10:42 AM EDT, 03/18/2025 (MT Newswires) -- Paccar ( PCAR ) is unlikely to see a rebound in truck demand in the second half of 2025 due to policy uncertainty and muted market conditions, UBS Securities said in a Tuesday note, advising caution until more clarity emerges.

UBS analysts had previously expected demand to recover in late 2025, supported by a freight market rebound and a pre-buy of heavy-duty trucks ahead of stricter emissions rules in 2027. However, they now see an increased risk that these factors will not materialize, leading to weaker-than-expected demand through 2026.

The firm also noted broader policy uncertainty could create macroeconomic headwinds and potentially lead to a recession, further pressuring freight and truck demand.

Tariffs are expected to raise costs for materials and components, making both imported and domestically produced trucks more expensive. UBS said Paccar ( PCAR ) may face challenges passing along these cost increases. The firm noted that Paccar ( PCAR ) could still have some relative upside compared to peers with greater reliance on Mexico for production.

While UBS sees lower odds of a significant pre-buy before the 2027 emissions regulations, the firm said a modest lift in 2026 remains possible if engine manufacturers focus solely on new engines.

UBS downgraded the company's stock to neutral from buy and lowered the price target to $108 from $124.

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