By Bob Tita
Paccar Inc. (PCAR) expects third-quarter production of its commercial trucks to be lower than previously forecast, providing fresh evidence that demand for trucks in the U.S. is likely to remain weak into the fall.
The maker of Kenworth and Peterbilt-brand trucks said late Tuesday that truck production will be 15% to 20% below the second-quarter's production level. The Bellevue, Wash., company previously predicted a 10% decline in production from the second quarter.
"Industry orders for new trucks in North America have slowed in recent months, as customers evaluate the mixed signals of a sluggish economic recovery," said Executive Vice President Bob Christensen in a statement released with a quarterly dividend announcement.
Analysts said Paccar's cutback wasn't entirely surprising given that industrywide orders for trucks in North America have declined every month this year so far compared with the same period in 2011.
"What remains to be seen is whether industry orders pick up again after the summer or whether further cuts to production need to be made in 2013," said J.P. Morgan analyst Ann Duignan in a note to investors early Wednesday.
After a prolonged slump in North American truck sales stretching from 2007 through 2010, the rebound in the truck market has been shallower than expected and began losing steam at the end of last year. Paccar faces the added pressure of a weak truck market in Europe where the company builds DAF-branded commercial trucks. Demand for trucks in Europe this year has suffered from stalled economic growth brought on by the sovereign debt crisis.
Paccar closed Tuesday's regular trading session in New York up 0.43% at $41.71 a share.
Write to Bob Tita at firstname.lastname@example.org
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