PACCAR makes money by building and selling large commercial trucks under three brand names: Kenworth and Peterbilt in North America, and DAF in Europe and beyond. When a trucking company needs a new rig to haul goods across the country, there is a good chance it ends up buying from one of those three brands. But PACCAR does not stop earning money when the truck drives off the lot. It also sells the replacement parts those trucks need for years afterward, and it lends money to customers who cannot pay for their trucks all at once. Those three activities, truck sales, parts sales, and truck financing, form a single connected machine. The diagram below traces where the money goes.
Five years of financial data tell a clear story about how that machine performs over time. Revenue climbed from $23.5 billion in 2021 to a peak of $35.1 billion in 2023, then pulled back to $28.4 billion in 2025. That pattern is not a surprise. PACCAR itself says truck sales are cyclical, meaning they rise and fall with the broader economy and with how much freight is moving around. When businesses are busy shipping goods, fleets order more trucks. When the economy slows, orders dry up. That is exactly what happened between 2023 and 2025.
What makes the financial picture more interesting is what happened to cash while revenue was falling. Operating cash flow actually held up well. In 2023 it was $4.2 billion. In 2024 it was $4.6 billion. In 2025 it was still $4.4 billion, even as revenue dropped by more than $5 billion from the prior year. Free cash flow, which is the cash left over after paying for factories and equipment, was $3.7 billion in 2025. That resilience comes partly from the Parts segment, which kept growing even as truck sales fell. Parts revenue rose from $6.67 billion in 2024 to $6.87 billion in 2025. Parts also carry better margins. The Parts segment earned a pre-tax return on revenues of 24.3% in 2025, compared to just 4.5% for the Truck segment in the same year.
The balance sheet adds another layer of stability. PACCAR held $9.5 billion in cash and marketable securities at the end of 2025 and has carried negative net debt, meaning more cash than debt, every year in the five-year window. Net debt stood at negative $6.3 billion in 2025. That cash pile gives the company room to keep spending on research and development even during a downturn. It spent $445.5 million on research and development in 2025 and plans to spend $450 to $500 million in 2026. The company has earned a profit for 87 consecutive years, including through multiple recessions.
Not everything in the 2025 results was clean, though. Truck segment income before income taxes collapsed from $2.85 billion in 2024 to $871 million in 2025. That is a drop of 69% in one year. Worldwide truck deliveries fell 22%, from 185,300 units to 144,200 units. Average prices per truck also fell as competition intensified. At the same time, the cost per truck went up, partly because of tariffs imposed by the U.S. government starting in March 2025. And the company took a $350 million charge related to civil litigation in Europe in the first quarter of 2025, which dragged net income down from $4.16 billion in 2024 to $2.38 billion in 2025. The 90-day production backlog, a forward indicator of near-term demand, also shrank from $7.6 billion at the end of 2023 to $2.6 billion at the end of 2025.
The risks PACCAR faces are specific and documented, not just generic warnings. The most immediate is tariffs. The company assembles trucks for U.S. customers in Ohio, Texas, and Washington, which limits some exposure. But imported parts still carry tariff costs, and those costs raised the average price per truck in 2025, squeezing margins even as sales prices fell. A second risk is emissions regulation. The U.S. Environmental Protection Agency, the European Union, and California's Air Resources Board all set strict limits on what trucks can emit. The company says failing to meet those rules could result in large fines or being blocked from selling trucks in California entirely. Third, the shift to electric and hydrogen trucks is not happening as fast as many expected. PACCAR is currently producing battery-electric Kenworth, Peterbilt, and DAF trucks, and it has partnered with Cummins, Daimler Trucks, and EVE Energy on a battery factory in Mississippi. But the company itself acknowledged it is reviewing the timing of investments in that factory because market adoption projections have changed. If freight customers do not switch to zero-emission trucks quickly enough, the billions being spent on new powertrain technology may not pay off on schedule.
There is also a growing stress signal inside the Financial Services arm. Worldwide accounts that were 30 or more days past due rose from 1.3% of the retail loan portfolio at the end of 2024 to 2.4% at the end of 2025. In Brazil and Mexico, past due accounts jumped from 2.0% to 4.6%. Net charge-offs, meaning loans where customers stopped paying and the money was written off, rose from $53.5 million in 2024 to $85.0 million in 2025. A weaker freight market means trucking companies earn less, which makes it harder for them to repay their truck loans. If that deterioration continues, credit losses will climb further.
Despite the difficult year, Parts revenue kept growing, free cash flow remained $3.7 billion, and the company maintained its 87-year streak of annual profitability. The Financial Services segment actually grew its income before taxes, from $435.6 million in 2024 to $485.4 million in 2025. The structural question is whether the stability of Parts and Financial Services is enough to carry the company through a prolonged truck market downturn, especially while spending hundreds of millions of dollars each year to develop electric and hydrogen trucks that have not yet found mass-market demand.