Channel checks: Ag Machinery "Crop insurance subsidies could help farmer..."

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Channel checks: Ag Machinery "Crop insurance subsidies could help farmer..."

Channel checks: Ag Machinery UBS Research

Sentiment

Week 1 of earnings positive so far.

URI beat and raised, Daimler pre-announced and raised guide, and TRATON had a

positive Q2 report. Cummins disclosed plans to phase in 2027 engines.

Trucks and Engines

Daimler raised NA truck unit sales guidance by 6%.

TRATON: On the positive side, 2026 production is sold out; In North America, truck

order intake almost tripled to 22,700 trucks with International motors accounting for

the vast majority of the increase. This reflects improving U.S. fleet economics, strong

freight rates, and some EPA27 pre-buy activity. However, they acknowledged some lost

market share in the US.

Some clarity on the EPA: Cummins

Cummins disclosed plans to phase in 2027 engines. Cummins will introduce its new X10

and X15 engines through a measured production ramp over the course of 2027, while

maintaining select legacy product availability.

Investor reaction: We got feedback that it seems negative for CMI based on price/mix for

2027 (ie they will still offer their lower priced 2026 model) and negative for PCAR for

pricing in 2H26 (with the view that they will need to offer concessions so that buyers do

not cancel 2H26 build slots). The feedback also acknowledged that the upside for

PACCAR is more smooth production in 1H27.

We think there are multiple factors to consider. Some of the 2H orders could push out to

2027, but we think that was likely anyway. We don’t necessarily assume PACCAR has to

offer concessions to retain 2H26 orders. We think enough buyers want the trucks before

year end (tax buying) and PACCAR would likely appreciate the chance to have smoother

build in 2H26 and 1H27.