Can-Am Q2 Earnings

The new 2020 Maverick X3 X rs Turbo RR with a 195 hp engine
The new Maverick X3 X rs Turbo RR is one of several 2020 Maverick models that are powered by the new 195 hp Turbo RR engine.

Can-Am recently reported their earnings for Q2 fiscal year 2021. North American retail sales were stronger than expected across all categories given the COVID pandemic. Management reported revenues of $1,233.3 million, a decrease of $226.2 million or 15.5% which was primarily related to the COVID related temporary suspension of production. Revenues for the North American Year Round segment, which includes side-by-sides and ATVS, decreased by $113.4 million, or 15.4% to $621.2 million. Revenues decreased despite strong retail sales because sales were drawn from existing dealer inventory while production was lowered because of Covid.

Retail Exceeds Expectations

Similar to reports from Polaris, Can-AM Q2 earnings had very strong sales for side-by-sides and ATVs. Consumers turned to off-road riding as a socially distant alternative activity during the pandemic. In addition, discretionary income from money not spent during Covid inactivity drove sales. Similar to Polaris, Can-Am also attracted a lot of new powersports customers, but lost market share as dealer inventory was depleted while production greatly reduced.

Can-Am Q2 Earnings Highlights

The following are some of the highlights from the earnings call that are related to the small, task-oriented vehicle market.

  • Can-Am powersports retail sales were up 40% in North America (NA) and were strong in all categories
  • Company is constructing a new facility in Juarez, Mexico to meet side-by-side vehicle demand – should be online in fall 2021
  • Management reports doing  better than expected when first going into Covid
  • Can-am NA side-by-side retail up high 50% compared to industry up low 70%
  • Lost market share because high product demand and production shutdown depleted inventory.
  • NA dealer powersports inventory was down 51%
  • People turned to powersports in their free time under the restrictions of the pandemic
  • Can-Am attracted new powersports customers and customers from other brands with off-road vehicles leading the way – new to BRP customers up 51% overall for the quarter with up 74% for off-road
  • Usually around 10-15% are new customers
  • For the season, NA off-road retail increased low 20% for industry with Can-Am side-by-side up low 40%
  • Side-by-side retail strong internationally up almost 50% in EMEA and ~30% in Asia Pacific
  • Total NA dealer inventory down 51% and this represents down $1 billion of inventory
  • Management reports loss of maybe 1-2 points of market share as depleted inventory drove customers to other brands

Learn more: Seekingalpha.com (Earnings call transcript)

SVR’s Take

This was a good quarter for Can-Am and the industry in general. New customers with money to spend and in search for Covid safe activities turned to powersports and off-road riding in particular. The large portion of new to powersports customers gives the companies a chance to create more lifetime off-road customers as well as cross sell them other powersports products. It will be interesting to see if the strong consumer demand can be maintained going forward.

Polaris Q2 2020 Earnings

Polaris General 4 1000 utility vehicle
Four-passenger UTVs like the Polaris General 4 1000 helped drive retail sales despite the pandemic.

Polaris Q2 2020 Earnings summary

Polaris recently reported their financial results for fiscal year 2020 2nd quarter and they were better than expected. The company reported sales of $1.512 billion for the quarter, a decrease of 15% year over year. Adjusted income decreased 25% from $107 to $81 million. Management stated that results “significantly outpaced company expectations” in the face of the pandemic. In the ORV/Snow segment sales were $953 million, a decrease of 9% year over year with ORV decreasing 14%. The powersports industry experienced strong retail sales, especially in off-road vehicles. Management attributed the strong sales to people seeking family enjoyment, having more free time and fewer alternatives for spending money because of the pandemic.

Polaris Q2 2020 Earnings Highlights

The following are highlights from the earnings call that relate to the small task-oriented vehicle market.

  • NA powersports industry retail was up high 30% in Q2
  • Polaris off-road vehicle retail increased low 60% as side-by-side and ATV sales were both strong.
  • New customers were key drivers with more females, people of color, families and younger buyers
  • Management reported that 75% of their off-road vehicle and motorcycle buyers in Q2 were new to Polaris.
  • Solid demand for four seat and crew UTVs for family usage
  • A significant portion of ORV sales came from existing dealer inventory which decreased 45% in the quarter as Polaris shutdown or decreased plant production
  • Production is “chasing demand with some shortage”.
  • Japanese competitors are gaining share, in part, due to having more product available.
  • Global Adjacent Market sales decreased 36% for the quarter to $78 million from $122 million
  • ORV retail sales continued strong growth in July

Guidance for 2nd Half

  • Polaris retail sales anticipated to outpace overall market.
  • Strong performance in second half expected by ORV.
  • ORV/Snow sales down 7% for the first half of the year but expected to be up overall for the full year as dealer inventory is replenished and powersports demand maintains modest growth.
  • Management anticipates continued weakness in adjacent markets given the dependence on government, university, commercial and rental sales.

