Paccar, Volvo CEOs see production picking up from Q1 pace
Key takeaways
- Volvo is tightening truck build slots as OEMs balance pricing power and production growth.
- Paccar says Class 8 production capacity remains available despite stronger fleet orders.
- Suppliers may increase output as North American truck demand gains momentum.
Just how aggressively should fleets be placing truck orders with original equipment manufacturers as the market builds momentum? That, it seems, depends on which company they’re asking to build them.
Speaking on their first-quarter earnings conference calls, the leaders of Volvo Group and Paccar both said production rates are picking up nicely but offered different assessments of just how many production slots might be available in coming quarters for carrier executives looking to refresh and/or expand their fleets.
Volvo President and CEO Martin Lundstedt told analysts that his team made the “tough” decision in the first quarter to idle its U.S. plants between 25% and 30% of the time because orders were weak in late 2025. April was better in that regard, he added, and starting next month, “we will use the installed capacity.”
Lundstedt also spoke about how Volvo Group is managing its capacity for its North American brands, Volvo Trucks North America and Mack Trucks, rather closely to the vest, as his team attempts to both grow volumes gradually and build some pricing power.
“There is probably also a certain element […] of also getting availability of the slots, both from a dealer perspective as well as a customer perspective,” he said. “It’s important to have the right balance in the order board because if you are taking it too far out in time—that is our view—then you need to introduce a number of rather complicated mechanisms of the cancellation fees or what have you.”
It’s fair to say Paccar CEO Preston Feight sees things a bit differently. On April 28, while discussing the Q1 results of the parent company of Peterbilt and Kenworth, Feight was asked about the balance between build slots and possible orders later this year. He didn’t name Lundstedt—who reported Volvo’s results four days earlier—but he appeared to poke at his peer’s commentary.
“We’re full in Q2. We’re majority full in Q3, Q4,” Feight said. “I’m not sure I recognize the commentary about people not having slots. That sounds more like a marketing scheme.”
On the whole, Feight and Lundstedt are on the same page about the North American market. Both reiterated their teams’ sales forecasts for the year and were asked by analysts why they did not raise them, given that orders have strengthened. Feight said Q1’s weakness—when Paccar delivered 17,800 new trucks compared to 22,200 early last year—means there’s a lot of catching up to do.
“The first quarter really didn’t have a high cadence to it. So if the first quarter ran at something around or a little under 200,000, then in order for it to come to the midpoint at 250,000, there’s going to be already a rapid acceleration,” Feight said. “And we have a great supply base, but they also need to be able to spin up their operations. So the rate of increase quarter over quarter is what probably informs the total market size.”
Paccar reported a Q1 profit of $605 million on sales of $6.23 billion. The net income figure was up from $505 million in the same period of last year, but that’s when Paccar booked a $350 million gain to cover long-running litigation around a European Commission cartel decision around its DAF Trucks division.
For its part, Volvo Group (which also makes buses, construction equipment, and industrial and marine engines) reported net income of about $900 million on sales of about $12 billion in the first three months of this year. Those figures were down 17% and 9% from a year earlier, and the company’s operating margin slipped to 9.6% from 10.9%.
About the Author
Geert De Lombaerde
Senior Editor
A native of Belgium, Geert De Lombaerde has more than two decades of experience in business journalism. Since 2021, he has written about markets and economic trends for Endeavor Business Media publications FleetOwner, Healthcare Innovation, IndustryWeek, Oil & Gas Journal, and T&D World.
With a degree in journalism from the University of Missouri, he began his reporting career at the Business Courier in Cincinnati. He later was managing editor and editor of the Nashville Business Journal. Most recently, he oversaw the online and print products of the Nashville Post and reported primarily on Middle Tennessee’s finance sector and many of its publicly traded companies.