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Industry Weathers ’07 Truck Sales Downturn

Heavy-duty truck sales have plummeted in North America since most trucking companies are avoiding the more complex and expensive EPA ’07 diesel emissions compliant model-and yet key OEMs and suppliers logged solid first quarter profit.

Allen Schaeffer, executive director of the diesel engine advocacy group Diesel Technology Forum told FleetOwner he expects many OEMs and their suppliers to cite global strategies as helping them manage emissions-related market swings in their quarter ended Match 31 financial reports.

“It’s driven in large part not just because of economies of scale-but being involved in lots of different market provides insulation from cyclical swings in one particular market,” Schaeffer said.

Case in point, Paccar, parent company of Peterbilt and Kenworth, announced its earnings actually increased 6.9% to $365.6 million compared to 1Q 2006. Global diversification and strength in its aftermarket parts and financial services more than made up for slack North American unit sales-which comprises of less than half of its revenue.

Cummins reported a record 1Q net income of $143 million, up 5.9% from the same quarter last year. The heavy-duty truck market represents the company’s largest business, but cost cutting measures and diversification away from heavy-duty trucks led to a more profitable quarter.

Engine maker Caterpillar said its earnings held relatively steady, considering the “severe weakness” in its key on-highway truck and housing construction-related equipment. Its profit slid 2.9% to $816 million.

“Our global reach, the breadth of our product line, the wide reach of the industries we serve and the strength of our diversified service businesses all contributed to our success in the first quarter,” said Cat chairman & CEO Jim Owens.

Sales for on-highway truck applications plunged 53%, Cat said.

“The industry is mindful as to what’s happening in [new EPA ’10 emission stardards],” Diesel Technolgy Forum’s Schaeffer said. “All of these companies today are global companies. And you hear things like global and harmonization and part of it is for exactly this reason- a company has a lot of challenges and added business expenses to comply with these standards.”

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