Learn more: Polaris Q2 2020 Earnings Call Transcript

SVR’s Take

The fallout from the pandemic appears to have been good for the off-road utility vehicle market, at least for recreational purposes. As a relatively safe activity in terms of avoiding the virus, riding UTVs appears to have provided an antidote to being in lockdown or some degree of it. It will be interesting to see if it continues to do so. They are still large purchases and with the virus flaring up in many places, potential buyers could become more cautious. However, the acquisition of a large portion of new customers to date bodes well for Polaris in the future. Marc Cesare, Smallvehicleresource.com

2020 Small Task-Oriented Vehicle Study

Club Car Onward 4-passenger lifted PTV
Club Car Onward 4-passenger lifted PTV

In a new market study on the small task-oriented vehicle (STOV) market in the US and Canada, Small Vehicle Resource (SVR), LLC describes an industry in midstream transition as:

  • Climate policies, COVID-19 effects and new technologies usher in the urban/suburban mobility market and underpin an expanding consumer market for personal transportation vehicles (PTVs), as well as commercial markets for light duty utility vehicles;
  • The transition from lead acid to lithium batteries continues, raising performance and transforming vehicle longevity and recycling value.
  • The maturing off-road utility and recreational UTV market remains fundamentally strong and highly competitive, and is poised to follow the automobile and golf-car type vehicle markets into electrification;

The study provides a strategic analysis of the rise of urban/suburban mobility market driven in the context of the STOV industry. Steve Metzger, SVR Managing Director, states that, “The intersection of climate policy, new technologies and COVID-19 effects will lead to a ‘dispersed living lifestyle’, and provide new opportunities in the urban/suburban mobility market.”  He further remarks, “The STOV industry, particularly the Big Three golf manufacturers with a foothold in gated communities, have the core competencies to transition from golf-centric to urban/suburban centric. The question is will they?” 

Marc Cesare, SVR Managing Director, adds that, “While the UTV manufacturers will see solid growth in their market, some are capable of pursuing the urban/suburban mobility market as well. However, their DNA, profit centers and distribution channels are primarily off-road and powersports. Culturally, the pursuit of the urban/suburban mobility opportunity may be a difficult paradigm shift.”

The study, the tenth in the series since 2000, covers market trends from 2016 and develops projections to 2025. The key segments are golf fleet, personal transportation vehicles, light-duty utility vehicles, and off-road utility and recreation vehicles. In total, these segments are forecasted to reach close to 1,200,000 new vehicles in 2025. Electric powered vehicles continue to make inroads. Approximately a third of the market is electric powered, primarily in the form of fleet golf cars, PTVs, as well as light duty utility vehicles, of which approximately 80% will be electric by 2025. Key trends and projections for the market include:

  • Demand for electric powered STOV vehicles will increase to over 450,000 vehicles in 2025.
  • Golf course fleet demand will decline slightly during the trend period but will remain overwhelmingly electric powered, around 80%.
  • Demand for PTVs will be strong.
  • Lithium battery powered vehicles will continue to make inroads as more models become available with this option.

            The study is entitled, Trends and Outlook for Small, Task-Oriented Vehicles-2016-2025- An Analysis of the Emerging Urban/Suburban Mobility Market.  For additional, detailed information see the study brochure with table of contents or contact:

Steve Metzger smetzger@smallvehicleresource.com

(914) 293-7577

Multiple Polaris Recalls

Polaris Ranger XP 1000 utility vehicle
Models like the Polaris Ranger XP 1000 that helped drive sales is part of a large recall.

