Urban Mobility Market for STOV OEMs

fuel cell powered urban mobility vehicle
Yamaha’s fuel cell powered urban mobility vehicle for a new ride sharing service.

Recent vehicle news from Asia spurred some thoughts on the opportunity urban mobility presents to small, task-oriented vehicle (STOV) manufacturers.

Urban Mobility Changing

Battery Swapping Autorickshaws

The first article reports on the use of battery swapping to power electric autorickshaws in India. Battery swapping removes the very expensive battery component from the upfront purchase price and reduces long term operating costs. In addition, the electric part moves toward a more climate friendly and less polluting transportation system.

The current thinking by some is that smaller two and three-wheeled vehicles provide the best economic case for battery swapping. In contrast, larger vehicles require larger batteries. This means more expensive and complicated swapping stations, and higher up front investment costs for the battery supplier. While this an India based example, the advent of e-scooters, e-bikes and startups offering three wheelers indicate market potential in the US.

Fuel Cell Powered Small Vehicle

This week Yamaha Motor announced the public testing of a prototype fuel cell vehicle for a vehicle sharing service. The vehicle looks like less than a typical automobile but more than a golf car. The technology advances new concepts in urban mobility as well as initiatives in Japan to promote hydrogen based fueling. Though the fuel cell provides greater range and less refueling needs, the more important part of this test for STOV OEMs is the vehicle form. The vehicle size and level of complexity should be a good fit for their capabilities.

Is Urban Mobility Too Small for Traditional Auto OEMs?

These transportation technologies represent a new opportunity for STOV manufacturers to leverage their existing manufacturing and technology expertise into new vehicle markets. The traditional automobile manufacturers are less likely to view these markets as an opportunity. Although, in the long term they could represent a threat to their dominance or at least reduce their addressable market. They are already pouring billions of dollars to enter the highway capable EV market. However, they must balance investment between highly profitable and traditionally popular ICE vehicles and lower margin and riskier EVs. Smaller, alternative energy vehicles are even farther down the list. In addition, their work force arguably did not join their companies to produce small, urban vehicles.

Urban Mobility Attracts Diverse Providers

Entrants in the urban mobility space include startups like Arcimoto and traditional small vehicle manufacturers serving Asian and to a lesser degree European markets. Startups have the advantage of creating purpose-built vehicles specifically for new mobility markets. However, they lack the manufacturing expertise, financial resources and distribution networks. Traditional foreign small vehicle manufacturers know their home markets, and have the distribution, financing and manufacturing assets. However, they do not have a strong presence in the US market.

Other potential entrants include the likes of bike sharing companies as well as Lyft and Uber that have moved into ride sharing with e-scooters and e-bikes. However, these company’s expertise is not in manufacturing. They provide the platform for people to access mobility. One can argue that the platform itself does not provide as a wide moat as the manufacturing and technology assets. The strengths and weaknesses of these potential providers and the dynamics of the urban mobility market suggest an opening for existing US STOV manufacturers.

Best Positioned US STOV Market Leaders

Among the current leading UTV, golf car and LSV manufacturers companies Polaris, Textron and Yamaha appear to be best positioned to pursue this new opportunity. Polaris owns Aixam, the leading European quadricycle brand as well as the GEM, Goupil and Taylor-Dunn electric vehicle brands. These brands provide them with electric vehicle technology as well as a range of distribution networks. On the other hand, the DNA and profit driver of Polaris is off-road motorsports. They may see relatively greater returns on investment in their traditional markets.

After the acquisition of Arctic Cat, Textron is similar to Polaris and now has an expansive small vehicle portfolio. Their DNA is more golf car and PTV, and therefore likely better suited towards urban mobility. However, the integration of Arctic Cat has been bumpy and they were slow to recognize the original UTV opportunity. As a piece of a larger conglomerate, their Textron Specialized Vehicle division may not be entrepreneurial enough or have the freedom to pursue this opportunity.

Yamaha has both off-road and golf car type offerings as well as e-bikes, but are not well coordinated. These businesses are in separate business units. In addition, their golf car portfolio has been emphasizing gas powered technology rather than electric technology. Yamaha’s existing mobility concept testing along with having one foot in the Asian market and another in the US should be an advantage. However, their slow re-entry into the UTV market after problems with the Rhino side-by-side speaks to a more cautious corporate approach.

