VICTORY BY THE NUMBERS...Polaris announces Year-End 2010 Numbers
WHEN A VICTORY IS NOT A VICTORY...Many questions have come up over the years regarding comparisons to Excelsior-Henderson motorcycles and the Polaris Victory motorcycle. Even to this
day, comparisons are made, whether regarding the motorcycle or company. So, the question is; "When is a Victory not a victory?" Answer, "When you look at the numbers." First off, let me
say that I have owned stock in Polaris and Arctic Cat before Excelsior-Henderson was launched, and continue to own stock. So that's now for over 20 years. Just a couple years ago, I took my kids
savings and bought Polaris stock. It is a good investment. They are among the best motorsports manufacturers in the off-road ATV market.
In fact, let's look at the numbers: 86% of Polaris sales come from Off Road Vehicles and Parts, Garments, Accessories. Snowmobiles account for 10% of sales. So, what remains
is the Victory motorcycle at 4% of sales. This is after 13 years of sales. It is often said, without a rich corporate parent, the Victory motorcycle line would be shuttered. In other
words, if their motorcycle division were a separate company, they would have been out of business years ago.
Motorcycle sales results have been disappointing, to use their own language. In the late 1990s, the management team boasted it would be a billion dollar business within 5-7 years. Didn't happen. After a couple years,
in 2001 the management team revised their forecast, and stated it would now be a $500 million business in 5 years. Didn't happen. In the last 9 years, they have not publicly revised their forecast for
the future, other than to indicate the growth has been below expectations. Now, IF you listen to their marketing department, they have been HUGELY successful.
So, what are their revenue numbers? Launch year 1998 sales were $10 million, and fiscal year 2010 were $82 million. Their 13 year average revenue is $63 million per year. Some years higher to a peak of
$113 million, to a low point at $19 million. 2009 sales were $53 million. 2006 is the only year they claim to have been profitable--but how profitable? In all other years, they do not mention profits. Think about this. Including their 4 year development time-frame,
they have 17 years invested into this product line (motorcycles), and it has been profitable 1 year, and is 4% of sales. The ONLY reasons they presently don't shutter the product line is because
they are too embarrassed to announce a management team failure, and secondly, it gives their marketing/public relations team something more exciting to talk about. There have been persistent rumors
about the motorcycle line shutting down. Obviously, if they don't improve the numbers, sooner or later a shutdown becomes likely. In summary, from a numbers perspective, they are
disappointing and below expectations. For 13 years.
How about the bike itself? There are two components to the motorcycle brand: (1) the motorcycle, and (2) the brand. First, the motorcycle is getting pretty good. The first few years
it was not a well styled bike and did have startup technical issues. Not surprising, but also not as good as it could and should have been. They are making progress, and one
might say from a technical perspective, they might be on a par at times with other OEM motorcycle manufacturers. The styling is hit and miss though, and if you look real close at the styling
cues and manufacturing/assembly processes, you will see why they sell at a lower price point. But overall, pretty good for the money.
Second, and equally or more important, is the brand itself. At the minimum, it has no soul. Okay, I said it, and now we can debate it. Some in the industry don't believe a product/brand needs one, nor want to offend Polaris, so they don't bring this up as they might
lose advertising dollars, or business, take heat, or whatever. However, the marketplace has been saying it for years, and continues to. Now deceased, Larry Shinoda of mid-60s Corvette styling fame, once told me in a meeting in Detroit that
"...you can put lipstick on a pig, but it's still a pig..." In my viewpoint, they have missed the marketing and styling target, and for the last 13 years the marketplace has been
telling them this too. Short story, is there room in the industry for additional motorcycles besides the old established manufacturers? Yes, certainly a market. Has Polaris been
able to tap into it? Not yet. Not at all. They would have to change.
And Excelsior-Henderson continues to assist Polaris in improving its motorcycle line. Many former EH Road Crew were recruited by Polaris in various departments, from sales, administration, marketing,
engineering, and production. So, obviously the product should be getting better. Why would they hire former Excelsior-Henderson talent? It's quite obvious why.
So, what's the final verdict on the Polaris Victory? It's not a victory yet, and they're darn lucky to have a rich, patient, corporate parent.