Category Archives: globalization

Columbia ParCar Purchases Tomberlin

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The Tomberlin Anvil is one of the more consumer-oriented vehicles Columbia ParCar will be adding to their offerings.

The Anvil is one of the more consumer-oriented vehicles Columbia ParCar will be adding to their portfolio under the Tomberlin brand.

Columbia ParCar Custom Carts, Inc., a Nordic Group company, announced that they are in the process of acquiring the assets of Tomberlin Automotive Group. In a statement to dealers, Scott Breckley , President of Columbia ParCar stated

The combined product portfolios across multiple commercial and consumer based platforms will create the worlds leading privately held EV company and a very compelling message for our Dealers, Distributors and Consumers. The result will blend product innovation with superb branding into our heritage of customer care that dates back to 1946. A winning combination in any strategic initiative .

The deal is expected to take another 45 days to close. The Tomberlin brand will continue to stand alone along side the ParCar brand. The merger will be kicked off with a series of regional launch parties starting in the Villages in Florida. Learn more:  Parcar.com

Comment:  This is a good match of complementary strengths. Tomberlin will add a lineup of vehicles primarily focused on the consumer personal transportation and recreation market but applicable to some commercial applications as well. Tomberlin’s product line includes LSVs and an off-road electric utility vehicle. The deal will allow Columbia ParCar to expand the breadth of their offerings as well as their dealer network. Tomberlin also adds some expertise in sourcing and manufacturing in China and a track record of innovation. When Tomberlin first came to the market they were one of the first companies to design an LSV that looked much more like a car than a golf car or a GEM. With some additional resources available, it will be interesting to see what new products will be launched. The deal also points to the continued effort by companies in all segments of the STOV market to expand their distribution and reach new customers.

Polaris Reports Record First Quarter 2015 Results

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Polaris yet again reported record quarterly results with first quarter 2015 sales reaching $1,033.3 million, up 16% compared to the previous year. Operating income increased 19% to $150.3 million during the 2015 first quarter. Currencies in the 2015 first quarter had a $32 million negative impact on total company sales versus Q1 of last year. Here are some of the highlights related to the STOV market. Comparisons are between first quarter 2015 to first quarter 2014, unless otherwise stated. The highlights have been updated following the earnings conference call with analysts.

  • Off-Road Vehicle (ORV) sales, which includes UTVs and ATVs increased 11% to $645.4 million.
  • ORV inventory increased primarily in the ATV segment.
  • Polaris North American ORV unit retail sales were up mid-single digits percent, with consumer purchases of Rangers and RZRs each increasing from the first quarter last year.
  • RZR sales are stronger than Ranger sales but the latter grew “nicely”.
  • North American ATV retail sales decreased low-single digits percent due to heavy competitive promotional spending during the 2015 first quarter with ACE up significantly.
  • Management reports a “fair amount” of wholesale discounting by competitors but this is not expected to continue. Promotional activity is more pronounced for ATVs but is occurring for side-by-sides as well.
  • Management sees the Hammerhead brand acquisition as a good way to attack the value end of the UTV market.
  • North American industry ORV retail sales in the first quarter 2015 increased an estimated mid-single digits percent according to management.
  • Sales of Polaris ORVs outside of North America decreased 10%  primarily due to weak economic conditions in the Europe, Middle East and Africa (EMEA) region, as well as the currency impact of a strengthening U.S. dollar.
  • ORV industry in EMEA region grew mid-single digits in terms of volume but was driven by smaller value products and discounting.
  • Average sales per ORV unit increased 7% in the quarter.
  • The Eicher-Polaris JV will begin shipping the new utility vehicle in Q3.
  • Global Adjacent Markets, which includes GEM, Aixam, Goupil as well as government and military sales, increased 7% to $65.4 million.
  • Government/military group experienced double digit percent sales growth during the 2015 first quarter.
  • Work and Transportation (W&T) group sales (part of Global Adjacent Markets) increased mid-single digits percent with North American W&T sales increasing double digits percent while W&T outside North America declined partly resulting from lower Aixam sales in EMEA due to the impact of negative currencies.
  • North American W&T was up over 30% on strong partnership shipments, national account growth and 40% GEM retail increase.
  • Brutus retail increased low double digits in volume but revenue was hurt by promotions and the loss of some dealers. The PTO and high end models are performing well but base models are underperforming.
  • Goupil and Aixam increased shipments and future orders are up 20% but currency headwinds remain a drag.
  • Aixam made market share gains in a flat industry performance.
  • Defense revenue grew double digits on strength of M RZR in international markets and DAGOR shipments to special forces.

