Paccar to keep selling current heavy-duty truck engines in ’27

Paccar's flagship trucks from left: Peterbilt, Kenworth and DAF. (Business Wire)

Paccar will continue to sell current heavy-duty truck engine configurations that do not meet incoming emissions regulations, executives said, staggering the introduction of model-year 2027 engines as at least one of its peers already committed to doing.

The parent company of Kenworth and Peterbilt — which saw a jump in profit and truck sales in the second quarter of 2026 — expects the slower than previously expected introduction of model-year 2027 engines to boost sales in 2027, Paccar CEO Preston Feight and President Kevin Baney said July 28.

A Biden-era requirement that nitrogen oxide emissions for heavy-duty trucks fall to 35 milligrams per horsepower-hour from 200 mg/hp-hr will become effective Jan. 1, but OEMs were offered wiggle room by the Trump administration on implementation, noncompliance penalties and NOx credits.

“We are planning on selling the current product to our customers. That’s the engagement we’ve had with many, many customers that that’s their preferred approach is to ease into this thing,” Feight told analysts during the truck maker’s second-quarter earnings call.

Nonconformance penalties (NCPs) will be a key factor, the executives said, agreeing with analysts that an additional cost of $8,000 to $10,000 for a newer model engine adhering to the stricter emissions rules would be trumped by expected NCP prices of between $6,000 and $7,000.

Paccar’s decision mirrors Cummins’ plans to stagger the introduction of two model-year 2027 engines that meet the tighter emissions standards after reviewing the draft Environmental Protection Agency regulations announced July 9.

Traton Group, parent company of International Motors, is investigating phasing in its model-year 2027 engines, CEO Christian Levin said during the Volkswagen Group unit’s Q2 earnings call July 23.

Levin also offered context for the changes, noting that uncertainty lingered while the regulations remained in draft form just five months before they are scheduled to become effective — a status he termed “bothersome.”

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Paccar CEO Preston Feight (left) and ATA President Chris Spear listen as EPA Administrator Lee Zeldin discusses the nitrogen-oxide emissions proposal. (American Trucking Associations)

However, Paccar said a brighter truck demand outlook in 2027 will build on existing momentum in sales.

Paccar’s global third-quarter 2026 sales are expected to grow to around 42,000 trucks even as build rate increases are partially offset by the normal European summer shutdown, Feight said. Paccar is also the parent company of DAF, which is headquartered in Eindhoven, Netherlands.

Bellevue, Wash.-based Paccar’s global truck deliveries totaled 38,700 units in Q2, down 1.5% compared with 39,300 in the year-ago period but up 16.9% compared with 33,100 in the first three months of 2026.

Truck sales in the U.S. and Canada in the most recent quarter totaled 22,000 vehicles, a decrease of 4.3% compared with 23,000 in the same period a year earlier but up 23.6% compared with 17,800 trucks in Q1 2026.

Still, Paccar’s forecast for industrywide U.S. and Canada Class 8 truck retail sales remained unchanged at a range between 230,000 and 270,000 trucks in 2026.

But the jump in sales aided Paccar’s margins and profit, with the gross margin increasing to 14.4% from 13.1% a year earlier.

Paccar posted net income of $752 million in Q2, a 3.9% increase compared with $723.8 million in the same period a year earlier. Q2 sales and financial services revenues totaled $7.55 billion compared with $7.51 billion in the 2025 period.

“Customers are benefiting from higher freight rates due to constrained industry freight capacity. Fleet age has increased as well, providing an opportunity for customers to refresh their fleets with newer, more fuel-efficient trucks,” said John Rich, Paccar executive vice president and chief technology officer.

Some 90% of Kenworth and Peterbilt’s build slots for the rest of 2026 are filled even though the OEMs’ build rates were expanded earlier in the year. That appetite for additional trucks is also offering Paccar more flexibility on pricing, executives said.