In April Polaris announced three recalls, two involving Ranger XP 1000 utility vehicles and one related to the PRO XD and several Ranger models. The largest recall covers 80,000 model year 2018 to 2020 Ranger XP 1000 and Crew XP 1000 utility vehicles. The clutch belt can break and damage the secondary clutch and fuel line and create a potential fire hazard. The second recall covers model year 2019 and 2020 Ranger XP 1000 and Crew XP 1000 and involves 7,000 vehicles. The fuel line can be misrouted above the bracket that protects the fuel line from a clutch belt failure, posing a fire hazard. The final recall involves model year 2019 PRO XD and several model year 2020 Ranger vehicles. The seat belts on the vehicles can fail, posing an injury hazard in certain crash situations. The following details are from Consumer Product Safety Commission.

Recall Details

Recall 1Recall 2Recall 3
Models
2018 Ranger XP 1000
EPS
2019 & 2020 Ranger XP 1000 & Crew XP 1000
Models
2019 Ranger XP 1000
EPS & Crew XP 1000
EPS
2020 Ranger XP 1000 & Crew XP 1000
Models
2019 PRO XD 4000D
AWD
2020 Ranger 500, 570, 1000, Crew 570, Crew XP 1000, EV, XP 1000
The clutch belt can
break and damage the secondary clutch and the fuel line, posing a fire hazard to the rider
The fuel line can be
misrouted above the bracket that protects
the fuel line from a
clutch belt failure,
posing a fire hazard 
The seat belts on the vehicles can fail, posing an injury hazard to the user if they were to be in a collision or tip-over incident.
Consumers should
immediately stop using the recalled vehicles and contact a Polaris dealer for a free inspection & repair.
Consumers should
immediately stop using the recalled vehicles and contact a Polaris dealer for a free inspection & repair. 
Consumers should
immediately stop using the recalled vehicles and contact a Polaris dealer for a free inspection & repair. 
80,000 UTVs recalled7,000 UTVs recalled10,500 UTVs recalled
See CPSC for affected
VIN information
See CPSC for affected
VIN information
See CPSC for more details
Recall number:
20-733
Recall number:
20-734
Recall number:
20-735
Sold Oct. 2016 –
Oct. 2019
Sold Aug. 2019 – Dec. 2019Sold Oct. 2019 – Dec. 2019

Polaris is notifying dealers and contacting registered owners directly. Consumers can contact Polaris at 800-765-2747 from 7 a.m. to 7 p.m. CT Monday through Friday or online at www.polaris.com and click on “Off Road Safety Recalls” for more information. In addition, check your vehicle identification number (VIN) on the “Product Safety Recalls” page to see if your vehicle is included in any recalls.

SVR’s Take

Polaris appeared to have improved their quality and significantly alleviated their recall problems before this latest round. The Ranger XP 1000 is a very important vehicle for their Ranger business and an 80,000 vehicle recall is very large. This will only add to the difficulties of dealing with the pandemic. SVR tracks industry recalls on an ongoing basis.

Polaris Covid-19 Response

Polaris PRO XD 400D AWD utility Vehicle
Sales of the new PRO XD 400D AWD from Polaris Commercial is likely feeling the effects of the Covid-19 crisis.

Polaris Covid-19: Operations & Dealer Response

The Polaris Covid-19 response is wide ranging and impactful. The management is suspending operations at eight plants across the United States, Mexico and Poland for a week. As part of the suspension the company is providing US employees with up to 10 days of pay. For dealers, they are allowing home delivery of products, providing product flooring support and covering flooring interest payments for off-road vehicles and motorcycles through May 31st.

Polaris Covid-19: Financial Response

On the financial side Polaris management announced a:

  • Drawing down of cash from their revolving credit facility
  • Reduction in capital expenditures
  • Suspension of share repurchases.

They have also withdrawn their financial guidance for the first quarter and full year.

SVR’s Take

This is not surprising given the current economic conditions brought on by the Covid virus. Similarly, BRP, maker of Can-Am products, withdrew their financial guidance for the year, suspended their dividend and drew down their $700 million revolving credit line. They are also considering reducing shifts and possibly suspending some plant operations.

Since the powersports industry in general is reliant on discretionary income, particularly in the recreational segment, they will be hard hit by the economic fallout from the Covid-19 virus. Polaris is more diversified than BRP with more commercial customers and products like Taylor-Dunn, Goupil, GEM and military vehicles. In addition, they have a large installed base and customers may choose to fix existing vehicles rather than purchase new ones. On the bright side Polaris points to the ability to maintain social distancing while still enjoying off-road vehicles.