The STOV OEMs appear to have many of the necessary requirements to pursue the urban mobility opportunity. The question remains whether they believe in the opportunity and if they are willing to take the risk.

Marc Cesare, Smallvehicleresource.com

Should Polaris Acquire Club Car?

Club Car Tempo
The Tempo, Club Car’s fleet golf car introduced in 2018.

A recent article speculated that Ingersoll-Rand’s acquisition of Precision Flow Systems could pave the way breaking up the conglomerate. Club Car is one of the pieces that seems a poor fit with the rest of Ingersoll-Rand. If this is the case, then Polaris Industries might be a good suitor.

The Pros for Acquiring Club Car

A strong international brand

Club Car has a number of characteristics that match previous Polaris acquisitions. First, Club Car is a leading brand, if not, the leading brand of the three major golf car manufacturers. Second, it is an international brand. Third, Club Car participates, in part, in a fragmented industry. Therefore, Polaris would have an opportunity to use their resources to establish a more dominate market position. While the golf car fleet market is primarily a three company affair, Club Car, E-Z-GO and Yamaha, the non-fleet personal transportation vehicle (PTV) and light utility vehicle markets are more fragmented markets. Fourth, a large installed base of vehicles forms the basis for a substantial parts and accessories business. This was a key reason for the Polaris purchase of Taylor-Dunn.

Club Car complements Polaris vehicle portfolio

A large portion of Club Car vehicles sold are electric and would fit well with the Polaris EV portfolio. Other EVs in the Polaris portfolio include GEM, Goupil, Taylor-Dunn and Aixam. Polaris could spread their battery and EV powertrain development costs over a larger number of vehicles. In addition, Club Car’s end markets and distribution network would complement current efforts by Polaris. Their PTVs would complement the street legal GEM vehicles and their light utility vehicles would complement the more heavy-duty Rangers.

In addition, the golf manufacturer’s dealer network would expand Polaris’ footprint. While there is some overlap with the GEM and Taylor-Dunn dealer networks, there would also be a large number of additional dealer locations in the US and internationally. Furthermore, these dealers could be used to expand the GEM and Taylor-Dunn distribution. Club Car end markets such as golf courses, resorts, colleges, airports and other institutions would also take Polaris into new markets or broaden their vehicle offerings where they overlap.

The Cons for Acquiring Club Car

Is there enough growth?

Polaris looks for acquisitions in growing markets and/or traditionally strong but neglected brands that they can leverage. In the case of Club Car, the fleet golf car market has been declining for a number of years. The PTV and light UTV markets are growing but not at really high rates and are a smaller part of the business. Club Car isn’t necessarily a neglected brand but is somewhat lost among much larger Ingersoll-Rand businesses. In contrast, Polaris might be able to focus more attention and resources and make a strong brand even stronger.

Another acquisition to swallow

Polaris has already made a number of acquisitions in the past year, adding Boat Holdings and the Marquis-Larson Boat Group to start a new boating business. Acquiring Club Car would require more management time and focus to successfully integrate the business into Polaris. In addition, the purchase would likely add additional debt to their balance sheet. Polaris management might want to finish integrating their recent acquisitions before adding another piece and avoid increasing their debt.

What Will Polaris Do?

A strong argument could be made that Polaris should acquire Club Car if it’s for sale. The key questions are whether the management perceives if there is enough growth in the market, and do they think they can use their resources to drive more growth. The combination of the PTV and light UTV markets along with the parts and accessories business may offer enough potential. Timing may also be an issue. Any down turn in the economy, which some are predicting, would hurt Polaris. Discretionary income drives a significant portion of their sales.

Marc Cesare, Smallvehicleresource.com

Polaris Reports Another Strong Quarter

2019 Polaris Ranger Crew XP 1000 EPS
The 2019 Polaris Ranger Crew XP 1000 EPS in Sunset Red Metallic is part of the Ranger product line that recently commemorated its 20th anniversary.

Polaris Q4 2018 Earnings Overview

Polaris reported another strong quarter and full year with 4th quarter sales of $1.6 billion, up 14% from last year. Full year sales topped $6.1 billion, up 12% from the prior year. The ORV/Snowmobile segment reported sales of $1.1 billion for the quarter, an increase of 7% year over year. The ORV portion declined 2% as the company had a tough comparable with the prior year’s quarter. On a negative note, management expects tariff and trade war costs to total between $110 to $120 million company wide for fiscal year 2019. They will hit the ORV and Motorcycle businesses the hardest. A significant portion of the Q&A on the call revolved around tariff and trade war costs. A summary of the earnings call highlights related to the STOV market follow.

