Segment Information

9 Months Ended

Sep. 30, 2023

Segment Reporting [Abstract]

Segment Information

NOTE I - Segment Information

PACCAR operates in three principal segments: Truck, Parts and Financial Services. The Company evaluates the performance of its Truck and Parts segments based on operating profits, which excludes investment income, other income and expense and income taxes. The Financial Services segment’s performance is evaluated based on income before income taxes. The accounting policies of the reportable segments are the same as those applied in the consolidated financial statements as described in Note A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

Truck and Parts

The Truck segment includes the design and manufacture of high-quality, light-, medium- and heavy-duty commercial trucks and the Parts segment includes the distribution of aftermarket parts for trucks and related commercial vehicles, both of which are sold through the same network of independent dealers. These segments derive a large proportion of their revenues and operating profits from operations in North America and Europe. The Truck segment incurs substantial costs to design, manufacture and sell trucks to its customers. The sale of new trucks provides the Parts segment with the basis for parts sales that may continue over the life of the truck, but are generally concentrated in the first five years after truck delivery. To reflect the benefit the Parts segment receives from costs incurred by the Truck segment, certain expenses are allocated from the Truck segment to the Parts segment. The expenses allocated are based on a percentage of the average annual expenses for factory overhead, engineering, research and development and SG&A expenses for the preceding five years. The allocation is based on the ratio of the average parts direct margin dollars (net sales less material and labor costs) to the total truck and parts direct margin dollars for the previous five years. The Company believes such expenses have been allocated on a reasonable basis. Truck segment assets related to the indirect expense allocation are not allocated to the Parts segment.

Financial Services

The Financial Services segment derives its earnings primarily from financing or leasing of PACCAR products and services provided to truck customers and dealers. Revenues are primarily generated from operations in North America and Europe.

In Europe, the marketing of used trucks, including those units sold by the Truck segment subject to an RVG, is performed by the Financial Services segment. When a customer returns the truck at the end of the RVG contract, the Company’s Truck segment records a reduction in an RVG liability and the Company’s Financial Services segment records a used truck asset and revenue from the subsequent sale. Certain gains and losses from the sale of these used trucks are shared with the Truck segment.

Other

Included in Other is the Company’s industrial winch manufacturing business as well as sales, income and expenses not attributable to a reportable segment. Other also includes non-service cost components of pension expense and a portion of corporate expense.

	Three Months Ended						Nine Months Ended
	September 30						September 30
		2023			2022			2023			2022
Net sales and revenues:
Truck	$	6,772.8		$	5,389.8		$	20,274.5		$	15,724.8
Less intersegment		(136.4	)		(191.6	)		(396.8	)		(493.1	)
External customers		6,636.4			5,198.2			19,877.7			15,231.7
Parts		1,599.4			1,487.3			4,858.9			4,343.2
Less intersegment		(17.2	)		(15.8	)		(54.8	)		(48.1	)
External customers		1,582.2			1,471.5			4,804.1			4,295.1
Other		13.7			17.3			41.9			52.8
		8,232.3			6,687.0			24,723.7			19,579.6
Financial Services		464.1			371.9			1,327.1			1,110.6
	$	8,696.4		$	7,058.9		$	26,050.8		$	20,690.2
Income before income taxes:
Truck	$	960.9		$	430.5		$	2,803.5		$	1,129.3
Parts		412.3			373.6			1,270.2			1,067.1
Other*		1.6			8.0			(616.6	)		14.9
		1,374.8			812.1			3,457.1			2,211.3
Financial Services		133.8			146.2			427.3			437.6
Investment income		80.8			21.4			192.5			24.3
	$	1,589.4		$	979.7		$	4,076.9		$	2,673.2
Depreciation and amortization:
Truck	$	102.1		$	86.3		$	301.1		$	235.6
Parts		3.6			3.5			10.9			10.0
Other		6.4			6.0			18.7			17.9
		112.1			95.8			330.7			263.5
Financial Services		121.8			107.2			347.7			322.1
	$	233.9		$	203.0		$	678.4		$	585.6

* In the first nine months of 2023, Other includes a $600.0 million non-recurring charge related to civil litigation in Europe (EC-related claims) which is discussed in Note M.