Furthermore, the companies will be hit by sharply lower oil prices in important oil producing states and farmers still feeling the effects of the tariff wars. Several years ago these two sub-segments helped restrain growth in the side-by-side market. Oil prices were lower but not quite this low and farm income was low as well.

Marc Cesare, Smallvehicleresource.com

BRP Earnings Call: Q4 2020

Can-Am Defender 6x6 DPS is a new addition for 2020.
New product introductions like the Can-Am Defender 6×6 DPS has helped BRP grow their side-by-side market share.

The BRP earnings call for Q4 and the full year for FY2020 revealed continued strong growth. Annual revenue increased 15% to $6,053 million (CA$) primarily driven by shipments of Year-Round products which includes side-by-sides. Net income increased by 63% and North American BRP retail sales for Seasonal Products and Year-Round Products increased 15%. BRP retail sales outpaced the industry in North America and International markets. For Q4 2020 total revenues improved 7.3% to $1,615.9 and net income jumped 57.1% to $118.2. Management stated that they met key five-year revenue and earnings goals a year ahead of schedule.

BRP Earnings Call Highlights

The following are some of the highlights of the Q4 2020 BRP earnings call that relate to side-by-sides.

  • BRP North American powersports retail sales increased 15% for FY2020 compared to mid-single digits for the industry
  • Side-by-side vehicle retail sales increased low thirty % compared to high-single digit %
  • International side-by-side retail sales increased by over 30%
  • Powersports Parts & Accessories revenue increased double digit %
  • Management anticipates line speed reductions or temporary closures to adapt to demand during the current crisis
  • The company is not issuing financial guidance for FY2021 because of uncertainty driven by the COVID-19 virus
  • About 20% of Can-Am’s US sales are in seven key oil states, which will be hit by the steep drop in oil prices

Learn more: Seekingalpha.com (Earnings call transcript)

SVR’s Take

BRP continued their long streak of strong quarters as they continue to gain market share in the side-by-side market. They have emerged as the number one rival to Polaris. In large part this is because of a steady introduction of new models that meet customer needs. They are the only company that has come close to matching Polaris’ pace of new model introductions.

However, both companies are going to be challenged by the corona virus crisis as well as the sharp drop in oil prices. The oil rich states were a drag on the market several years ago when there was a less severe drop in oil prices. Tariff and flooding troubles in the farming states only adds to the problem. The effects of the corona virus are unclear at this point but are likely to be severe. Furthermore, products like side-by-sides that significantly rely on discretionary income are likely to be disproportionately affected.

Marc Cesare, Smallvehicleresource.com

2020 PGA Show Insights

Club Car Onward with lithium batteries
Club Car Onward is now available with lithium batteries.

My colleague, Stephen Metzger, attended the 2020 PGA Show in Florida. His observations of the latest products on display “…suggests a new generation of diverse vehicles going well beyond the golf market.  In general terms the emerging market that trends will play into is that of urban/suburban mobility. “ He lays out his observations and what they say about the strategies of the three major manufacturers in a new article.

PGA Show: Big Three Strategies

Club Car is looking towards connectivity and telematics technologies for new market opportunities. The company is monitoring developments in the urban/suburban mobility market. According to management, Club Car’s lithium battery powertrain and Onward PTV platform positions the company well to take advantage of new opportunities .

E-Z-GO lithium models, ELiTe and Express from E-Z-GO.
E-Z-GO lithium models, ELiTe and Express from E-Z-GO.

E-Z-GO is leaning on their latest technology advancements like their first to market (of the big three) lithium powertrain for fleet and PTVs, their IntelliBrake technology, AC drive, 72-volt powertrain and new quieter and more efficient EX1 gas engine. In addition, they continue to monitor the urban and suburban mobility markets.

Yamaha emphasized their new, fully independent suspension which is likely a precursor to a lithium powered vehicle. The absence of much heavier lead acid batteries has significant implications for the suspension setup and vehicle ride quality.

Other PGA Show Insights

Automotive features such as touchscreen LED displays and rearview cameras are continuing evidence that more automotive features are becoming standard in PTVs. The trend fits nicely with the ongoing development of the urban/suburban mobility market. A slice of this market includes low-speed vehicles and PTV like vehicles. Manufacturers also displayed scotters and golf specific, electric powered vehicles. The technology of the latter category could likely be adapted to the urban/suburban mobility markets.