Polaris Earnings Call Highlights

  • Polaris side-by-side retail sales increased mid single digits % while ATV retail sales decreased mid single digits %
  • Average selling price for the ORV segment increased by 7% but were partially offset by tariff, logistics, and commodity costs
  • Polaris gained market share in the side-by-side market for the quarter and the full year
  • Management believes they are gaining share from Japanese competitors and Arctic Cat, now owned by Textron
  • Global Adjacent Markets revenue increased 4% to $122 million on the strength of commercial, government and defense and Aixam businesses.
  • Polaris increased wholegood prices 3.5% for the ORV/Snowmobile segment at the start of 2019 to counter tariff and trade costs
  • Revenue for ORV/Snowmobile and Global Adjacent Markets segments are expected to increase mid-single digits % for fiscal year 2019
  • Management does not expect to enter into electric powered markets until there is large consumer demand. Their response pertained to motorcycles but appears to be their general philosophy.

Learn more: Earnings Call Transcript (seeking alpha.com)

Textron Expands ELiTE Vehicle Lineup

Cushman Hauler 800 ELiTE
The new Cushman Hauler 800 ELiTE from Textron is powered by lithium batteries.

Textron Specialized Vehicles Launches Hauler 800 ELiTE Electric UTV

Textron Specialized Vehicles launched the Cushman Hauler 800 ELiTE electric powered utility vehicles. Samsung SDI lithium technology powers the ELiTE series. The Cushman Hauler 800 and 800X will feature the lithium battery pack. Textron is targeting golf course superintendents with these models.

ELiTE Powertrain

The Hauler 800 and 800X ELiTE powertrains feature a 48-volt AC drive with a 11.7 hp (peak) motor and two zero maintenance lithium ion batteries. In comparison, the existing electric Hauler 800 and 800X have a 48-volt AC drive with 4.4 hp continues motor and six deep cycle batteries.

Learn more: Textron.com

SVR’s Take

Textron’s initial introduction of the ELiTE lithium batteries in fleet golf cars was successful. As a result, utility vehicles used on golf courses are a logical extension of the program. Furthermore, from a macro market perspective, Textron is the first major manufacturer in the STOV market to make a strong push with lithium powered vehicles. While others have offered lithium batteries as an option on some vehicles, Textron is the first to incorporate them into key models.

Where is the Competition on Lithium Batteries?

Polaris diverse lineup sprinkled with lithium models

With the 2017 acquisition of Arctic Cat, Textron Specialized Vehicle business became an even more direct competitor with Polaris. Polaris has been active in the electric vehicle market for years. They invested in Brammo, and acquired Goupil in France and GEM and Taylor-Dunn in the US. However, to date, Polaris has not made a big push into lithium powered utility vehicles in the US. GEM vehicles have an option and the European based Goupil offers two lithium battery pack options for many models. Polaris briefly offered their Ranger EV with a lithium pack but the model was significantly more expensive. Their volume in fleet golf cars provides Textron with an advantage over Polaris when introducing lithium powered models.

Club Car enters the fray

At the recent 2019 PGA Show Club Car introduced its lithium powered fleet vehicle, the Tempo. According to sources, they are likely to introduce a lithium powered version of their Onward PTV later in the year. Like Textron, Club Car will have the advantage of production volume through fleet sales. They likely will follow suit and offer lithium powered utility vehicles in the future. A smaller manufacturer likely to follow the trend is STAR Electric Vehicles.

Marc Cesare, Smallvehicleresource.com

Polaris Launches New PRO XD UTV Line

Polaris PRO XD 2000D

Polaris PRO XD 2000D is part of a new work-oriented UTV line.

Polaris PRO XD 400D AWD utility Vehicle

The new PRO XD 4000D AWD from Polaris Commercial is the lines crew version.

PRO XD Overview

Last month Polaris Commercial launched their new PRO XD utility vehicle line. The line includes the PRO XD 2000D 2WD, the PROXD 2000D 4WD and the PRO XD 4000D 4WD. All three vehicles are purpose-built for work and are powered by a 898cc, 3-cylinder Kubota diesel engine. Polaris is engineered features to target three key areas they believe are necessary for work vehicles:  durability, serviceability and safety.