Guidance for the Year

  • Global adjacent market sales are now expected to grow 5% to 10% and total international sales are now expected to decline low single digits percent.
  • ORV’s are expected to increase mid-single digits percent after growing 11% in the first quarter benefiting from a 7% increase in the average sales per ORV unit.
  • Currency changes are expected reduce full year 2015 revenue by $140-160 million.

Learn more:  Seekingalpha.com (Earnings call transcript)

Mahindra USA Partners with Intimidator to Offer UTV

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The Mahindra mPact XTV 1000 L utility vehicle is one of six models developed by the company in partnership with Intimidator, Inc.

The Mahindra mPact XTV 1000 L utility vehicle is one of six models developed by the company in partnership with Intimidator, Inc.

From Mahindra USA:

Mahindra USA announced Monday it is teaming up with Intimidator Inc. to manufacturer an all-new line of utility vehicles, the Mahindra mPACT™ XTV. The mPACT™ XTV rollout will begin with six models available through Mahindra’s dealer network beginning in early 2015. Mahindra dealers were given a sneak preview of the new utility vehicles at Mahindra’s Regional Dealer Meetings in October.

“Our partnership with Intimidator brings together two companies with shared vision, an innovative approach to product design and a passionate commitment to quality. Mahindra is dedicated to investing in the future through new product development to provide our dealers and customers with products that continue our tradition of delivering the unmatched value they have come to expect from Mahindra,” said Mani Iyer, President, Mahindra USA.

The Mahindra mPACT™ XTV are all designed to provide superior performance and deliver impressive work and transport capabilities. This XTV lineup offers category-leading cargo box and towing capacity. Each model offers spacious, comfortable seating for driver and passengers and is loaded with standard features such as true 4WD, 12-inch ground clearance, power cargo box lift, front and rear receiver hitches – all backed by an industry-leading three-year powertrain and one- year bumper-to-bumper warranty.

The gas and diesel versions will be available in three styles in early 2015:

• Standard: three-passenger with cargo

• Crew: six-passenger with cargo

• Longbed: three-passenger with extra cargo that folds to a flatbed

“We are looking forward to a long-term and productive relationship with Mahindra to bring the mPACT™ XTV’s, that are built with pride from the ground up in Batesville, AR, to its strong and growing North American dealer distribution network. We will boost UTV production significantly in the coming years as we expand the rollout to all markets to meet demand,” said Robert Foster, Owner, Intimidator, Inc.

Intimidator has immediate plans to add 7,600 sq. ft. to its 122,000 sq. ft. headquarters in Batesville, AR, and is working closely with the Independence County Economic Development Board on plans for a major facility expansion in the area’s new industrial park within three years. In addition, the expected demand for the Mahindra mPACT™ XTV’s will add 150 new jobs at the Intimidator manufacturing facility, which currently employs more than 50 people, as production is ramped up to meet this demand.

“The Mahindra mPACT™ XTV stole the show at our North American Regional Dealer meetings in October as our dealers responded with overwhelming support for this new product line. Pre-orders at the Regional Dealer Meetings exceeded our expectations and we are looking forward to getting these top-of-the-line utility vehicles in the hands of our customers in 2015,” said Cleo Franklin, Mahindra USA’s Vice President of Marketing and Strategic Planning. “The utility vehicle segment is a natural extension to our growing line of tractors and will add fuel to Mahindra’s rapid growth in North America.”

The new Mahindra XTV’s will begin to roll out in early 2015 to select markets and expand through the United States and Canada through the remainder of the year. For more details and weekly updates on the Mahindra mPACT™ XTV series, visit mahindraxtv.com.

Intimidator, Inc. is owned by Robert and Becky Foster, former co-owners of Bad Boy Mowers. Intimidator offers world-class American-made, side-by-side 4×4 Utility Vehicles with unparalleled strength, power and performance at an affordable price. The company’s expanding line of products includes the Intimidator Classic, Intimidator Crew Cab, and Intimidator Truck series utility vehicles built to suit a variety of needs—from hauling feed to hunting and more. Three engines choices are currently offered: 1,000cc Diesel, 750cc Gasoline, and a 48volt Electric.

Headquartered in Batesville, Arkansas, the family owned company has more than 50 employees. Intimidator products are sold through a growing network of more than 65 dealers in the United States. Intimidator and its sister companies, Bad Dawg Accessories and Ground Hog Maxx, provide the best aftermarket selection of accessory items the side-by-side market has to offer. Bad Dawg products are distributed through Bass Pro Shops, Cabela’s, and Tractor Supply stores nationwide. For UTV accessory information, visit Bad Dawg Accessories.com or call (877) 522-3364. For more information on Intimidator, visit IntimidatorUTV.com or call (877) 522-3364.