Marc Cesare, Smallvehicleresource.com

Polaris Earnings Call: Strong Annual Sales; Low 4Q Growth

Polaris Ranger XP 1000 utility vehicle
Models like the Polaris Ranger XP 1000 helped drive ORV sales.

Polaris Earnings Overview

In their recent earnings call Polaris management reported strong annual sales despite relatively low fourth quarter growth. Overall sales increased to $6.78 billion for the full year, an increase of 12% from last year. All segments grew with the ORV/Snow segment increasing by 7%. For the fourth quarter sales increased 7% to $1.74 billion despite North American powersports retail sales increasing by only 2%.  There was strength in Ranger/General side-by-sides, full-size ATVs and Indian Motorcycles unit sales. In addition, PG&A sales outside of the TAP business performed very well, up 22%. The company continues to be hampered somewhat by tariffs, a $90 million cost in FY2019. However, the management has been able to receive some exemptions and managed to pass some of the cost on to suppliers.

Polaris Earnings Call

The following are highlights related to small, task-oriented vehicles from the recent Polaris earnings call for fiscal year 2019 fourth quarter.

  • ORV segment (UTVs & ATVs) sales increased by 13%
  • ORV retail increased mid-single digits %
  • Side-by-sides retail up low single digits percent
  • ATV retail up mid-single digits
  • Management reports that the ramp up of 2020 side-by-side retail sales were slightly below expectations and dealer inventory increased as a result
  • They named a top executive from their ORV business head-up their electrification strategy
  • Company-wide average selling price (ASP) jumped by 8% on the strength of ORV and motorcycles
  • ORV ASP increased 10% with more unit sales and more side-by-side sales
  • The company boosted prices 3% to 3.5% on many models earlier in the year
  • Recently they reduced prices substantially on select RZR models
  • Global Adjacent Markets decreased 1% to $120 million with vehicle sales declining but PG&A increasing

Full Year Sales Guidance

  • Full year sales are expected to improve 2% to 4%
  • ORV/Snow segment is expected to increase low single digits percent with ORV up low single digits percent
  • The Global Adjacent Markets segment is expected to increase high single digits percent as all product lines should show growth
  • Side-by-side shipments to dealers should decline in the first quarter as management tries to reduce dealer inventory that increased slightly the last two quarters.

Learn more: Seekingalpha.com (Earnings call transcript)

SVR’s Take

One of the most interesting pieces of information coming out of the earnings call was the appointment of a Senior Vice President for electrification strategy. Management noted that the powersports industry tends to lag the auto industry by 5 – 10 years. They think there is currently an inflection point in the market with regards to electrification. In addition, they talked about making investments and see a need to become more competitive in their core powersports business as it relates to electrification.

While Ranger sales continued to drive growth, RZR sales were not as impressive. This is likely where the higher dealer inventory levels originated. The price reduction of some of their RZR S models is likely a reflection of increased competition in the market segment. Kawasaki and Honda are the last two entrants into the high performance segment which has now become quite crowded. In addition, Polaris lowered RZR XP Turbo prices. This reduction may be to remain competitive as well as an effort to create pricing differentiation between the XP Turbo and their higher priced Pro XP models.

Marc Cesare, Smallvehicleresource.com


New Mobility Tech Challenges PTVs

Cruise Origin offers mobility through autonomous driving
The recently announced Cruise Origin self-driving vehicle that GM plans to start building in 2022. A potential threat to PTVs in gated communities?

The Mobility Tech Challenge

New urban and micro mobility technology creates a potential challenge to the existing players in the PTV market. This technology is wide ranging from electric skateboards and electric bikes to three-wheeled and larger autonomous vehicles. While the technology is typically discussed in the context of the urban environment, it can also be well suited to the gated and vacation community markets. These alternative mobility technologies do not provide a head-on, direct competition to PTVs, but neither are they merely tangential. They can challenge the existing PTV players by taking multiple, smaller slices of the market pie. In addition, they are attracting a host of new players and new investment.

Electric Bikes & Scooters

The gated and vacation community skews older so skateboards are probably out, and at first glance electric bikes and electric scooters (Vespa like) may not seem to make sense. However, electric bikes and scooters can offer a slice of the market an alternative transportation experience. An electric pedal assist bike can provide exercise without as much exertion as a traditional bike. In addition, if you already bike, it extends your existing trip range and experiences. Scooters offer an alternative to PTVs for quick single or two-person trips. This technology can also be applied in the form of a bike or scooter share program, providing access to the whole community. A share program would seem well suited to a planned community that has a large enough population and well planned out destination points.

