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Polaris Industries had a strong second quarter of 2018 mostly thanks to its bread and butter of off-road recreational vehicles. Polaris North American retail sales are up 6 percent for the quarter and part of that growth is thanks to its motorcycle segment.
The Polaris earnings statement doesn’t give a lot of specific numbers, but it does tell us that Indian Motorcycle grew retail sales by “mid-single digits” in Q2 of 2018 compared to the same time last year while sales of the Polaris Slingshot fell by a similar margin. The result is “low-single-digit” growth for Polaris Motorcycles despite 900cc and above motorcycle sales being down “mid-single digits.” Indian’s modest growth means that it’s gained a bigger market share in the U.S.
The strong sales performers for Indian reflects the downturn of big bike sales in the U.S. The big sellers last quarter were the Scout, Scout Sixty, and Scout Bobber which are the brand’s three smallest bikes. A result of that is transaction prices going down 6 percent and lower profits because generally, much like cars, the smaller the bike, the lower the profit margins. Indian makes a lot more money on a Roadmaster than it does on a Scout.
By selling more bikes that are less profitable along with the dip in Slingshot sales, revenue for Polaris Motorcycles was down 13 percent while gross profits were up 19 percent. However, when you adjust for Victory Motorcycles wind-down costs, profits were down 16 percent. Victory is still making things a little complicated for Polaris despite having been dead for about a year and a half now.
As for the Polaris ORV (off-road vehicle) division, all segments were up in a flat segment. Sales of Polaris side-by-sides and ATVs were both up “mid-single digits” thanks to new products and more commercial sales.
Polaris seems to have hit its stride in the motorcycle business, especially with Indian, and announcing exciting new products like the FTR 1200 is only helping. Financial performance of the Slingshot is a bit more volatile, but its uniqueness affords it some market dominance in the three-wheeler game.
