Victory Motorcycles closes down as Polaris focuses on Indian and Slingshot
After 18 years of building cruisers in the USA, Victory Motorcycles is pulling into the garage and putting down its kickstand for the final time. Parent company Polaris has announced it is closing down the brand. The decision is the result of both success and failure. Despite some recent gains – sales were up 18 percent in the 2nd quarter of 2016, for instance – Victory has struggled in its head-to-head battle with the behemothic beast that is Harley Davidson, peaking in sales back in 2012 and losing money in three of the past five years.
By contrast, acquisition and development of the classic Indian Motorcycle brand by Polaris has proven to be a brilliant decision, with booming sales and expanding distribution. Also, its three-wheeled Slingshot roadster, which the company houses in its motorcycle division, has been somewhat of a sales surprise. So, business being what is, the difficult decision was made to concentrate efforts in the areas that have been bearing more and better fruit. Polaris CEO puts the move in corporate speak thusly:
"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. Ultimately this decision will propel the industry-leading product innovation that is core to our strategy while fostering long-term growth and increased shareholder value."
For fans of the brand and current owners, some sort of solace may be found in the fact that the company says that it will, for the next 10 years, continue to supply parts for the Victory lineup and honor warranties. Plus, we'd bet there will soon be some good deals to be found on current inventory.
|© Victory Motorcycles|
Polaris says it's the end of the line for Victory Motorcycle brand
Polaris Industries will exit the Victory Motorcycle brand it started from scratch 18 years ago, citing a mix of competitive pressures and lack of market share.
The Medina-based company's announcement Monday will not affect Polaris' fast growing Indian Motorcycle brand or other divisions, officials said. CEO Scott Wine said the "winding down" of the Victory brand will begin immediately.
"Victory has struggled to establish the market share needed to succeed and be profitable. The competitive pressures of a challenging motorcycle market have increased the headwinds for the brand," Wine said in a statement.
Victory's share of the motorcycle market slid to just 2 percent last year, from 3 percent in 2013. Wine said the company decided to focus on the Indian brand given its strong performance and growth potential and the significant additional investments that would be necessary for Victory to succeed.
Polaris will help dealers liquidate existing Victory inventory and will continue to supply parts and service for 10 years and honor warranty coverage accordingly.
Polaris said it "remains committed to maintaining its presence" in the Spirit Lake, Iowa, facility where Victory and Indian bikes are now made. It also remains committed to its new Huntsville, Ala., plant which makes the three-wheeler Slingshot motorcycle, among other products.
It is unclear how employment at the plants might be affected as Victory winds down.
Dealers are taking the news as best they can. "We sunk a lot of money into this and so we are sad to see it go," said Jamie Kurkowski, assistant sales manager at Mies Outland in Watkins, the largest Polaris dealer in the state.
"We had years where we sold 150 Victorys a year," Kurkowski said. "Lately it was about 75 and 100 Victorys a year. But what are you going to do? It sounds to me that it was a profit margin problem."
While Polaris directed a lot of energy in recent years at buying and relaunching the Indian Motorcycle brand, the launch of the Victory bike came first and represented a bold attempt at product diversification.
When the first Victory Motorcycle roared off the assembly line in Spirit Lake in 1998, it broadened Polaris' product line beyond snowmobiles, four-wheel all-terrain vehicles and personal watercraft. Since then, Polaris has designed and produced nearly 60 Victory models that won 25 industry awards.
The experience, knowledge and infrastructure gained in launching Victory gave company officials the confidence to acquire and develop the Indian Motorcycle brand, Wine said. "So 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 motorcycles sales were about $603 million. That's up from roughly $192 million for the first nine months of 2012, when the bulk of sales reported in that category represented Victory motorcycles.
Motorcycles now represent about 15 percent of Polaris' annual revenue of $4.7 billion.
Polaris' stock fell 3.3 percent to close at $83.72 a share Monday. It's trading at nearly half the value enjoyed in February 2015.
The decision to shut down the Victory line did not surprise Wall Street analysts. The end of Victory is just "as some in the industry had conjectured since the launch of Indian," said UBS analyst Robin Farley.
"Sales of Victory had peaked in 2012 before the introduction of Indian in 2013. And Victory had declined each year after that, with the business being unprofitable … for three of the last five years," she said. "We expect this to be neutral to positive" for Polaris' earnings outlook."
The product change comes at a tough time for Polaris, which has battled a downturn in the recreational sports industry and massive recalls of its four-wheel ATVs and Indian Motorcycles due to the potential risk of fire. Research, repairs, warranty, legal and other costs associated with the recalls have cost Polaris more than $120 million to date.
The company is expected to reveal costs for the Victory brand shutdown next week, when it reports fourth-quarter earnings.
Polaris Plans to Drop Unprofitable Victory Motorcycle Brand
SPIRIT LAKE, Iowa — Polaris Industries will stop making its Victory motorcycles so it can focus on its Indian Motorcycle brand and other products.
Polaris announced Monday that it is shutting down the unprofitable Victory brand after 18 years. The motorcycles were produced at the Minneapolis-based company's Spirit Lake, Iowa, and Spearfish, South Dakota, plants.
The company decided that its Indian Motorcycle brand has better growth prospects, Polaris CEO Scott Wine said.
"This decision will improve the profitability of Polaris and our global motorcycle business, and will materially improve our competitive stance in the industry," he said.
Polaris said 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.
Jefferies analyst Trevor Young said the move was a surprise, but it will likely help Indian Motorcycle sales. The Indian brand is second only to Harley-Davidson in the market.
"Over the medium-term, we think this is a positive, as it appears Polaris is doubling down on Indian," Young said in a research note.
The company will detail its profit outlook for the year when it releases its fourth-quarter earnings report on Jan. 24.
UBS analyst Robin Farley noted the move will eliminate an American motorcycle brand, but Harley-Davidson may not be able to take advantage of it because its customer base is aging and Indian Motorcycle has been gaining market share.
Polaris said it will help dealers liquidate their remaining Victory motorcycles, and it will continue producing parts for the bikes for 10 more years.
About 400 dealers nationwide sold Victory motorcycles, although about 150 of those also sell Indian motorcycles.
In addition to motorcycles, Polaris makes ATVS, snowmobiles, the three-wheeled Slingshot roadster and other vehicles.
Polaris' plants in Iowa and South Dakota will continue producing Indian motorcycles. It's not clear how many jobs will be lost at those plants with the end of Victory production.
The company's Slingshot roadsters are made in Huntsville, Alabama.