Polaris Industries will be leaving the Victory Motorcycle brand it started from scratch 18 years ago, citing a mixture 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 âdissolutionâ of the Victory brand will begin immediately.
âVictory has struggled to establish the market share necessary to be successful and profitable. Competitive pressures from a tough motorcycle market have increased headwinds for the brand, âWine said in a statement.
Victory’s market share in the motorcycle market fell to just 2% last year from 3% in 2013. Wine said the company has 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 assist dealers in liquidating existing Victory inventory and will continue to provide parts and service for 10 years and honor warranty coverage accordingly.
Polaris said it “remains committed to maintaining a presence” at the Spirit Lake, Iowa facility, where Victory and Indian bikes are now manufactured. It also remains committed to its new plant in Huntsville, Alabama, which manufactures, among other things, the Slingshot three-wheeled motorcycle.
It is unclear how factory employment might be affected at the end of Victory.
Dealers are taking the news as best they can. âWe’ve put a lot of money into this so we’re sad to see it go,â said Jamie Kurkowski, assistant sales manager at Mies Outland at Watkins, the state’s largest Polaris dealership.
âWe’ve had years where we’ve sold 150 Victories a year,â Kurkowski said. âLately it’s been around 75 and 100 wins a year. But what are you going to do? It seems to me that it was a profit margin problem.
While Polaris has devoted a lot of energy in recent years to buying and relaunching the Indian Motorcycle brand, the launch of the Victory motorcycle came first and represented a bold attempt at product diversification.
When the first Victory motorcycle rolled off the Spirit Lake assembly line in 1998, it expanded Polaris’ product line beyond snowmobiles, four-wheeled all-terrain vehicles and personal watercraft. Since then, Polaris has designed and produced nearly 60 Victory models which 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. âSo 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 roughly $ 192 million for the first nine months of 2012, when the bulk of reported sales in this category were for Victory motorcycles.
Motorcycles now account for about 15 percent of Polaris’ annual sales 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 its value in February 2015.
The decision to close the Victory Line did not surprise Wall Street analysts. The end of Victory is just “as some in the industry had surmised since the launch of Indian,” UBS analyst Robin Farley said.
âVictory’s sales had peaked in 2012 before Indian was introduced in 2013. And Victory had declined every year after that as the business had not been profitableâ¦ for three of the last five years,â he said. she declared. “We expect this to be neutral to positive” for the earnings outlook for Polaris. “
The product change comes at a difficult time for Polaris, which has battled a downturn in the recreational sports industry and massive recalls of its four-wheeled ATVs and Indian motorcycles due to the potential fire hazard. Research, repairs, warranty, legal and other fees associated with recalls have cost Polaris more than $ 120 million to date.
The company is expected to reveal the costs of shutting down the Victory brand next week, when it releases its fourth quarter results.