Durability

For durability they designed a rigid chassis, a rust and dent resistant composite bed that can fit a full-size pallet, a heavy-duty sealed driveline, a reinforced seat with heavy-duty seat material and 26″ job site tires.

Serviceability

To improve serviceability Polaris:

  • Extended the maintenance intervals to 200 hours
  • Improved vehicle fault alarms for low oil, parking brake engagement, belt burn and engine overheat to identify problems earlier
  • Designed side access for dipstick and air filter servicing
  • Use front air intake for cleaner air and longer filter life
  • Integrated Polaris Pulse Connector to simplify accessory installation and improve uplift possibilities

Safety

For safety the PRO XD vehicles include:

  • Orange seat belts and vehicle decals to improve work site visibility
  • Backup alarm, horn and parking brake
  • System where the vehicle starts only in Park with brake enabled
  • Wide foot wells for easier entry and egress
  • Speed limited to 26 mph or as low was 15 mph
  • Engine Braking System for hill descending
  • Fully sealed cab

Features and Specs

Common features and specs across all three vehicles include:

  • 24.5 hp, 898cc, 3-cylinder Kubota diesel engine
  • Engine Braking System
  • Automatic PVT transmission
  • 1,250 lb. cargo box
  • 2,500 lb. towing capacity
  • 11″ of ground clearance
  • 9″ of front and rear suspension travel
  • 26″ Duro DI-2042 Power Grip tires
  • 4-wheel hydraulic brakes
  • 55W low/ 60W high, LED Tail
  • Kevlar backed seat material
  • Tilt steering
  • Digital Gauge

The PRO XD 2000D AWD adds an all-wheel drive Ultra Turf drive system while he PRO XD 4000D AWD is the same but seats four and comes equipped with electronic power steering. The PRO XD 2000D 2WD starts at $14,599 the 2000D AWD at $16,099 and the 4000D AWD at $17,749. In addition, Polaris offers two standard accessories packages. The Work Package adds a poly roof, poly windshield, strobe light, air filter restriction gauge and wide angle rearview mirror. The Work Package with Cab System includes the same package plus doors, engine block heater, heater defrost kit and rear panel.

SVR’s Take:

The new PRO XD vehicles are an improved version of basic work UTVs and replace the lower priced and lesser equipped Brutus vehicles. Last year Polaris Commercial discontinued the lower priced and less featured vehicles of their Brutus line, another work oriented UTV line, due to lagging sales, . In contrast, they kept Brutus HD PTO Deluxe, a fully equipped vehicle with a starting price of $24,099 which apparently sold well compared to the lesser equipped vehicles. According to earnings calls, the Brutus line did not quite live up to high sales expectations. In part because in the commercial UTV segment there is a different type of customer, sales process and sales cycle. Typically, a powersports dealer network does not serve this segment well.

Also, the Brutus uses a Kohler diesel engine and the PRO XD vehicles a Kubota. In the past Polaris did not have as much success developing their own diesel engines. They eventually switched to outside vendors. This makes sense since their volume of diesel powered UTVs is small compared to their overall sales. Development resources are better used elsewhere, and their diesel vehicles are improved by using an outside vendor specializing in developing high quality diesel engines.

Tariff Questions Dominate Polaris Earnings Call

Polaris 2019 Ranger XP 1000 EPS 20th anniversary

The 2019 Ranger XP 1000 EPS 20th Anniversary edition helped drive sales despite tariff concerns.

Financial Results Overview

Tariff questions dominated the Polaris Industries earnings call to discuss their Q3 financial results for fiscal year 2018. The manufacturer of the RZR, Ranger and General side-by-sides reported adjusted revenue of $1,653 million, an increase of 12% from $1,480 million from third quarter 2017. Net income increased 21% from $98 million to $118 million. (Financial figures are compared to Q3 2017 unless noted)

STOV Segments Perform Solidly

Overall ORV/Snow segment revenue increased 3% from $1,007 million to $1,036 million. Lower snowmobile revenue was more than offset by a 12% increase in ORV revenue. ORV includes UTVs and ATVs. North American (NA) retail sales, driven by side-by-side sales, increased 1% in the quarter against a tough comparable. In comparison, management estimated that industry wide NA ORV sales improved low single digits for the quarter. Polaris side-by-side market share for the quarter remained the same.

