Research Question: Is Polaris maintaining its stranglehold on the side-by-side off-road vehicle market, or are competitors beginning to take share?
Companies Covered: Polaris Industries (PII), Honda Motor Co (TYO:7267), Yamaha Motor Co (TYO:7272), Arctic Cat (ACAT), Deere & Company (DE)
Report Available: October 1, 2014
Blueshift’s initial research shows Polaris maintaining a strong business with its side-by-side vehicles, however competitors are releasing new models which could create opportunities for them in a market open to having more options.
- In its most recent quarter, Polaris reported strong earnings and raised its guidance for the rest of 2014. Net income increased 21%from the previous year to $96.9 million. North American sales improved, increasing by 15% year-over-year. PII expects full year sales growth of 16% to 18%. PII realized market share gain in its side-by-side (UTV) line and increased its motorcycle revenues by 107%. PII’s off road vehicle (ORV) growth outpaced overall ORV market growth by 5%.
- A former PII manager claims PII’s great performance is due to its willingness to take product chances where its competitors will not. Unlike Honda, PII has taken chances with its UTV line by designing them to be sportier and more powerful, leading some diehard Honda fans to purchase a PII. Fans believe Honda could build a better machine than PII, but blame Honda’s conservatism for its UTV’s ugliness, and lack of power and sportiness. PII continues to add new products to its lineup, including two vehicles to its GEM line, two new RZRs and Rangers, four Sportsmen, the Victory Magnum and Indian Roadmaster motorcycles. PII took another risky chance with the introduction of its Slingshot, a non-conventional 3-wheel motorcycle. Several reviewers claim the Slingshot is very fun to drive and delivered great value for its price.
- Many PII owners have been waiting years to purchase a UTV from Honda if it ever came close to matching PII’s performance and design, suggesting a potential threat to PII if Honda ever gets its act together in this market. Some PII owners are considering Yamaha’s new 2015 Viking model due to its solid build and suitable design, and believe Yamaha is now headed in the right direction. PII has heavily invested in its Ace product, though many ORV customers lack enthusiasm for it. A potential customer recently sat in an Ace, and shared his negative thoughts with a dealership salesman who admitted, “they can’t get anyone to buy it” because the engine was underpowered and “feels like an ATV with a cab on it.” Complaints about PII often cite problems with overheating, fires, and bearing issues even on newer models with fewer than 1000 miles.
- Our May 15 report focused on ORVs in the agriculture industry found PII ORVs well positioned to grow in 2014. PII trailed DE in terms of popularity among farmers but remained at the top of the ORV market because of its wide product assortment and superior marketing. More customers were purchasing larger, side-by-side UTVs, placing PII’s Ranger and RZR in the sweet spot for growth. These product lines were gaining momentum among new demographics, including women, seniors, and families. PII’s single passenger Sportsman Ace posted sluggish initial sales as most customers preferred ORVs with more power. Sources reported Japanese ORV manufacturers had been lacking recent innovation, but said these companies—particularly Honda Motor Co. Ltd. (TYO:7267)—still enjoyed a loyal following.
To determine if PII is maintaining its stranglehold in the side-by-side ORV market or if any competitors are taking any share, Blueshift will gather data and issue a market research report from independent sources in the following areas: Polaris dealers, multibrand dealers, and industry specialists.
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