Polaris has been the company on the move in 2011, and its second quarter earnings show why. Gobbling up Indian and then later GEM, Polaris has shown that it has an appetite for growth, which has been fueled by its strong sales, which have increased in revenue by 41% over Q2 2010. Perhaps more impressive is that the American company has parlayed that increase in revenue into a 90% increase in net income over the same time period, which has been a boon for the company’s shareholders and a testament to the company’s reduced-cost structures.
Polaris is recalling 840 Victory Cross Country motorcycles made from January 1, 2011 through April 11, 2011 for faulty handlebar clamps/risers that may have been improperly machined. Because of the defect, the handlebars may slip in the clamps, resulting in a lack of control over the motorcycle.
Accordingly, Polaris will be notifying affected owners, and Victory dealers will test and replace the defective parts free of charge. The recall is expected to start in June of this year, and concerned Victory Cross Country owners can contact Victory customer service at 1-888-704-5290. The NHTSA, as always, is also available at 1-888-327-4236 or safercar.gov.
Zero Motorcycles has quietly announced some interesting news: that Mark Blackwell, V.P. of Motorcycles at Polaris Industries, will be joining the electric motorcycle company’s Board of Directors. With a plethora of reasons as to why an industry veteran like Blackwell would join Zero’s board, it’s been no secret that the Scotts Valley company has been collecting seasoned industry professionals like pokemon characters, seemingly building a brain trust of people who actually know how to run a motorcycle company.
Blackwell’s addition to Zero is interesting because it could signal a relationship with the Polaris V.P. that goes beyond merely an advisory/visionary position, which is the core responsibility of a companies board. The timing is interesting as well, as Polaris has been on a buying spree, first acquiring the original American motorcycle company brand: Indian Motorcycles, and a few days later electric car manufacturer GEM. With a Polaris executive sitting on Zero’s board almost immediately after these aquisitions, one has to wonder if this isn’t a precursor to some sort of larger arrangement between the two companies.
Polaris released some interesting info this past week to its stockholders, perhaps the highlight of which was how the Minnesota-based company views its acquisition of the Indian Motorcycle brand. Disclosing a brief summary of its plans, it’s clear that Polaris aims to go after the heavy-cruiser segment with a two-pronged approach, much in the same manner as we postulated back on Wednesday after news of the acquisition broke.
More important than stroking our own egos, two pieces of interesting insight came from Polaris’s SEC filing 8-K filing. First was a glimpse into what the purchasing price of Indian could be, as a slide to investors shows Indian’s 2010 revenue as being $11 million, which would peg a baseline asking price of about $9 million, though the perceived brand value could raise that price. The second juicy morsel is how Polaris sees Indian fitting in with Victory, showing the potential of tripling Polaris’s motorcycle sales in the future.
Before yesterday afternoon, I had a hard time getting excited about Polaris. I think they make snowmobiles…but I’m not sure. This is how engaged with their brands I was, but of course this has all changed with the news that Polaris Industries, Inc. has acquired Indian Motorcycle for still undisclosed terms. Covering the business strategy side of motorcycling for the past two and a half years, I can tell you that there are few moves or decisions that strike me as truly inspired, but that events of the past 24 hours are surly Mensa-worthy.
Before I can talk about Polaris and Indian, I have to talk about another motorcycle company: Harley-Davidson. Kingdoms are fated to topple, but looking at Harley-Davdion and its dominance in the American motorcycle scene, let alone in popular culture, the legacy of the Milwaukee company seems assured to endure the test of time. So many companies have tried to be the next Harley, and all of their failures reinforce that concept that no company does “Harley” better than Harley-Davidson. Virtually creating the the legacy cruiser segment, and Harley-Davidson’s success in this regard is also the double-edged sword that is slowly prostrating the Milwaukee brand.
If I had to give one piece of advice to a company wanting to compete with Harley-Davidson, it would be real simple: don’t. Seemingly at the risk of painting itself into a corner, Harley-Davidson has refined its marketing message so thoroughly that it has honed in on a particular type of rider, and exhibits such a distinct persona of motorcycling that the company’s identity has found itself heading full-speed down a one-way street of branding. Thus the low-hanging fruit of competing with Harley-Davidson is to go after the brand where it cannot go.
Polaris Industires has just announced its acquisition of the historic Indian Motorcycle company. Terms of the deal have not been disclosed, but the deal sees one of the most historic names in American motorcycling finding a home with a major player in the motorcycle industry. The move is an interesting one for Polaris, as the company already owns cruiser and touring motorcycle manufacturer Victory Motorcycles.
According to the company press release, Indian will function as an autonomous business unit, but will likely gett help from Polaris’s engineering department, along with the obvious supply chain and purchasing power of the larger brand.
According to Polaris Industries, Victory motorcycle sales were up 48% in the second quarter of 2010. Polaris’ on-road division, which is essentially the Victory cruiser brand, posted sales of $15.5 million, up from the $10.5 million in sales the company did in Q2 2010. In North American, sales for Victory cruisers were up 10% over last quarter, the third quarter in-a-row of sales growth for the brand.
In about 18 months, roughly a thousand workers will be out of a job at the Polaris plant in Osceola, Wisconsin. In that timeframe Polaris plans to close the Osceola plant, and move its production south of the border to Mexico. The move comes about as Polaris looks to increase production efficiency (i.e. lower production costs with cheaper labor), which will then allow the company to be more competitive with its products’ positions in their respective marketplaces.
Polaris Industries Inc. announced today that it has acquired the powersports division of Swissauto, which made it’s fame making GP engines in the 1990’s. The move according to Polaris will allow the company to strengthen its global and vehicle design capabilities, while also bolstering the company’s European presence. Swissauto was founded in 1987 and in a short span of time won 29 races, 41 poles, and 3 World Championships with its two-stroke, V4, 500GP motor.
Victory describes the Core as the following:
“Core is a concept motorcycle designed and built by the Victory Motorcycles Industrial Design team to show what a performance cruiser of the future could look like. It consists of only the essentials: engine, frame, wheels and front suspension — no rear suspension. Its unique cast aluminum frame was made by pouring molten aluminum into a sand core, which was removed when the casting was complete.”
In other words, the future will be filled with huge displacement bikes that have no suspension, a wood seat, and be air-cooled…not to mention produced by century old techniques. Someone should remind Victory that time moves forward, not backwards. Never-the-less, we find the Core to be aesthetically pleasing to look at, and would gladly take it around the neighborhood to setoff car alarms.
Sometimes you have to express yourself by making a motorcycle, and this is what the Core is. We can appreciate that.