The average selling price of ORVs overall increased 5%. Management reports that the initial launch of the 2019 model year was successful with good response from consumers and dealers. In particular, the new Ranger XP 1000 variants drove sales. Furthermore, the company’s inventory management system, RFM, is producing results with the best side-by-side delivery performance to date. In addition, lower promotional costs accompanied the stronger sales. Comments on individual markets indicated that the oil and gas customer segment improved while agriculture decreased some.

Global Adjacent Markets Gain

The Global Adjacent Markets (GAM) segment made solid gains as well. Sales increased 5% from $92 to $98 million. This segment includes vehicle sales to commercial, government and defense clients in addition to Aixam quadricycle sales in Europe. In addition, the GAM segment includes vehicles like Ranger and Brutus UTVs, military RZRs, GEM electric vehicles, Taylor-Dunn industrial vehicles and Goupil electric vehicles based in France. Management reported solid sales for  Goupil vehicles and strong orders from fire and police departments, and other government agencies.

ORV and GAM Drive International Growth

Sales to international markets jumped 10% with a strong showing from the ORV/Snow segment, up 9%, and the GAM segment, up 6%. Looking at sales by region, the Europe and Middle East drove overall international sales while Latin America increased only slightly and the Asia Pacific region decreased.

Full Year Guidance Improves

Polaris increased their guidance for the ORV/Snow segment. They now expect a low double digit increase in sales.The GAM segment should increase sales by low double digits, which is unchanged from previous guidance.

Tariff Impacts

Tariff impacts raised expenses by $8 million for the quarter and are expected to total $40 million for the year. The renegotiated NAFTA deal, the USMCA, is expected to have a neutral effect. However, the 301 tariffs, especially the upcoming List 3 tariffs could have more severe repercussions. Currently, the company is dealing with List 1 and List 2 tariff impacts. Polaris is at a disadvantage related to 301 List tariffs because their main competitors produce their vehicles in Mexico or assemble them in the US using Japanese parts. Therefore, these companies are not subject to the same tariffs.

Tariff Mitigation Plans

Management laid out a three pronged approach to mitigating the potential List 301 tariffs. First, they will try to negotiate with their suppliers to share some of the increased costs. Second, they may increase prices. Thirdly, they hope to lobby the current administration to obtain an exemption from the tariffs. Polaris argues that the tariffs are primarily hurting them, but they are the only US based manufacturer among the major players in the market. Furthermore, the company has been increasing their US based manufacturing. At this time, Polaris is not providing any specific quantitative guidance for tariff impacts for 2019.

Other Future Factors

For the powersports market in general, management expects that there will be a need to increase pricing to offset inflation, tariff impacts and increasing commodity and logistics costs. Furthermore, management stated, “As the industry leader, we’re not afraid to lead on price.”

The newly launched Factory Choice program, which gives the customers and dealers an opportunity to make differentiated vehicles from the factory and has been popular, gives Polaris optimism. The program should help drive sales in the future.

The dealer inventory profiles produced under the RFM program this year for side-by-sides significantly improved product availability. The increased availability bolstered sales, raising similar expectations moving forward.

Learn more:  Polaris Earnings Call Transcript (Seekingalpha.com)

SVR’s Take

This was another solid quarter for Polaris. The sales increases for side-by-sides were not gangbusters at first glance, but they are being compared to a really strong third quarter in 2017. The new 2019 vehicle lineup should drive sales more fully in the fourth quarter. The GAM segment is slowly growing into a significant business and could become a $500 billion business in about two years. On a cautionary note, the tariff impacts could slow progress for Polaris, especially in contrast to fast growing and Canadian based Can-Am. Increased pricing could potentially hurt sales, although as a premium brand Polaris can pass on some pricing. The other alternative is that they will take hit to their margins and generate less income.

 

 

Polaris 2019 Ranger Crew XP 1000 Reviews

Polaris 2019 Ranger Crew XP 1000 EPS

The 2019 Ranger Crew XP 1000 EPS in Sunset Red Metallic from Polaris.

