Victory Motorcycles brand being killed off
MINNEAPOLIS — The owner of Victory Motorcycles said Monday that it will immediately begin winding down the brand and related operations. Polaris Industries Inc. said it will help dealers liquidate existing inventory and will continue to supply parts for 10 years. It also said it will continue to provide service and warranty coverage.
Polaris, which started Victory 18 years ago, said the brand has struggled to establish the market share needed to succeed and be profitable, competition has increased and the money the company might spend on Victory might be better invested in the Indian brand it acquired.
Polaris says it lost money on Victory in three of the past five years after sales of the heavyweight motorcycles peaked in 2012. The brand represented only about 3 percent of Polaris' total sales.
"Given the significant additional investments required for Victory to launch new global platforms that meet changing consumer preferences and considering the strong performance and growth potential of Indian Motorcycle, the decision to more narrowly focus Polaris’ energy and investments became quite clear," Polaris said in a news release.
“This decision will improve the profitability of Polaris and our global motorcycle business, and will materially improve our competitive stance in the industry,” said Scott Wine, Polaris Industries chairman and CEO. “Our focus is on profitable growth, and in an environment of finite resources, this move allows us to optimize and align our resources behind both our premium, high-performing Indian Motorcycle brand and our innovative Slingshot brand, enhancing our focus on accelerating the success of those brands."
Jefferies analyst Trevor Young says the move was a surprise, but it will likely help Indian Motorcycle sales.
Polaris remains committed to maintaining its presence with Indian Motorcycle production in Spirit Lake, Iowa, where Victory motorcycles were assembled, and in Huntsville, Alabama, where it assembles its Slingshot three-wheel two-seaters.
Any one-time costs associated with supporting Victory dealers in selling their remaining inventory, the disposal of factory inventory, tooling, and other physical assets, and the cancellation of various supplier arrangements will be recorded in the 2017 income statement in respective sales, gross profit and operation expense, Polaris said. These costs will be excluded from Polaris’ provided 2017 sales and earnings guidance on a non-generally accepted accounting principles basis.
"Since inception, our teams have designed and produced nearly 60 Victory models that have been honored with 25 of the industry’s top awards," Wine said. "The experience, knowledge, infrastructure and capability we’ve built in those 18 years gave us the confidence to acquire and develop the Indian Motorcycle brand, so I would like to express my gratitude to everyone associated with Victory Motorcycles and celebrate your many contributions.”
Polaris, which produces a variety of all-terrain off-road vehicles, snowmobiles and personal watercraft, said it will release its fourth quarter and full-year 2016 financial results and provide 2017 guidance on Jan. 24.
Southwest Florida had a brush with the Indian Motorcycle brand 10 years ago when then-owner Stellican Inc., which owns Manatee County-based Chris-Craft Boats, considered making the Indian brand in Manatee, too. But the company opted for North Carolina, which was offering stronger economic incentives.
Polaris shares closed Monday on the New York Stock Exchange at $83.72, down $2.84, or 3.3 percent.