Preston Feight: Well, I think what we shared is we’re filling the third quarter right now and so obviously you and everyone else is watching the second half of the year to see what happens, and I think it’s a little bit too much of a prognostication to guess what Q4 is going to be. But the math says it should be a good year. Our order intake looks like it should be a good year. The truck performance is good, the margin performance is good. So we feel like it all adds up to, like as far as the story can go, really positive outlook.
David Raso: Yes. At least the mix is favoring you with a vocational strength given your position in that market, so, okay, very helpful. Thank you.
Preston Feight: Yes, David, that’s another really good point you brought up. Thanks for bringing that up.
Operator: Thank you. Our next question comes from Jerry Revich from Goldman Sachs. Your line is now open. Please go ahead.
Unidentified Analyst: Hi, this is Clay on for Jerry. Our question here though, what has been the early feedback from customers on how they’re thinking about the higher cost profile of the next generation trucks and to what extent do they value the embedded extended warranty?
Preston Feight: Well, I think they’re obviously paying attention to what it’s going to be. Nobody knows what those new prices are going to be yet. There’s lots of speculation out there. It’s a bit early for the speculation I think. Other than to know the emission standards are going to be requiring additional after treatment changes to the engines and different capabilities on the engines to manage the after treatment. So with those, there’s going to be costs. And I think at any time throughout the years the customers pay attention closely to that. So I think as we already shared, they kind of feel like they’d like to get their orders in a steady way and also kind of avoid any kind of point of disruption around the introduction of the new emission cycle. So that’s what’s going to pull forward the 2025 and 2026 purchases, I think.
Unidentified Analyst: Thanks. And along the same lines as the installed base of those trucks, the 27 emission trucks grows, will your parts market share benefit from the expanded warranty provisions? Thanks.
Preston Feight: Yes, it will. Frankly, simply, yes, it will.
Operator: Thank you. Our next question comes from Jeff Kauffman of Vertical Research Partners. Jeff, your line is now open. Please go ahead.
Jeff Kauffman: Thank you very much and congratulations on a solid quarter. A lot of my questions have been asked. So I want to drill down on truck ASP. You mentioned that new truck pricing is up about 3%. But I’m calculating ASP to be closer to up. So I’m assuming the difference between the 3% and the 8% is mostly mix related. Can you help me bridge that gap and help me understand maybe how much of this could be more vocational in the U.S. versus over the road or versus, say, North American sales versus European sales, which is David Raso noted are down substantially. Just trying to understand the difference between the two numbers?
Preston Feight: Sure, Jeff. Hey, thanks for the opening comment also. You nailed it. I already think as you typically do is like if you look at the vocational markets, the truck prices are high there, and I would also say that the mix between North America to Europe is a contributing factor.
Jeff Kauffman: Okay. So as I think forward for the year, I would probably expect your average reported ASP to be up a little more than your price increases as a result of mix kind of carrying through 2024. Am I thinking about it wrong?
Harrie Schippers: That’s a logical assumption based on all those things, yes.
Jeff Kauffman: Okay. Well, again, congratulations and thank you.
Preston Feight: Yes. Thank you, Jeff.
Operator: Thank you. There are no other questions at this time. So I’ll hand back to the management team for any further remarks.
Ken Hastings: We’d like to thank everyone for joining the call, and thank you, operator.
Operator: Ladies and gentlemen, this concludes PACCAR’s earnings call. Thank you for participating. You may now disconnect.