2019 Ranger Crew XP 1000 Overview

The six-passenger  2019 Ranger Crew XP 1000 from Polaris features a number of improvements compared to the 2018 version including more power, ground clearance, towing capacity and larger tires. The Sage Green base model starts at $16,299 and there are four models in the lineup including a Premium model with automotive paint, a 20th Anniversary Limited Edition with special paint scheme and stitched seats, the Northstar Edition with a full HVAC cab and a High Lifter Edition for mud riding. Some of the key features and specs of the 2019 Ranger Crew XP 1000 include:

  • 82 hp engine
  • High Performance On-Demand True AWD/2WD/VersaTrac Turf Mode
  • Engine braking system
  • Electronic power steering
  • 27″ Maxxis tires on aluminum Black Xcelerator 2.0 wheels
  • 11″ of front and rear suspension travel
  • 13″ of ground clearance
  • 1,000 lbs capacity cargo bed
  • 2,500 lbs towing capacity
  • 4-Wheel Hydraulic Disc with Dual-Bore Front Calipers
  • Under seat storage and pass through for longer items
  • New front fascia design

Reviews Summary

These reviews focus on the base and Premium model with some owner added options as noted. In general, the reviews are very positive. Owners like the power, ride and storage of this model. The only common issue is that the response of the vehicle on initial take-off can be “jerky”. The first two videos discuss some of the key features of the vehicles and are from dealers. Actual owners with time on the machines made the latter two and are more informative.

Vehicle Walk Arounds

Video walk around of the 2019 Ranger Crew XP 1000 by Family PowerSports in Lubbock, TX provides a nice overview of key changes from 2018 model. These changes include:

  • New front fascia
  • Increase ground clearance from 11″ to 13″
  • 26″ stock tires to 27″ 6-ply tires
  • Increased horsepower from 80 to 82
  • Increase towing capacity from 2,000 lbs to 2,500 lbs
  • Widened front and rear entries for easier ingress and egress
  • 25% thicker seats for more comfort
  • Cleaner dash design
  • Added storage under passenger seat

Video walk around of the 2019 Ranger Crew XP 1000 by Leone Polaris in Peru, IL. This video provides more footage of vehicle specifics but is also a little harder sell. The presenter noted similar changes over the 2018 model as in the video above and added the following:

  • Best crew model on the market
  • 25% tighter turning radius
  • Highest grade tires and wheels
  • Tailgate quality similar to a good pickup truck

Owner Reviews

Video review from owner with the 2019 Ranger Crew XP 1000 EPS Premium

  • First-time UTV owner reviewing after about 800 miles and 75 hours using the vehicle
  • Use the UTV when camping and added front full glass windshield, rear plexiglass window and roof from Polaris and a bluetooth audio system from a third party provider
  • Owner is from South Dakota and used vehicle on gravel roads and farmland
  • Compared to base model this one has different gauge and dashboard along with automotive paint
  • Would have bought full glass rear window instead of plexiglass which probably won’t last that long
  • Love the ride:  “Drives like a Cadillac” and seats are “top notch”
  • Takes bumps and river bottoms really well in front and rear seats
  • Love the look of the front which looks like a pickup truck
  • Crew size is good for family with three boys
  • Lot of room for storage
  • Like the power. Have easily towed trailer with pavers.
  • Don’t like the dust in the cabin even with half windshield we tried from neighbor; Better without windshield but our area has a lot of bugs
  • No grab handle for the driver seat which makes it difficult for older person to enter the vehicle
  • Accessories are extremely expensive e.g. doors would cost $5,000 more
  • Machine is long. You will need a 14 ft. trailer.
  • Commenters responding to the video talked about having a “jerky” initial takeoff. Others suggested this lessened with breaking in of the belt and using lower gear at start.
  • Another commenter noted the “amazing power” of this model

First impression video review by a new owner of the 2019 Ranger Crew XP 1000 in Sage Green which is the base model. The owner drove the vehicle around a duck hunting camp in Alabama checking and pulling game cameras.

  • First time UTV and Polaris owner with a couple of hours of use on the vehicle
  • Added front and rear glass. The Plexiglas option when scratched can be difficult to see through in low light.
  • Sage Model doesn’t have adjustable driver seat and just a digital gauge instead of additional analog gauges.
  • Like the large amount of storage
  • Might put in 1/4 doors up front in contrast to the standard side nets
  • Reached 52 mph top speed
  • Driving in work mode seems to have a smoother throttle response in contrast to the other modes
  • 2″ higher ground clearance is good for use in the water
  • Very happy with it

 

Can-Am Market Share Increases

2019 Can-Am Defender HD8

New models like the 2019 Can-Am Defender HD8 help increase Can-Am market share.