Pros

They are fun to ride and, in the case of bikes, can provide additional exercise opportunities. They are a less expensive alternative, especially if you need an occasional second mode of transportation and have a small footprint. Furthermore, their speed range fits well in the low speed planned community environment. They can also be used to venture outside the community with likely less restrictions than PTVs.

Cons

On the other hand these modes of transportation have some drawbacks that limits their appeal. First, they can only accommodate one or maybe two people in the case of scooters. They have limited carrying capacity for running errands. They also do not provide any protection from the elements or as much collision protection from other vehicles as a PTV does. In addition, older folks may not feel as physically capable of operating these vehicles. Although, the low speed and well planned roadways can ameliorate this issue to some degree.

Three-wheelers & Autonomous Vehicles

Arcimoto Fun Utility Vehicle - FUV
The electric powered Arcimoto Fun Utility Vehicle (FUV) is just coming to market.

On the other end of the spectrum you have larger multi-passenger vehicles that provide a more direct competition to existing PTVs. Vehicles like the FUV can carry two passengers or one with cargo. As a three-wheeler, the FUV can operate at higher speeds and has no restrictions for venturing outside of communities on public roads. At the same time, this vehicle can be speed limited for golf course and planned community use. With autonomous vehicles planned community residents could displace at least some of their PTV usage, and possibly all of it if the the service is robust enough.

Pros

With the ability to travel from golf course to community roads to public roads, the three-wheeled vehicle offers greater versatility than PTVs. Capable of higher speeds, it also has greater functionality than PTVs for certain use scenarios. For autonomous vehicles, the low-speed, well-defined and relatively limited planned community road networks offer an ideal environment. For residents less inclined or capable of driving a PTV, they provide a method to maintain mobility.

Cons

The FUV is currently much more expensive than PTVs and even LSVs. Therefore, customers may not find the increased versatility and functionality worth the price. They also are limited to two passengers, and as a result are less useful for family outings. For autonomous vehicles the technology is still in the development phase. In addition, some customers may prefer the convenience, customization and the statement made by owning a PTV. Furthermore, the cost of this type of service is not currently known.

New Players, Investment & Disruptive Innovation

Harley Davidson electric bicycles

An additional aspect of urban and micro mobility that PTV manufacturers must contend with is the increased number of market players, capital investment and disruptive product innovations that the technology brings. For example, Harley Davidson and Jeep have revealed at least prototype electric bikes. Completely new companies like Arcimoto have entered the market. Tech companies like Alphabet (Google) and traditional auto manufacturers are developing highly sophisticated autonomous vehicle technology. In addition, you have ride share companies.

PTV manufacturers are potentially at a disadvantage because they have neither the focus of disruptive startups or the financial resources of much larger companies. On the other hand, they do possess strong knowledge of the market and a distribution network to serve the market. They also have experience in developing and manufacturing electric vehicles in a highly competitive environment.

Potential Strategies

One strategy for PTV manufacturers to take is to start developing new mobility platforms themselves. The question is whether they have enough resources and commitment. They would have to balance maintaining their current product lines while trying to introduce entirely new a category of products. Another strategy would be to leverage their distribution and marketing expertise by acquiring or partnering with new market entrants to launch to product categories. They could also decide to keep improving their existing products and manufacturing efficiency. As a result, they could maintain or lower prices while increasing the value of their products. Therefore, new entrants could find market entry to difficult or limited to niche markets. However, compared to the other two strategies, this strategy offers less upside. In addition, it still leaves them vulnerable to a disruptive technology. The first two strategies provides the opportunity to potentially expand into urban markets.

Marc Cesare, Smallvehicleresource.com

New Strategy For Club Car?

Club Car 411 utility vehicle
The Club Car 411 is the result of partnering with AEV Technologies.

My colleague Stephen Metzger discusses Club Car’s product development strategy in a new article. In particular, he analyzes Club Car’s partnership with AEV Technologies and the resulting offering, the Club Car 411 utility vehicle. Rather than develop the vehicle in-house, which Club Car has the capabilities to do, they decided to go outside. Is management embracing a new approach to product development or is this just a one-off exercise? In addition, an interview with Brian Rott, President Cart Mart in California, discusses how the 411 fits in the market.