Paccar SWOT & PESTLE Analysis

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

This section is available only in the 'Complete Report' on purchase.

Opportunity

This section is available only in the 'Complete Report' on purchase.

Threat

This section is available only in the 'Complete Report' on purchase.

Political

1. Trump Presidency can affect auto Industry: The Administration believes NAFTA has encouraged U.S. automobile makers to shift production to Mexico, at the cost of Americans jobs and hitting the U.S. economy. Mexico imports a lot of the parts it uses to manufacture vehicles that are then exported back to the U.S. This tariff policy could have negative consequences on Paccar revenue as the US government are planning to cut corporate tax by 20% to give economic stimulus to US players as the US government is promising to look at federal government gas-emissions regulation for cars and trucks.

Economic

1. Threats from Chinese low cost market: The major factors hindering the growth of the market is Chinese low-cost market that can threaten global players' existence. The main reason why China is giving though competition to Paccar is that the Chinese government is giving support to its local players not in both financial and non-financial way which is helping the local players to establish themselves as cost effective market players. Due to these advantages, they are able to sell products at cheaper rate than Paccar and therefore most of the developing countries in Asia are dependent on these local players for automotive parts. This has also helped Chinese players to improve their geographical presence in this sector in and around the world and giving competition to major international truck selling players

2. Cost of diesel and market fluctuation: As the US and Canadian economies are currently growing at a steady rate which implies that demand for trucks is also rising as more goods need to be transported domestically or across the border. Therefore seasonal demand fluctuations are bottlenecks as the supply and demand ratio changes. This factor speaks for itself. The price of diesel in the USA has been pretty steady therefore one should be prepared to see these diesel costs on an upward trend which causes carrier FSCs (Fuel Surcharges) to rise.

Social

1. Safety ratings and low maintenance cost: Customers now a day want to own such a vehicle whose safety features and ratings are good and also the cost of maintenance of the vehicle is low. These factors are becoming one of the main reasons to prefer one brand over the other irrespective of cost and other features. It should withstand any weather condition and the insurance should be available with good terms. People also buy when economy is good.

Technological

This section is available only in the 'Complete Report' on purchase.

Legal

This section is available only in the 'Complete Report' on purchase.

Environmental

This section is available only in the 'Complete Report' on purchase.