PACCAR Inc (NASDAQ: PCAR) on Tuesday reported consolidated revenues of $28.44 billion for the full year 2025, a decrease from the record $35.13 billion achieved in the previous year. The manufacturer of Kenworth, Peterbilt, and DAF trucks posted adjusted net income of $2.64 billion, or $5.01 per diluted share, marking the fourth-highest annual profit in the company’s 120-year history.
For the fourth quarter ended December 31, 2025, revenues reached $6.82 billion, down approximately 13.8% from the $7.91 billion reported in the same period in 2024. Quarterly net income stood at $556.9 million, or $1.06 per diluted share, compared to $872.0 million a year earlier. While the earnings per share (EPS) figure was largely in line with analyst consensus, the revenue results exceeded many market forecasts, suggesting resilient demand for parts and financial services despite a broader slowdown in truck deliveries.
Following the announcement, PACCAR shares saw modest volatility, reflecting a market balancing the year-over-year contraction in truck sales against robust performance in the company’s higher-margin segments.
Segment Performance and Financial Highlights
The company’s annual results were significantly influenced by a non-recurring after-tax charge of $264.5 million related to civil litigation in Europe. Excluding this item, adjusted net income for the year was $2.64 billion. On a GAAP basis, full-year net income was $2.38 billion ($4.51 per diluted share).
The downturn in quarterly performance was primarily attributed to a period of weaker freight demand that slowed new truck sales across the industry. Total truck deliveries for the fourth quarter were 32,900 units. Despite the lower volumes, PACCAR maintained a consolidated after-tax return on revenue of 8.4% for the full year.
Counteracting the cyclical softness in truck manufacturing, the company’s aftermarket and financial divisions reported record figures:
PACCAR Parts: Annual revenues rose 3% to a record $6.87 billion, while fourth-quarter revenue hit an all-time high of $1.74 billion.
PACCAR Financial Services (PFS): The segment achieved record annual revenues of $2.21 billion, with pretax income rising 11% to $485.4 million for the year.
Dividends: The board declared total cash dividends of $2.72 per share during 2025, including a $1.40 per share year-end extra dividend paid in early January 2026.
Strategic Investments and 2026 Outlook
PACCAR management provided a constructive outlook for 2026, citing improved clarity regarding trade policies and emissions regulations. The company anticipates that the North American Class 8 truck market will see retail sales between 230,000 and 270,000 units in the coming year, supported by stabilizing freight conditions and economic growth.
Capital expenditure for 2026 is projected between $725 million and $775 million, with research and development (R&D) spending estimated at $450 million to $500 million. These investments are directed toward several long-term growth drivers:
Next-Generation Powertrains: Continued development of clean diesel, hybrid, and battery-electric systems.
Manufacturing Efficiency: Expansion of flexible manufacturing capabilities and autonomous vehicle platforms.
Market Share Expansion: Kenworth and Peterbilt maintained a combined 30% share of the U.S. and Canada Class 8 market in 2025, a position the company seeks to defend through new product launches like the DAF XF and XD Electric models.
Industry and Macroeconomic Context
The heavy-duty truck industry faced a challenging 2025 characterized by a “freight recession” in North America and shifting regulatory landscapes in Europe. While industry-wide Class 8 retail sales in the U.S. and Canada totaled 233,000 units—a decrease from 2024 levels—order activity showed signs of recovery late in the year.
Analysts noted that PACCAR’s performance was bolstered by the implementation of the Section 232 truck tariff policy in November 2025. Because PACCAR maintains localized production facilities in the U.S., Canada, and Mexico, the company is positioned to benefit from a competitive advantage over manufacturers more reliant on offshore components. Furthermore, the industry is preparing for the EPA 2027 NOx emissions standards, a transition that management suggests could drive pre-buy activity and influence used truck pricing throughout 2026.
Despite the quarterly contraction in top-line revenue, PACCAR’s 87th consecutive year of net profitability underscores a diversified business model where aftermarket parts and financial services provide a buffer against the inherent volatility of the global truck market.
Reasons to Pass on PCAR
- Full-year revenue decline: 2025 consolidated revenue fell to $28.44 billion from $35.13 billion in the prior year.
- Quarterly revenue contraction: Fourth-quarter revenue declined 13.8% year over year to $6.82 billion.
- Lower quarterly earnings: Fourth-quarter net income decreased to $556.9 million from $872.0 million a year earlier.
- Weaker truck demand: New truck sales were pressured by softer freight conditions across the industry.
- Reduced delivery volumes: Fourth-quarter truck deliveries totaled 32,900 units, reflecting lower production levels.
- GAAP earnings impacted by litigation: A non-recurring after-tax litigation charge of $264.5 million reduced reported net income.
- Core manufacturing under pressure: Truck manufacturing performance declined despite strength in parts and financial services.
- Industry cyclicality persists: The heavy-duty truck market remained in a downturn in 2025, with Class 8 retail sales down year over year.
- Elevated investment commitments: Planned 2026 capital expenditures and R&D spending may limit near-term financial flexibility.
- Dependence on market recovery: The 2026 outlook assumes stabilization in freight demand and economic conditions.