Paccar Expects Truck Demand Upswing in Second Half
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Optimism is growing at truck maker Paccar about order levels and demand for new tractors in the second half of 2025 and in 2026, said CEO Preston Feight.
In a call with analysts to discuss the company’s second-quarter earnings, Feight said Bellevue, Wash.-based Paccar — the parent company of Kenworth and Peterbilt — expects greater economic clarity to emerge as 2025 progresses. After months of uncertainty caused by a freight recession many expected to have ended by now as well as whipsaw trade policy decisions in the White House, Paccar expects multiple variables to start to turn in its favor, Feight said.
Among those are a rebalancing of capacity in the truckload sector; upside from the One Big, Beautiful Bill Act; pre-buy purchases ahead of upcoming NOx reduction regulations; and a settling of the tariff debate. Each offers positives for the coming quarters and 2026, he said.
“I don’t think it’s just one area,” Feight said. “I think it’s just getting certainty because, as we get clarity, that will create confidence for our customers. And as they have confidence, then that will increase their ability to order trucks.” Feight also stressed that fleets’ equipment replacement needs are minimal at the moment, further slowing order activity.
Paccar’s Q2 profit slumped 35.3% year over year as these economic woes continued to hamper sales, particularly among truckload carriers. Paccar posted Q2 net income of $723.8 million, compared with a $1.12 billion profit a year ago.
Peterbilt and Kenworth achieved 30.4% market share in the first six months of this year. (Peterbilt)
Peterbilt and Kenworth sold 23,000 trucks during the quarter across the U.S. and Canada, down 19.9% compared with 28,700 trucks in Q2 2024.
Industrywide, North American Class 8 truck orders tumbled 36% year over year in June to 9,400 units, according to ACT Research, and dived 28.8% from 13,200 trucks in for May.
Through the first six months of 2025, U.S. Class 8 retail sales fell 5% year on year to 107,827 trucks from 113,529 trucks, according to Wards Intelligence data.
For orders to improve, Feight said, there are a number of key variables in play, some of which may have a domino effect.
“One of the things [in] the truckload sector — which is a pretty significant part of the overall market in the U.S. and Canada — is that there was some overcapacity,” Feight said. “I think that overcapacity is coming out gradually. And as that gets in balance, it will help with rates, which will help with profitability for the carriers, which will help with the truck orders.” He added, “I think that as their profitability improves and their need for trucks continues to increase, then that’s good for the market dynamics.”
A key market dynamic right now is a settling of capacity, he said.
“As that capacity has come out, [and] is still coming out, there’s this balance being achieved. Once we get through that balance point, then we’ll start to see increasing demand,” he said. “So this is all creating some level of pent-up demand for the future.”
Feight noted that the One Big, Beautiful Bill Act signed by President Donald Trump on July 4 included corporate tax cuts that could increase the funds available to carriers to spend on equipment.
A clearer picture on tariffs and regulations will also help persuade carriers to renew their rolling stock, he said.
“Clarification of the ongoing [International Emergency Economic Powers Act] and Section 232 trade policies could enhance market clarity as well as benefiting Paccar and our customers,” Feight told analysts “We anticipate the North American market will strengthen as tariff policies become certain, the truckload market gains momentum and customers begin to anticipate the 2027 NOx emission standards.”
A Kenworth T680. (Kenworth)
Section 232 tariffs on steel and aluminum were first imposed in March and then hiked in June, but the Department of Commerce is conducting an investigation into whether imports of heavy- and medium-duty trucks and parts should see tariff levies too.
Truck prices have risen as a result, and Feight said further increases were in the cards.
“We do have a tariff surcharge listed onto our trucks for the U.S. and Canada right now. And so, we are pricing that in, which allows us to price out into the future,” he said. Feight noted that a thriving freight market would also offer the truck maker greater latitude for price hikes.
At the end of 2024 and start of 2025, truck makers, including Paccar, expected an upturn in purchases by carriers seeking model year 2025 and 2026 tractors to cut the cost of adhering to Environmental Protection Agency regulations. OEMs were disappointed, as the Trump administration promised to pump the brakes on the introduction of the Greenhouse Gas Emissions Standards for Heavy-Duty Vehicles and 2022 Heavy-Duty Nitrogen Oxides rule, lessening the need for a pre-buy.
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But Feight expects the latter rule, which remains on the statute books, to encourage purchases too.
“The law in 2027 is that the standard of NOx will move from 200 milligrams down to 35 milligrams. And if it moves from 200 milligrams to 35 milligrams, that will bring cost to the product, which will encourage customers to be buying trucks probably beginning later in this year,” he told analysts.
As a result, he expects demand for trucks to increase in 2026.
“I feel pretty good about 2026. I think that there’s going to be clarity on these regulatory standards because they’re deploying in 2027, one way or another. There will be clarity around tariffs one way or another. And, as we said, the trucks are getting used. So, 2026 should see improvement,” Feight said.
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