John Deere, manufacturer of the Gator utility vehicles, recently announced their quarterly earnings for the fourth quarter of fiscal year 2013. Net income attributable to Deere & Company was $806.8 million for the fourth quarter ended October 31, compared with $687.6 million for the same period last year.
For fiscal 2013, net income attributable to Deere & Company was $3.537 billion compared with $3.065 billion in 2012.
While it is difficult to isolate the sales figures for Gator utility vehicles because of all the other products the company sells, management reported that sales for the agriculture and turf division under which Gator sales fall decreased 4 percent for the quarter primarily due to lower shipment volumes and the unfavorable effects of currency translation, partially offset by price realization. However, sales increased 7 percent for the full year largely due to higher shipment volumes and price realization, partially offset by the unfavorable effects of currency translation. Operating profit was $996 million for the quarter and $4.680 billion for the year, compared with $931 million and $3.921 billion, respectively, in 2012.
For 2014 the industry retail sales of turf and utility equipment in the U.S. and Canada are projected to be up about 5% in 2014. Management reports that “Market conditions are improving in tandem with the slow economic recovery. Also the pent-up demand seen in late 2013 is expected to continue, mainly benefiting the riding lawn equipment and utility vehicle segments.”
Modified versions of the Polaris Ranger XP 900 EPS will be used in the DARPA Robotics Challenge
Polaris Industries will provide a modified versions of its Ranger XP 900 EPS for DARPA’s upcoming Robotics Challenge. Polaris customized the vehicles with a remote SafeStop Electronic Throttle Kill and Brake Actuation technology and it features a 1,000-pound capacity bed with space for the robot’s power supply. The competition is based on eight tasks in a simulated disaster relief scenario which would likely include utility vehicles because of their versatility and off-road capabilities. The Rangers will be used for the driving task and will need to navigate a a 250-foot course with obstacles and varied widths and exhibit the ability to turn the vehicle in a full circle. The DARPA Robotics Challenge Trials will be held Dec. 20-21 at the Homestead-Miami Speedway in Homestead, Fla., and are open to the public. Learn more: Theroboticsofbusiness.com
Comment: The vehicles are coming from the Polaris Defense Division. The military has been testing robotic vehicles including UTVs for a number of years. John Deere has a robotic Gator that it partnered with Boeing UK to develop. Disaster relief and military applications have a fair amount in common in terms of the vehicle capabilities and features needed.
A six passenger transport vehicle from Cruise Car with a solar array on the roof for battery recharging.
Cruise Car out of Sarasota, FL reports growing sales on the strength of orders for government and commercial markets. The company manufacturers golf cars and low speed vehicles for transport and utility. A key differentiator for the company is their Sunray Solar Roof Canopy which uses solar power to recharge vehicle batteries. They also feature an aluminum chassis and AC electric motors. According to management the company has been successful selling vehicles to military installations and last month was awarded a contract to supply fleets of shuttles and light utility runabouts to VA Hospitals and VA Cemeteries nationwide. Hotels and resorts are also an important market segment for the company. Many of the vehicles they sell to these markets are LSVs which can be used on public roads. Learn more: HeraldTribune.com
Comment: The companies success confirms with what we have been hearing from dealers around the country. Namely that STOVs and in particular LSVs are selling well in the commercial and government markets. The military and other government sectors are attracted in part to the fact that the vehicles are electric powered, whether to reduce fuel costs and/or meet sustainability goals. This is also true of the college/market where they can be used for personnel transport or light utility work around campus. The safety features of LSV compliant vehicles are appealing to buyers as well.
The new military grade ATV from Polaris, the Sportsman WV850 H.O. with Terrain Armor tires.
Leveraging their growing military business, Polaris recently launched a new military-grade ATV featuring Terrain Armor™ Non-Pneumatic Tires (NPT). The new Sportsman® WV850 H.O. with Terrain Armor will be available in “very limited quantities” in December 2013 for consumers looking for a work vehicle.
The non-pneumatic tires were first developed for military applications. Polaris has won a number of contracts to supply US and allied militaries with ATVs and UTVs for use in combat environments and started offering the NPTs earlier this year. Polaris has tested NPTs under several extreme situations, including logging more than 350 miles/563 kilometers after receiving fire from a 50-cal round, and driving 1,000 miles/1609 kilometers with a 3 in/7.6 cm railroad spike in the tread and webbing. The vehicle is designed for extreme work or hunting conditions and also features upgrades to the transmission, shocks and cooling.
