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Paccar SWOT & PESTLE Analysis

ID : 52324653| Apr 2018

COMPANY PROFILE -Paccar

Business Sector :Automobile, Commercial Vehicles and Financial services Information technology

Operating Geography :North America, Global

About Paccar :

Paccar is the leading global technology conglomeratethat is into the design, manufacture and customer support of all the types of commercial vehiclessold globally under the Kenworth, Peterbilt, and DAF nameplates. The Company also designs and produces diesel engines and other powertrain components for manufacturing its own products and for selling it to third party manufacturers of trucks and buses. Through a globalized network of Parts Distribution Centers, Paccar distributes vehicle parts to its dealers which is facilitated through its finance and leasing subsidiaries. The Company also produces and sells industrial winches under the Braden, Carco and Gearmatic brands.

Paccar was incorporated in Delaware in 1971 and is the successor to Pacific Car and Foundry Company which was incorporated in Washington in 1924. The Company maintains prodigious standards of quality for all of its products as part of its proven business strategy. They are supremely designed, highly tailored for specific applications and sold in premium markets, where there is a demand for olympian performance and pride of ownership. PACCAR Global sells the company’s products in more than 100 countries and has more than 25000 employees as of 2017. PACCAR’s spectacular credit ratings of A+/A1 patronized PACCAR Financial Services’ new loans and leases of $4.33 billion. Stockholders’ equity was a record $8.05 billion. Riding on the strong financial performance in 2017, after-tax return on beginning stockholders’ equity (ROE) was an impressive 24.7%. Paccar's USP or unique selling point lies in being a leading technology company specializing in design and production of heavy duty commercial vehicles, parts and winches.

Paccar Revenue :


$19,456.4 million – FY ending 31st Dec 2017 (y-o-y growth 14.23%)
$17,033.3 million – FY ending 31stDec 2016

Competitive Analysis of Paccar

SWOT
PESTLE
The SWOT analysis for Paccar is presented below:
Strengths
Weaknesses
1. Geographically diversified business
2. Renowned Brand name
3. Innovative in IT that meets ever-changing market needs
4. Extensive dealer network and skilled workforce.
1. High debt level and increase in tax rate
2. Effect of recession and decline in revenue
Opportunities
Threats
1. Growing demand in developing countries
2. New product and services
3. Expansion and mergers and acquisition:
1. Increasing cost and fuel price
2. Technological problem
3. Cyclic nature of industry
4. Increasing competition
SWOT & PESTLE (combined)
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Detailed SWOT Analysis of Paccar

 

Strength

1. Geographically diversified business: Geographically diverse business and revenue helps the business to shield from shocks in any one part of their business. Companies located in different countries or locations around the world have different characteristics and therefore this helps the company to lower their risk by investing in parts of the world with low correlations. This lowers risk and increases the value of the business over the long-term. Paccar has an established business in North America, Europe and Australia. Brazil, India, China, and Russia are some of the markets Paccar has recently invested in as it forayed into South America, Eastern Europe, Africa and ASEAN.PACCAR Financial Services’ (PFS) has operations in 24 countries on four continents, Paccar parts is expanded into 130 locations in 31 countries while DAF, Kenworth and Peterbilt trucks and parts are sold in 100 countries on six continents.

2. Renowned Brand name in commercial vehicle production and assembly: Paccar has a strong brand name across various heavy equipment industries. Top-selling brands Kenworth and Peterbilt were awarded for customer satisfaction by global research company J.D. Power and Associates. The Paccar business strategy revolves around Quality, Technology and Innovation by offering premium products and services for a profitable market share growth across expanding geographies. Various financial services such as financing, leasing and insurance services to both dealer and customer is provided by Paccar Financial Services over 24 countries and this includes a portfolio of around 200000 trucks and trailers. Paccar believes that trucking takes the economy forward. In 2017, 71% of U.S. Freight Tonnage was hauled by trucks. Paccar is razor-focused on the heavier commercial vehicleswith notable double-digit market share in North America, Europe and Australia. The Company's heavy duty market share was 35% in Mexico, 31% in U.S and Canada, 22% in Australia, followed by 15% in Europe and 4% in South America. Total production in 2017 was 2.3 million units with Paccar standing at #8 position globally. Paccar has delivered net profits for 79 consecutive years and given out dividends since 1941.

3. Innovative in IT that meets ever-changing market needs: For better customer service management, Paccar gives 24 hour service a day throughout the year so as to have control on inventory and also to increase the output rate. New innovative products and technologies like the launch of the NEW DAF CF & XF, which bagged the "International Truck of the Year 2018" award, Paccar Powertrain, Platooning technology, Zero-emission Kenworth is what lends this American technology behemoth a great competitive advantage over its competitors.Kenworth and Peterbiltwitnessedwhopping U.S. and Canada Class 8 retail market share of 30.7%.The PACCAR engine factory in Mississippi earned the 2017 plant of the year honor from quality magazine. T680PACCAR IT was honored in the Information Week Elite 100 for the fifteenth consecutive year. The ranking is given to companies with innovative idea in IT that meets ever-changing market needs. Paccar's IT developments have also paved the road for autonomous commercial vehicles to provide greater vehicle autonomy which in turn will improve safety, fuel efficiency and truck utilization and simultaneously increment truck content and demand for parts.

4. Extensive dealer network and skilled workforce: Paccar delivers its product and services in more than 100 countries with Asia and United States contributing the major part in generating revenue for the firm. It has almost 1800 dealers in and around the world. Acquisition of DAF and Leyland trucks has strengthened its position globally and the company has more than 25,000 employees as of 2017.The one thing which makes Paccar successful is its extensive dealer network and skilled workforce which are located in almost 2100 locations.

Weakness

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Opportunity

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Threat

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Key Business Segments / Diversification :

Paccar
Commercial Vehicles Powertrain Information Technology Aftermarket Support Financial Services
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TABLE OF CONTENTS
DELIVERY AND FORMAT
WHY CHOOSE US?
References used in Paccar Analysis Report

1. Paccar Annual report 2016: http://www.paccar.com/media/2583/paccar_2016_annual_report.pdf

2. Relative Strength of Paccar https://www.forbes.com/sites/dividendchannel/2015/12/16/relative-strength-alert-for- paccar

3. Heavy duty truck market in 2017 to 2021 http://www.prnewswire.com/news-releases/global-heavy-duty-trucks-market-2017-2021-with-daimler-trucks-man-paccar-scania--volvo-trucks-dominating-300506559.html

4. Impact of transportation industry in 2030 https://www.automotiveworld.com/megatrends-articles/truck-transportation-2030-impacting-commercial-vehicle-industry/

5. Three ways Trump presidency affect auto industry http://wardsauto.com/industry/three-ways-trump-presidency-affect-auto-industry

6. New regulation which will change trucking in 2017 https://qualityco.com/how-new-regulations-will-change-trucking-in-2017/

Copyrights and Disclaimer

Paccar SWOT and PESTLE analysis has been conducted by Deepika Talreja and reviewed by senior analysts from Barakaat Consulting.

Copyright of Paccar SWOT and PESTLE Analysis is the property of Barakaat Consulting. Please refer to the Terms and Conditions and Disclaimer for usage guidelines.