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Takeaway: $NAV's heavy discounting may not be sustainable with less efficient operations. An end to discount would help competitors, including $PCAR.

Trucks per Employee: NAV Losing Ground

  • Efficiency: Trucks per employee is an interesting measure of efficiency and capacity utilization.  On that measure, NAV is losing ground while PCAR is gaining.  Absolute numbers are impacted by the high percentage of smaller Class 5-7 vehicles produced by Navistar.
  • NAV Discounting Heavily: NAV’s product and regulatory issues have resulted in reduced market share, even with discounting to maintain sale volumes.  Lower sales rates relative to competitors can create negative feedback in the form of higher costs and increasing losses.  In turn, higher costs make NAV’s discounting more difficult.
  • Unsustainable: Customer perception of product quality and OEM financial stability is important for truck sales, in our view.  Navistar’s problems may not yet be over, particularly if Volvo and Daimler again sue the EPA over revised non-conformance penalties.

Industrial Indicator: NAV Losing Ground - truck per employee

Industrial Indicator: NAV Losing Ground - perf 9 18 12