Can Am Defender Max

Can Am Defender Max

BRP Reports Strong Fiscal Q2 Earnings  

BRP Inc., manufacturer of Can-Am vehicles announced strong earnings for their fiscal second quarter (ending July 31, 2018) and improved Can-Am market share for their side-by-side business. Management reported an increase in revenue of 18% to $1,207 million from $1,023 million (In Canadian $) as well as increased profit margins.

Ahead of Strategic Plan 

Since implementing their strategic plan in 2015 Can-Am has steadily made inroads in the side-by-side market. Management set the goal of doubling Can-Am market share for the North American side-by-side market from approximately 10% to 20% by 2020. They are on track to reach that goal in 2019 instead of the original 2020 target year.

Recent Can-Am UTV Launches Source: Can-Am Presentation 9/10/2018

Product Development Drives Can-Am Market Share Success

The company drove this rapid growth by launching a host of new models to maintain competitiveness in existing market segments or to enter new segments. They typically launch new models every six months. The Defender lineup of UTVs is an example of entering new segments. The Defender not only attacked the work/utility segment where Can-Am needed a presence, but opened up under represented geographic markets. The company reports US side-by-side dealer network coverage increased over 50% over four years. They also added trail and sport models for the recreational segment while continuing to produce competitive high-end performance side-by-sides as well.

Can-Am Emerges as Main Polaris Competitor

While still far from the market share of market leader Polaris, Can-Am has established itself as the main competitor to Polaris, outpacing the likes of Yamaha, Honda, John Deere and others. This applies to not only to the side-by-side market but in other product segments as well including ATVs, 3-wheelers and snowmobiles. Both companies have also entered the boating market with recent acquisitions. (BRP; Polaris) Can-Am is one of the few side-by-side manufacturers that comes close to the breadth of models that Polaris offers across all the market sub-segments. Management’s intentions are to continue to build out their product lineup.

Earnings Call Highlights

The following are highlights from the earnings call and presentation. Unless noted comparisons are to the same quarter of the previous year.

  • Revenues were up in North America (NA) and all intl markets
  • NA retail sales for Seasonal and Year-round business segments increased 16%
  • All product segments are outgrowing respective industries
  • Year Round business which includes SxS, ATV and Spyder products increased by 26% from $440.4 to $554.0
  • NA side-by-side retail jumped low 30% vs. low teen % for industry for the quarter
  • NA 2018 SSV industry up high single digits percent for recently ended model year while Can-Am jumped mid 30%
  • Management reports gaining over 2.5% in market share in NA side-by-side market for the 2018 season
  • Can-Am SxS up 25% in all  international markets:  Europe/Middle East, Latin America and Asia-Pacific.
  • Management states:  “We are seeing solid growth across the lineup, and the popularity of our specialized models such as the Defender LONE STAR, the Maverick X3 rock crawler and our mud-ready Maverick X3 and Defender is helping us deliver superior profitability for us and our dealers.
  • Management increased guidance for Year Round business to up 18-21% from previously guided 12-15%
  • Can-Am has more than doubled their side-by-side retail volume since 2015 with 6 new platform introduced over the past 3 years and on target to reach 2020 goals one year in advance
  • Room to grow in the Defender side-by-side segment
  • Some cost pressures from commodity prices and freight costs

Learn more:  Earnings Call Transcript

Polaris Recalls RZR XP Turbo S UTVs

RZR XP Turbo S

Polaris is recalling RZR XP Turbo S models due to an issue with the ROPS.

Polaris is recalling 2018 RZR XP Turbo S UTVs because the rollover protection structure can fracture during a high-speed rollover. The recall involved approximately 1,300 vehicles. Owners reported six instances of the ROPS fracturing. Owner should immediately stop using the vehicles and contact a Polaris dealer for a free repair.

SVR’s Take:  The recall is relatively small compared to typical recalls, and considering the number of vehicles Polaris sells. However, this is the first time I remember an issue with a ROPS structure for any manufacturer. In addition, Polaris mostly likely manufactured these 2018 models under their new design and manufacturing processes implemented to produce better quality vehicles. SVR maintains a list of recent recalls of UTVs, golf cars and LSVs. The following recall information is from the Consumer Protection Safety Commission.

