DAF Plant Holds Potential for PACCAR - Analyst Blog


PACCAR Inc. 's ( PCAR ) share price dropped 0.7% to $55.36 on Oct 3, due to the overall decline in the U.S. market. However, the opening of a new assembly plant by PACCAR in Brasil appears promising for the company in the future.

PACCAR inaugurated its 300,000-square feet DAF assembly plant in Brasil earlier this week. The plant, which stretches across 569 acres of land, will be used for assembling the premium quality DAF XF, CF and LF vehicles. DAF XF-105 will be the first DAF model produced in this plant.

PACCAR will also produce CF and LF models in the plant in future. While the DAF CF's has a large range of usage such as regional transportation and heavy construction, DAF LF is designed for distribution and urban delivery.

The DAF trucks produced in the plant will be distributed to Brasil and South America. PACCAR expects that demand for trucks with a capacity of more than six tonnes in the Brasil market will exceed beyond 140,000 units in 2013, and there is scope for further expansion in the years ahead. Thus, the company believes that the new DAF plant will support economic development and enhance the quality of life in Brasil.

DAF premium quality products occupy a leading position in Europe. These products have captured a market share of 15.8% in the above 16-tonne segment. Customers prefer DAF products owing to its better quality, low operating costs and higher resale value.

PCAR, a Zacks Rank #4 (Sell) stock, is the third largest manufacturer of heavy-duty trucks (with a capacity of more than 15 metric tons) in the world after Volvo ( VOLVY ) and Daimler AG ( DDAIF ). The company also manufactures light/medium trucks (with a capacity of 6-15 metric tons). PCAR also provides customer support for its products with the supply of aftermarket parts, finance and leasing services.

Currently, Tesla Motors Inc. ( TSLA ) with a Zacks Rank #2 (Buy) is performing well in the automotive industry.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: DDAIF , PCAR , TSLA , VOLVY



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