That hits all of the OEMs, but it hits Paccar hardest for two simple reasons.

1) With the exception of Navistar, it is chronically exposed to the NAFTA market – probably 60 per cent of its revenue is derived from therein. Of course its export business counts for something, but it is, in comparison with both Volvo and DCX – tiny. Paccar is over-exposed to the most cyclical heavy truck market on earth, and has left it too late to change this. Before anyone mentions DAF – let us remember that it too is a very small fish in a now global ocean. 25 per cent of the EU market is peanuts in terms of the world truck market.

2) There is talk of a market upswing post Q4 2007. The underlying economic indicators do not point to this; and, after all, people only buy trucks if there is something to move with them. If US consumer demand craps out, then there will be a huge surfeit of truck capacity with no obvious demand for it. But, even so it may happen. Where is Paccar then? Not well placed is the answer. Its assembly approach places it at the mercy of the Tier 1 suppliers, who have had to drastically reduce capacity. Will they be able to afford to replace that same lost capacity in time for the EPA 10 upswing – if indeed one happens? Seems very unlikely; CAT is a bust – its ACERT technology is looking farcical, and truck operators don’t want it. Cummins, conversely, is more interested in India and China – potential huge growth markets – than it is with the US – increasingly the preserve of OEMs with captive engines – vid DCX, Volvo and Navistar. A captive engine makes for a better margin, and more reliability of supply. Paccar’s notion that truck operators want a choice is now looking very old. Truck buyers want a keen price and for the thing to start in the morning.

In sum, all Paccar has is the brands and the reputation. Both were fine up to now, but both seem very unlikely to cut it post EPA 07. This year is the turning point for the US truck business, and PACCAR is very badly placed indeed.

For a half sensible – if at times rather individual take on all of this – go take a look at

http://www.roadtransport.com/b.....ucks-blog/

It deals with world rather than just US truck matters, but occasionally there are some good insights to be had.