Name of product:  Model year 2018 RZR XP Turbo S recreational off-highway vehicles (ROVs)

Hazard:  In the event of a high-speed rollover, the vehicle’s rollover protection structure (ROPS) can fracture, providing inadequate protection during a rollover.
Remedy:  Repair
Recall date:  August 27, 2018
Units:  About 1,300
Consumer 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.

RZR XP Turbo S Recall Details

Description:  This recall involves model year 2018 RZR XP Turbo S recreational off-highway vehicles (ROVs) sold in red and blue. The recalled vehicles have “POLARIS” printed on the front grille, “POLARIS” printed beneath the doors, and “RZR” printed on the rear fenders. The vehicle identification number (VIN) and model number can be found on a label affixed to the vehicle frame in the left front wheel well.
Polaris Model Year 2018 RZR XP Turbo S
Year Model Number Model/Color
2018 Z18VEL92BR RZR XP TURBO S WITH RIDE CMD AND LV INDY RED
2018 Z18VEL92BK RZR XP TURBO S WITH RIDE CMD AND LV POL BLUE
Remedy:  Consumers should immediately stop using the recalled ROVs and contact a Polaris dealer to schedule a free repair. Polaris is contacting all registered owners directly.
Incidents/Injuries:  Polaris has received six reports of rollover protection structures fracturing during rollovers. Polaris has received one report of an injury but does not attribute it to ROPS fractures.
Sold At:  Polaris dealers nationwide from January 2018 through August 2018 for about $27,500.
Manufacturer(s):  Polaris Industries Inc., of Medina, Minn
Importer(s):  Polaris Industries Inc., of Medina, Minn
Manufactured In:  Mexico
Recall number:  18-762

Polaris Recalls Gravely Atlas UTVs

Name of product:  Gravely Atlas JSV 3000 and 6000 utility vehicles
Hazard:  The utility vehicle’s exhaust header pipe can crack, posing fire and burn hazards.
Remedy:  Repair
Recall date:  August 8, 2018
Units:  About 2,100
Consumer Contact:  Gravely at 877-740-7060 from 8 a.m. to 4:30 p.m. ET Monday through Friday or online at www.gravely.com and click on the Product Support link at the bottom of the page, then select Product Safety Recall in the menu on the left of the page for more information.

Recall Details

Description:  This recall involves all model year 2015 through 2018 Gravely Atlas JSV 3000 and 6000 gas-engine-powered utility vehicles. The recalled utility vehicles were sold in red and have one or two rows of seats and a rear box. “Gravely” is printed on the rear box, and “Atlas” is printed on the hood of the utility vehicle. The model and serial number can be found on the driver’s side and are visible from the front wheel well. The following model numbers and serial number ranges are being recalled:

Year

Model

Serial Number Range

2015

996200 Base

150100, 150102 – 150299, 150310, 150321, 150332, 150343, 150354, 150365, 150376, 150387, 150398, 150409 – 150771, 150774 – 150803 and

150805 – 151173

996201 Crew

150100 – 150299, 150310, 150321, 150332, 150343, 150354, 150365, 150376, 150387, 150398, 150409 – 150599 and 150601 – 150641

2016

996200 Base

160100 – 160299, 160310, 160321, 160332, 160343, 160354, 160365, 160376, 160387, 160398 and 160409 – 160640

996201 Crew

160100 and 160102 – 160112

2017

996200 Base

170100 – 170256

996201 Crew

170100 – 170102 and 170108 – 170152

2018

996200 Base

180101, 180105 – 180116, 180118 – 180136, 180138 – 180149, 180151 – 180154, 180158 – 180161, 180163 – 180166, 180168 – 180170, 180172,

180174 – 180178, 180181 – 180182, 180186 – 180187, 180190, 180192, 180199, 180202, 180205 – 180206, 180209 – 180211, 180214 – 180215, 180218 and 180220 – 180222

Remedy:  Consumers should contact an authorized Gravely dealer for a free repair. If the exhaust system becomes noisier, consumers should immediately stop using the recalled utility vehicles. Gravely is contacting all known purchasers directly.
Incidents/Injuries:  Gravely has received seven reports of cracked header exhaust pipes. No injuries have been reported.
Sold At:  Gravely dealers nationwide from September 2014 through July 2018 for between $13,000 and $15,700.
Manufacturer(s):  Polaris Industries Inc., of Medina, Minn.
Distributor(s):  Gravely Company, of Brillion, Wis.
Manufactured In:  United States
Recall number:  18-758