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PACCAR Management Discusses Q2 2012 Results - Earnings Call Transcript

DAF's share of truck registrations in Europe above 16-tonne reached 16%. Kenworth and DAF truck deliveries in the Andean region of South America, that is the region outside of Mercosur, increased by about 75% in the first half of this year compared to the same period last year.

Looking forward, PACCAR expects to deliver about 10% fewer trucks in the third quarter compared to the second quarter due to the weak economic growth in the United States, coupled with the ongoing uncertainty in the Eurozone.

Looking at the broader market, U.S. and Canadian Class 8 industry retail sales are estimated to improve this year to a range of 210,000 to 230,000 units, up 12% at the midpoint from 197,000 units last year. In Europe, the greater than 16-tonne truck market is also anticipated to be in the range of 210,000 to 230,000 units, down slightly from the 241,000 units last year.

PACCAR's business initiatives worldwide are progressing well. Capital spending is estimated to be $450 million to $550 million, with research and development at $275 million to $300 million. Construction of our new DAF assembly factory in Ponta Grossa, Brazil, is progressing and we plan to be building DAF Trucks in Brazil next year.

We're also very pleased with the excellent customer response to the launch of the new Kenworth T680 and the Peterbilt Model 579, both very exciting trucks. During the second quarter, Kenworth and Peterbilt began limited production of these exciting new models, and it will gradually increase their production in the third and fourth quarters.

PACCAR is enhancing its network of 15 parts distribution centers. We're building a new 280,000 square foot distribution center in Eindhoven, the Netherlands, and our distribution centers in Madrid, Spain and Lancaster, Pennsylvania are increasing their capacity to meet the demands of our customers and dealers.

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