Preston Feight: And I would add into that, everything — I’ll echo everything Harrie said, but I’ll say our dealer has done a really good job of making investments into their workshops, making it more convenient for trucks to come back to them. So that’s good for our customers and good for the Parts business. And I also wouldn’t lose the idea that truck age is still pretty high. And there’s been an undersupply for three years and those older trucks are consuming parts still. So even as freight tonnage may have trimmed a little bit, I’d still say there’s a lot of consumption of parts on the trucks out there.
Steven Fisher: Okay. And then just lastly, can you just remind us where you are in that penetration of the new products and how much runway there is still to go?
Harrie Schippers: For DAF, the new DAF is currently about 75%, 80% of the production mix, and you could compare that to around 25% where we were a year ago. So that ramp-up has been really successful, well executed by the operations team in Europe.
Preston Feight: And in the U.S., it’s been complete. The transition is complete fully.
Harrie Schippers: For heavy trucks, but also for the new medium-duty truck that went into production, what is it, 1.5 years ago and that’s completely changed over now. That new medium-duty truck is made for those customers, Class 6, 7, 8 or low Class 8 provides like the heavy trucks, more value for customers and build in a very efficient way.
Steven Fisher: Thank you.
Preston Feight: You bet.
Operator: Thank you. Our next question comes from the line of Tim Thein with Citi. Please go ahead.
Tim Thein: Yes, thank you. Good morning. Maybe just continuing on the Parts discussion. The full year revenue growth projection at the 8% to 11%, I apologize if I missed that. Are you sticking with that? Or is that — are you taking that — do you now see that higher just given what you see in the first half of the year?
Harrie Schippers: We didn’t say anything on the full year. We said it would be 10% to 12% for the second quarter after 17% in the first quarter. And at that run rate, you would get somewhere between 10% and 13% for the year maybe.
Tim Thein: Got it. Okay. All right. And then just on the — you mentioned the supply chain issues that continue — and as we think about the interplay there with production for the full-year, do you foresee any change in — to the extent maybe the assumption that the supply chain is getting better maybe in the second-half than the first? Do you foresee much by way of a mix change there in terms of potentially maybe some units that weren’t able to get completed, and I’m thinking of a heavy versus medium duty mix. Do you foresee that changing much in an environment where the supply chain is better? Or is that just kind of around the edges? And I’m just wondering if there’s been somewhat of an emphasis to maybe get certain units out the door faster. And if that normalizes, could that potentially have some impact on mix in the back half of the year?
Preston Feight: No, I kind of think your words are really good there, Tim. I think it’s around the edges right now that, that would be dealt with. I think it’s fairly just generally improving and we feel pretty good about the way it’s working through. There’s just moments. And our teams and suppliers are doing a really good job of solving those moments. And so it feels like we’ll just continue to see that trend upward.
Tim Thein: Okay, all right. Thanks for the time.
Preston Feight: You bet.
Operator: Thank you. Our next question comes from the line of John Joyner with BMO Capital Markets. Please go ahead.
John Joyner: Okay, thank you very much. I feel that things are always great at PACCAR. So sorry for another supply chain issue, but maybe I can ask it, I guess, another way. And with all the work to, I guess, help improve available supplies. Are there any areas that are actually maybe better today than prior to COVID? And can you possibly bucket kind of the percentage of areas that are relatively more normal today versus ones that are still constrained?
Preston Feight: Is your question compared to pre-COVID, did you say?
John Joyner: Yes. I’m trying to understand, I mean, I guess that things are improving, but is there — just given a lot of the work that’s been going on to help the supply base to help the kind of velocity within the supply chain? Are there any areas that are actually structurally better. I mean maybe this is a dumb question, but I feel like it could be the case.
Preston Feight: Well, I think that I would give a lot of credit. We built 51,000 trucks in a quarter. That’s a lot of output. So the supply base is doing a good job. That’s a high number if you wanted to go back to pre-COVID. And our 51,000 to 54,000 in the second quarter is also a high number. So I would say that great suppliers, good partnerships there and they are doing generally a good job. And there’s just always opportunities to keep improving. And we do that together with them.
John Joyner: Okay. All right. Thank you very much. And then — with regard to the CapEx bump that up a little bit this year. What incremental investments are causing the step-up? And do you expect the total to keep progressing higher or maybe in that $600 million to $700 million range for the next few years?
Preston Feight: We think the $600 million to $650 million is the right number. We’ve got some really fun and exciting projects that we’re working on, that are coming along nicely right now, it’s the third phase of our battery electric vehicles, it’s engine platforms that we’re developing is new truck platforms that we’re working on. Just a lot of really interesting things, and as long as we can make good progress on them, we’ll spend the money and commit to that.
John Joyner: Okay, all right. Excellent. Thank you, Preston.
Preston Feight: You bet.
Operator: Thank you. Our next question comes from the line of Nicole DeBlase with Deutsche Bank. Please go ahead.
Nicole DeBlase: Yes, thanks, guys. Good morning to you. Can we just start with South America. I think you tweaked your industry forecast a bit lower there. So would love to hear what you’re hearing on the ground in that region.
Preston Feight: Sure. I mean we’ve had great success so far in South America in the first quarter. What we see is there’s pretty high interest rates down there. And I think there’s questions about — from the customers about what might happen with those interest rates. So there’s maybe for some parts of the market, a pause in that space. But really, we still have a great backlog there and expect things to keep going. Our build rates have increased there, and we expect them to stay high. And those are the kind of primary things that are happening. So our tweak down is really about that interest rate pause that we’ve seen in the market a little bit.
Harrie Schippers: Yes, at the same time, Brazil is transitioning from Euro 5 to Euro 6. And we know DAF has an excellent Euro 6 product in the market out there. So a great opportunity for us to grow our market share a little bit further.
Nicole DeBlase: Got it. Okay. That’s helpful. And then second question on the 2Q build guidance. Any thoughts from a regional perspective, like — is everything kind of flattish sequentially versus the 51,000 in 1Q, everything up slightly? Like just any thoughts by region would be helpful.
Preston Feight: I wouldn’t try to differentiate too much between the regions. I think we’re going to see good performance in all of the regions for PACCAR.
Nicole DeBlase: Thanks. I’ll pass it on.
Preston Feight: All right, you bet.
Operator: Thank you. Our next question comes from the line of Jerry Revich with Goldman Sachs. Please go ahead.
Jerry Revich: Yes, hi. Good morning, everyone. And Michael and Brice, congratulation.
Preston Feight: Thank you.
Brice Poplawski: Yes, thank you.
