⚠ Price and Volume Falling TogetherModerate threat

Caterpillar (CAT) — threat to the moat

Caterpillar has had price or volume to lean on every recent year; a recession would take both away at once.

The good years hide how the two levers can move together. In 2025 volume rose and price fell1; in 2024 volume fell by $3,543 million while price rose by $1,238 million2. Each year one lever cushioned the other.

Profit attributable to common shareholders ($M)2,5122015-6720166,09320192,998202010,3352023Caterpillar Forms 10-K FY2019, FY2022, FY2025
Profit in downturns falls by half or more.

In a real downturn both fall. Caterpillar's sales and revenues dropped from $47,011 million in 2015 to $38,537 million in 2016, and the company reported a loss of $67 million3. In 2020 sales fell to $41,748 million and profit to $2,998 million4.

The pricing moat has not yet been tested against a recession with tariffs still in place. The cost side would not fall with demand, since tariffs are charged on what is imported, not on what is sold.

Costs do not fall as fast. Caterpillar's selling, general and administrative expenses were $6,371 million in 2023, $6,667 million in 2024 and $6,985 million in 2025, and research and development about $2.1 billion a year5. Those costs kept rising in 2025 while price fell, which is part of why operating profit fell faster than sales grew.

The first quarter in which both the volume and price lines of the sales bridge are negative is the signal. None of the annual bridges from 2023 to 2025 shows both negative; when one does, margins will head back toward the low teens.

References
  1. ReportedIn 2025 volume rose and price fell; in 2024 volume fell by $3,543 million while price rose by $1,238 million.
    Caterpillar Form 10-K for fiscal 2025 - Item 7 MD&A: consolidated results, sales and profit bridges, tariffs, dealer inventory and the 2026 outlook. — FY2025 · publ. 13 February 2026 · source ↗
  2. ReportedIn 2025 volume rose and price fell; in 2024 volume fell by $3,543 million while price rose by $1,238 million.
    Caterpillar Form 10-K for fiscal 2024 - the 2024 sales bridge (price realization and sales volume). — FY2024 · publ. February 2025 · source ↗
  3. ReportedCaterpillar's sales and revenues dropped from $47,011 million in 2015 to $38,537 million in 2016, and the company reported a loss of $67 million.
    Caterpillar Form 10-K for fiscal 2019 - five-year summary 2015-2019, segments 2017-2019, the dealer count and the 2017 Gosselies restructuring. — FY2019 · publ. February 2020 · source ↗
  4. ReportedIn 2020 sales fell to $41,748 million and profit to $2,998 million.
    Caterpillar Form 10-K for fiscal 2022 - segment sales and profit for 2020-2022, the dealer count, sales by application, and the $925 million Rail goodwill impairment. — FY2022 · publ. February 2023 · source ↗
  5. ReportedCaterpillar's selling, general and administrative expenses were $6,371 million in 2023, $6,667 million in 2024 and $6,985 million in 2025, and research and development about $2.1 billion a year.
    Caterpillar Form 10-K for fiscal 2025 - financial statements and notes: profit, per-share data, cash flow, balance sheet, debt, dividends and credit risk. — FY2025 · publ. 13 February 2026 · source ↗
Sources
Generated September 25, 2026