Paccar Analysis

Paccar Inc was founded in Seattle in 1905 as the Seattle Car Manufacturing Company. It was originally formed as a supplier of railcar and logging equipment to the Washington State timber industry. Through merger the company was renamed the Pacific car and Foundry Company, and, in 1945, it entered the on-highway truck market through the acquisition of the Seattle-based Kenworth Truck company. This was followed by the purchase of another North American heavy-duty truck manufacturer - Peterbilt Motors - in 1958. In 1972, the company was renamed PACCAR Inc, and in 1981, it made its first international acquisition with the purchase of the UK Foden truck brand. In 1996, it acquired the Netherland's-based truck OEM DAF out of bankruptcy, and, in 1998, purchased another UK truck manufacturer Leyland Trucks. More recently, it took a 19 percent stake in Czech truck manufacturer Tatra.

While PACCAR's initial growth was predicated on acquisition, it has now begun to focus more upon organic expansion. It has established sourcing operations in both China and India, and will bring a production facility in Brazil on stream during 2013. It has also begun to produce proprietary engines for its Peterbilt and Kenworth brands within the United States in a facility that began operation during 2010. In addition, PACCAR, like most other Truck manufacturers, has a Financial Services division that serves as a funding partner for its customers, as well as a number of small, legacy operations such as PACCAR Winch. Figure 1 illustrates the US Class 8 truck market and the respective shares of its competing players from 2006 - 2011.

PACCAR's overall industrial position in a global context is referenced in Appendix 1, which provides a global ranking of Triad (North America, Europe and Japanese-based) and non-Triad truck manufacturers. Figures 2 and 3 demonstrate both the reliance of PACCAR on its core North American market, and upon its core heavy truck product line.

This...