Dive Brief:
- Paccar's truck sales and revenues fell by some $1.3 million in Q1 2020 compared to Q1 2019. But its parts division set a record in profit, according to the OEM's earnings, reported Tuesday. Paccar Parts reported a 3% increase in net income year over year. Paccar has 18 parts distribution centers and plans to open two more in 2020.
- Officials at the OEM said parts sales were stimulated by increased shipments of medical supplies, food, infrastructure materials and goods during the coronavirus outbreak. Paccar makes Peterbilt, DAF and Kenworth trucks.
- Paccar CEO Preston Feight told investors that Paccar Parts is continuing to see stimulated parts demand in April. The parts team is working to provide fleets with necessary equipment as they respond to the pandemic demands.
Dive Insight:
A slump in truck sales is unrelated to the fact that trucks on the road still need parts.
The COVID-19 crisis has idled or slowed a number of OEMs, including Paccar, Mack and Daimler Trucks North America. Paccar instituted factory shutdowns on March 24, hoping for an April 6 opening but then extending its halt until April 20. Feight said reopenings of Peterbilt, DAF and Kenworth factories will be phased in through the next two weeks.
But even in downtimes, OEMs may be able to use parts revenue as an offset to declining truck revenue. The wear and tear on America's fleet has likely been substantial, with many responding to the increase in consumer buying in most of March.
Maintenance and replacement costs were already headed upward, before the COVID-19 spread. Breakdown costs for fleets in Q4 2019 soared 25.7% year over year, according to Jim Buell, EVP of FleetNet America.
Buell reported in February that truckload fleets had an average roadside breakdown every 14,333 miles in Q4 2019. LTL fleets visit home base more often, so their average breakdown happened every 57,012 miles in Q4. Tanker fleets saw a breakdown every 37,630 miles.
On Tuesday, Paccar reported Q1 2020 revenues of $5.16 billion, compared to $6.49 billion in the first quarter of 2019. Paccar's net income was $359.4 million, compared to $629 million earned in the same period last year.
