Cummins directs 15% of its sales to PACCAR

The American multinational corporation Cummins directed 15% of its 2021 sales to the medium and heavy truck manufacturer PACCAR.

Before, in 2020, that participation was also 15% and in 2019 it reached 19 percent.

PACCAR is engaged in the design, manufacture and customer service of light, medium and heavy duty trucks under the Kenworth, Peterbilt, Leyland Trucks and DAF brands.

Globally, Cummins has thousands of customers and has developed longstanding business relationships with many of them.

In particular, this company has long-term supply agreements with PACCAR for its medium and heavy-duty engines and aftertreatment systems.

Although a significant amount of its sales to PACCAR are made under long-term supply agreements, these agreements provide for particular engine requirements for specific vehicle models and not a specific volume of engines or aftertreatment systems.

PACCAR is its only customer that represents more than 10% of its net sales in 2021.

Therefore, the loss of this customer or a significant decrease in the level of production of PACCAR vehicles using its engines would have an adverse effect on its operating and financial results.

Looking back, the company has supplied PACCAR with engines for 77 years.

Cummins

Although a significant amount of its sales to PACCAR are made under long-term supply agreements, these agreements provide for particular engine requirements for specific vehicle models and not a specific volume of engines or aftertreatment systems.

In addition to its agreement with PACCAR, Cummins has long-term heavy-duty and medium-duty engine and aftertreatment system supply agreements with Navistar and Daimler.

It also has an agreement with Stellantis to supply engines for its Ram trucks.

Collectively, its net sales to these four customers, including PACCAR, were 33% of its consolidated net sales in 2021, 32% in 2020 and 37% in 2019.

In 2021, Cummins continued to invest to develop new products and enhance its current technologies to meet future emissions requirements around the world and improve the fuel economy performance of diesel and natural gas engines and related components. , as well as development activities around all-electric, hybrid and hydrogen power solutions and hydrogen production.

Its research and development expenses, net of contract reimbursements, were $1.1 billion in 2021, $903 million in 2020, and $998 million in 2019.