Preston Feight: But as a percentage of their total just out in what Harrie is saying, it’s a percentage of the total business for them, it’s not that significant. And I think we also look at it and say, like interest rates are in pretty normal levels from a long-term history standpoint. So with the economy moving along nicely with economic growth expected, we think it should be a good year.
Rob Wertheimer: Perfect. And then is vocational a different market. And I wonder if you could just comment on, you mentioned it stronger. It seems obviously stronger. Just any comment on the bifurcation between that and the long-haul segment, how big that is or how wide that is if it is more resilient given the infrastructure stuff.
Preston Feight: Sure. Great topic for us. And you think about it, we have over 40% share in the vocational market between Kenworth and Peterbilt. It’s – I mean, this is not a perfect number, but it’s roughly 25% of the total market. Obviously, it varies plus or minus. It’s exceptionally strong right now. Backlog is effectively full for that market through much of the year. We’re kind of stacked up at body builders. So that bodes well for Kenworth and Peterbilt for the balance of the year and going forward. And we think just as you look at the infrastructure spending in the country, and that’s continuing to happen, and it’s going to continue to be strong for us.
Rob Wertheimer: Okay. Thank you.
Preston Feight: You bet.
Operator: Thank you. Our next question comes from Steve Volkmann of Jefferies. Your line is now open. Please go ahead.
Steve Volkmann: Good morning, guys. Thanks for taking the question. I guess, we’ll get more detail in the queue, but can you just comment on how pricing is looking these days?
Preston Feight: Brice, do you want to share anything price?
Brice Poplawski: Yes. Our pricing is approximately 3% higher, and that’s very much in line with costs, Steven.
Steve Volkmann: Got it. Thank you for that. And then I’m curious, Preston, I think you said that you thought 2025 and 2026 would be improved or I think more positive, I wrote down here. Are you thinking that we will start to see some pre-buy as early as 2025? I know there’s a very big price increase coming here. Just your thoughts about how that plays out.
Preston Feight: Yes, I do. I think, obviously, the future is unknowable caveat that for you. But I would say that when you look at the buying cycle and trucks are being run and the fact that people are sensitive to those emissions changes, that it should help 2025 and 2026 be very strong years for the industry. And I think the question that everybody is kind of trying to figure out is when will that start and how significant will that initiation point begin. So for right now, what we look at is the trucks we’re producing are the best trucks we’ve ever built. They have great efficiency, and they’re not only great new trucks, but they’re also great used trucks in a few years. So between that spot, the 2025 and 2026 strengthening market I think, all feels really good.
Steve Volkmann: Great. Thank you, guys.
Preston Feight: You bet. Have a good day.
Operator: Thank you. Our next question is from Jaime Cook of Truist. Jaime, your line is now open. Please go ahead.
Jaime Cook: Hi. Good afternoon, and nice quarter. Just on the answer to Steve’s question, the 3% price that you said was in line with cost. Was that – can you, I guess, extinguish between truck OE and aftermarket? And then I guess, any commentary on pricing in the remaining three quarters. I’m just curious like your truck deliveries in the second quarter are similar to first, but margins are expected to be lower in the second quarter versus the first quarter. So any color on that? And then I guess, follow-up, Preston. Obviously, margins have been very strong. As we’re going through the cycle and demand is starting to, I guess, moderate. Any view on structurally how much you think your margins have improved versus potentially having to give a step back on price, just related to the market share and the new truck introduction. Just wondering how you’re structurally thinking about margin improvement this cycle. Thank you.
Preston Feight: You bet, Jaime. There’s a lot of questions in there, but thanks, it’s good to hear you. So I’d say to start with on the truck side, the price versus cost is 3 and 3. And on the Parts side, prices 3 and cost is 2. So that kind of helps you there kind of expect something maybe in a similar range as going forward through the course of the year. That all, of course, leads into your questions on margin and I look at the margins. One of the things we’re really proud of our people at PACCAR are creating these great trucks, these great parts business systems, because it is delivering these structurally stronger margins for everyone. Really happy with how that’s going. The fact that we delivered a 19% margin in a time when there’s a truckload carriers are a bit softer, feels really positive.
And the fact that we shared with you the second quarter looks like 18% and 18.5%, really strong margins for the company, which is showing that we can demonstrate excellent performance through all parts of the business cycle. Really pleased with the team for what they’re doing.
Jaime Cook: Thank you.
Preston Feight: You bet.
Operator: Thank you. Our next question comes from Chad Dillard from Bernstein. Your line is now open. Please go ahead.
Chad Dillard: Hi. Good morning, guys.
Preston Feight: Hey, good morning.
Chad Dillard: So I was hoping to get your thoughts on the shape of the cycle. I think Preston, you mentioned that 2025 to 2026 would be a better year versus 2024. Just want to get a sense for whether you’re seeing a bottom in orders, like what gives you that confidence? And then do you think capacity needs to leave the market before you see an order rebound?
