I would now like to introduce Mark Pigott.Mark Pigott Good morning. PACCAR today reported improved revenues and net income for the second quarter of 2010. PACCAR's second quarter sales and Financial Services revenue were $2.46 billion compared to $1.85 billion in the second quarter of 2009, a 33% improvement. Net income improved to $99 million compared to $26 million a year ago. I'm very proud of our 16,000 employees who have delivered outstanding performance to our shareholders and customers in an uneven and unsettled global economy. PACCAR's financial results reflect the benefits of higher truck deliveries worldwide and a continued improvement in aftermarket parts sales and Financial Services results. However, the North American and European truck markets remained at historically low levels. In the U.S. and Canada, our customers are starting to adjust to the higher- priced vehicles that have resulted from the EPA 2010 emission change. The European truck registrations for the second quarter improved 17% compared to the first, but despite that favorable increase, the European truck market year-over-year is still down. We expect the 15-ton market registrations in Europe to be between 160,000 units and 170,000 units this year, comparable to the 168,000 units last year. U.S. and Canadian retail truck sales are estimated to improve to a range of 110,000 to 130,000 units this year compared to 108,000 last year. While the global economic outlook is still uneven, the truck market is stabilizing. PACCAR truck build in the third quarter is expected to be slightly better than the second quarter. I would note that production at our DAF factories in Europe will have their regularly scheduled two-week summer shutdown. We discussed during the analyst call in April the three-step process that the truck industry usually progresses as it recovers from a recession. First is improvement in parts and service, second in used truck values and third is more truck orders. In the U.S. and Canada, parts sales were up 10% to 15%, and used truck pricing increased 10%. The good news is that industry new truck orders for the first six months compared to a year ago are up 30%. Many of the orders are for production during the next six to 12 months. In Europe, a similar situation with parts business and used truck pricing improving by 10% to 15%. In Europe, as I previously noted, new truck sales are 15% lower than last year due to a slow first quarter, but the second half of the year should be up 20% compared to 2009.
More good news is that DAF is the leader in the European market for on-highway tractor sales and has now achieved a record overall market share of 16.3%, the second highest market share in Europe. It's been a wonderful success story over the last decade for DAF.DAF is steadily progressing toward its medium-term goal of 20% market share in Europe. DAF heavy truck production is up 25% from first to second quarter this year and we expect that their production will be up 25% for the remainder of the year. Kenworth and Peterbilt build rates will be up 10% to 15% from the second to the third quarter. Our customers are benefiting from a 7% year-on-year improvement in freight volumes, higher freight rates and stable diesel prices. They continue to increase the utilization of their fleets, which in turn is driving increased aftermarket parts and service business for our dealers. PACCAR's aftermarket parts sales increased to $538 million for the second quarter, the highest level since the third quarter of 2008. Turning to margins, margins for trucks was primarily driven by higher pricing due to improved demand. PACCAR's strong balance sheet and positive cash flow have enabled the company to continuously reinvest in the business, enhance operating efficiency and develop innovative new products such as the PACCAR MX diesel engine. I'm pleased to note that we're now installing the MX engine in approximately 15% of Kenworth and Peterbilt vehicles. Assembly of the PACCAR MX engines began last month at our industry-leading manufacturing facility in Columbus, Mississippi. Early feedback from our customers of the PACCAR MX engine has been excellent. On a broader scale in the U.S. and Canada, the substantial majority of Kenworth and Peterbilt trucks are being produced with the EPA 2010 engines. I know a number of you are interested in it, but there appears to be about a 5% shift to 13-liter engines year-on-year. Read the rest of this transcript for free on seekingalpha.com