Polaris says it’s the end of the line for Victory motorcycles
Polaris Industries will exit the Victory Motorcycle brand it created 18 years ago, citing a mix of competitive pressures and lack of market share.
The Madinah-based company’s announcement on Monday will not affect Polaris’ fast-growing Indian Motorcycle brand or other divisions, officials said. CEO Scott Wine said the “liquidation” of the Victory brand will begin immediately.
“Victory has struggled to establish the market share needed to be successful and profitable. Competitive pressures from a tough motorcycle market have increased headwinds for the brand,” Wine said in a statement.
Victory’s share of the motorcycle market fell to just 2% last year from 3% in 2013. Wine said the company decided to focus on the Indian brand given its strong performance and its growth potential and the significant additional investments that would be required for Victory to succeed.
Polaris will help dealers liquidate existing Victory inventory and continue to provide parts and service for 10 years and honor warranty coverage accordingly.
Polaris said it “remains committed to maintaining its presence” at the factory in Spirit Lake, Iowa, where Victory and Indian bikes are now manufactured. It also remains committed to its new factory in Huntsville, Alabama, which manufactures the three-wheeled Slingshot motorcycle, among other products.
It is unclear how factory employment might be affected at the end of Victory.
Dealers are taking the news as best they can. “We put a lot of money into this, so we’re sad to see it go,” said Jamie Kurkowski, assistant sales manager at Mies Outland in Watkins, the state’s largest Polaris dealership.
“We had years where we sold 150 wins a year,” Kurkowski said. “Lately it’s been around 75 and 100 wins a year. But what are you going to do? Seems to me it was a profit margin issue.
While Polaris has spent a lot of energy in recent years buying and reviving the Indian Motorcycle brand, the launch of the Victory bike came first and represented a bold attempt at product diversification.
When the first Victory Motorcycle rolled off the assembly line at Spirit Lake in 1998, it expanded the Polaris product line beyond snowmobiles, four-wheeled all-terrain vehicles and personal watercraft. Since then, Polaris has designed and produced nearly 60 Victory models that have won 25 industry awards.
The experience, knowledge and infrastructure gained from launching Victory gave company officials the confidence to acquire and grow the Indian Motorcycle brand, Wine said. “So I would like to express my gratitude to everyone associated with Victory Motorcycles and celebrate your many contributions.”
For the first nine months of 2016, Victory and Indian motorcycle sales were approximately $603 million. That’s about $192 million for the first nine months of 2012, when the bulk of reported sales in this category were Victory motorcycles.
Motorcycles now account for about 15% of Polaris’ annual revenue of $4.7 billion.
Polaris’ stock fell 3.3% to close at $83.72 per share on Monday. It is trading at almost half of the value appreciated in February 2015.
The decision to close the Victory line did not surprise Wall Street analysts. Victory’s ending is just “as some in the industry had surmised since Indian’s launch,” said UBS analyst Robin Farley.
“Sales of Victory had peaked in 2012 before the introduction of Indian in 2013. And Victory had declined each year thereafter, with the business not profitable … for three of the last five years,” he said. she stated. “We expect this to be neutral to positive” for Polaris’ earnings outlook.”
The product change comes at a difficult time for Polaris, which has battled a downturn in the recreational sports industry and mass recalls of its four-wheeled ATVs and Indian motorcycles due to the potential fire hazard. Research, repairs, warranty, legal and other costs associated with the recalls have cost Polaris more than $120 million to date.
The company is expected to reveal the costs of closing the Victory brand next week when it reports fourth quarter results.