Taking less than a year to move the technology over from the military to the consumer market is impressive. I contacted a Polaris representative about any military grade UTVs in the works but they said they were not aware of any. However, it would seem to be the next logical step. Potentially, you could see the tires useful for not only work but recreational riding in more extreme terrain. Learn more: Businesswire.com
A recent poll from an agriculture website shows that hunter’s prefer UTVs as their hunting vehicle compared to ATVs or other types of vehicles. The poll also showed that more than one third of hunters preferred using no vehicle at all. There is no additional information about the poll methodology but given the website’s focus, the population polled is most likely predominantly farmers. The results are as follows:
Source: Powersportsbusiness/RBC Capital Markets Q3 Dealer Survey
The third quarter dealer survey produced by Powersports Business, in partnership with RBC Capital Markets, shows that while overall dealers are mixed about their current situation, they are optimistic about the next twelve months for the UTV market. The survey of powersports dealers indicated that dealers were most optimistic about their side-by-side lines of business compared to others such as motorcycles, ATVs, snowmobiles, etc with 48% expecting growth of 10% or better, 24% expecting flat growth and 3% expecting a decline. Some rough calculations of the figures indicate that overall dealers expect growth in the range of 10% for the next 12 months.
The survey results also offered some brand specific information:
Dealers expect Polaris lines to continue to lead the market with the Ranger product line having a slight edge in growth for the next twelve months.
For BRP, Can Am side-by-side sales in the third quarter were reported as good and the Maverick is expected to do well moving forward.
New vehicle entrants, Honda Pioneer and Yamaha Viking, have been doing well and are expected to continue with dealers giving the Pioneer an edge in quality.
On a more downbeat note, expectations for the Yamaha Rhino and Arctic Cat Prowler are trending downwards.
Aerial view of part of the Queretaro industrial park in Mexico. BRP’s new facility is located in the park.
BRP, manufacturer of Can Am side-by-sides, last week inaugurated their new manufacturing facility in Queretaro, Mexico. The facility assembles Rotax engines for its Can-Am off-road vehicles, assembles the Sea-Doo Spark watercraft and manufactures composite hulls and decks for Sea-Doo watercraft. By 2015, a total of $100 million (Canadian) will have been invested in the facility and 1,100 people will be employed. A sister facility in Juarez, Mexico has been assembling Can Am ATVs and side-by-sides since 2001. Learn more: BRP.com
Comment: BRP isn’t the only UTV manufacturer in Mexico. Polaris has a presence there as well. Part of the move is driven by production cost savings but the other reason is geography and distribution. The Southwest US and in general the South are an area of growth for the UTV market. These facilities put manufacturers closer to these markets as well as expanding markets in Latin and South America. As manufacturers try to shorten ordering cycles for dealers and better manage inventory while more closely aligning product supply to market demand these facilities can offer improvements in those areas.
Massimo Motor’s dealer network will now have access to inventory financing from GE Capital’s Commercial Distribution Finance division. Massimo Motor is based in Irving, TX and was started in 2009. They produce ATVs and UTVs which primarily serve the agriculture and hunting markets but are looking to expand their appeal. The company produces 500cc and 700cc UTVs and are developing a 1000cc product for the race/high end recreational market segment. Learn more: Businesswire.com
Comment: The high-end recreational market segment has been getting more and more competitive as competitors like Polaris, Arctic Cat and Can Am continue to pump out new models for the segment. The entry of Massimo Motor into the segment will only increase the competition. One challenge they will face is their relatively small dealer network in comparison to their more established rivals.
Screenshot from Primordial’s flagship Ground Guidance software product.
Polaris Industries announced the acquisition of Primordial Inc, a Minnesota-based software company known for navigation software used by the military in off-road environments and a crowd sourced mapping application. Ground Guidance is used by soldiers to map fast and stealthy routes in difficult terrain. Ooze is a crowd-sourced mapping application that it sells to businesses and government agencies.
Ground Guidance is a good fit for Polaris’s military segment which has been a long term strategic growth segment. Ooze could have synergies with their RiderX mobile apps, which snowmobilers use to navigate trails. Long-term there could be potential in the off-road recreation segment for both products. Learn more: Bizjournals.com
Comment: You have already seen improving electronics in utility vehicles and the trend has been for these vehicles to eventually adopt many of the advanced features of automobiles. It will not be surprising to see OEMs offering more electronic gear and software as optional and eventually standard equipment. Polaris vehicles are also frequently used by firefighting teams for the Bureau of Land Management and Forest Service. These software applications may have some application in the off-road emergency response/fire/rescue market as well.