosi told analysts that Allison does not expect an improvement anytime soon.

“We expect this operating environment to persist in the near term, with market activity likely to remain subdued until there is greater clarity around these regulatory and economic factors,” he said during Allison’s Oct. 29 earnings call.

A meaningful shift will depend on a clear catalyst or resolution of tariff, trade policies and emissions regulation uncertainties boosting demand, he said. As a result, Allison now expects full-year 2025 sales in a range of $2.975 billion to $3.025 billion and net income in the range of $620 million to $650 million.

The company previously cut its full-year sales and profit guidance when releasing its second-quarter 2025 earnings, also due to the elongated freight market recession in North America.

Allison said then that it expected 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.

However, Graziosi told analysts, “as mentioned on our last earnings conference call, we see the reductions in demand in [the North American on-highway market] as a deferral of purchases by end users as opposed to a permanent change in market size.”

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