Learn more:  Mahindrausa.com

Comment:  The Mahindra and Intimidator partnership is another sign of the robustness and competitiveness of the UTV market. While some companies have exited the market, new companies continue to enter the market. Farm equipment and other manufacturers such as Mahindra are partnering with UTV manufacturers to enter the market. These partnerships allow them to participate in a growing and complementary market without devoting as many resources as they would if they developed the vehicles themselves. In addition, they gain access to the expertise of manufacturers that focus on UTVs as compared to farm equipment in Mahindra’s case.

Eicher-Polaris Joint Venture To Launch Flexituff Utility Vehicle For The Indian Market

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Eicher-Polaris-Flexituff-side-spied-900x549

The new Flexituff utility vehicle from an Eicher and Polaris collaboration was spied on the road recently while undergoing tests. Photo Credit:  www.indianautoblog.com

A collaboration between Eicher and Polaris is set to release their first vehicle, something akin to a mini-truck, later this year for the Indian market. The Flexituff UV will be available in two configurations, a multi-passenger van (MPV) and a twin-cab pickup for hauling cargo. The vehicle will feature a Greaves Cotton 600cc diesel engine with claimed mileage of 25km/L. Based on pictures of the vehicle in testing, the vehicle will be slightly larger than competitive offerings, the Mahindra Maxximo and Tata Magic. Initial production is expected to be 10-12,000 vehicles per year with expectations that it will reach 100,000 units in the future. Learn more:  Motoroids.com

Update:  Some more information on the vehicle. It uses composite body panels to save weight and “…features a bare dashboard with a four-spoke steering wheel, a simple instrument cluster and a centre console-mounted gear level.” The double cab pickup with cargo area can fit five occupants. The price of the vehicle is expected to be about 1 lakh or about $1,500-1,600 US. The vehicle development project is reported to have cost $40 million US. Learn more:  Inidancarsbikes.in

Comment:  This type of vehicle is not as prevalent in the US but in India and parts of Asia the vehicles are common. Smaller sized delivery vehicles are an important part of a hub and spoke delivery system where they are used to deliver goods the last kilometer or so through small and crowded streets. Price points and cost of operation are important purchasing factors for owner/operators of these local shipping businesses.

BRP Q4 FY15 Earnings Call & Analyst Day

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The Can Am Maverick Xds Turbo was introduced in 2015.

The Can Am Maverick Xds Turbo was introduced in 2015.

BRP, manufacturer of Can-Am branded off-road vehicles recently announced their financial results for the fourth quarter of fiscal year 2015, and also made a presentation to industry analysts. The following is a summary of some of the key points from the earnings call and analyst presentation, mostly related to the utility vehicle market. (all $ figures in Canadian dollars)

  • For the year total company revenues were up 10% to $3.5 billion and net income increased to $70.1million from $59.7 million.
  • For the year, Year Round Products revenue, which includes ATVs, UTVs and the Can Am Spyder, increased to $1.3 billion from $1.2 billion.
  • Gross Profit Margins decreased by 1% to 24% because of currency issues.
  • In the Q4 2015, which ended January 31, Year Round Products increased 53% year over year to $416.0 million from $272.5 million. The large increase is attributed to continued growth, dealer shipments for new product introductions for ATVs, UTVs and the Spyder and a new dealer ordering system that shifted some shipments from Q3 to Q4.
  • The Maverick Xds and Xds Turbo were introduced but slightly behind the optimum schedule.
  • Management reports that North American industry side-by-side sales are up mid-teens percent for the season starting in June while the ATV industry remains flat.
  • Can-Am side-by-side sales were up mid-single digits. While Can AmMaverick and Commander maintained market share in their respective sport and recreation focused market segments, BRP’s lack of product in the more utility oriented segments puts their sales growth behind the overall industry pace.
  • New product introductions increased inventory for UTVs and ATVs slightly.
  • Promotional activity for the UTV market is reported to be normal.
  • UTV OEMs continue to collaborate through the ROHVA association in discussions with the CPSC regarding new UTV regulations.
  • BRP continues to expand their NA dealer network. They added 38 dealers in FY14 and 76 in FY15. Of the latter 76, 72 are carrying off-road vehicles and 31 are located in the South or Southwest. Dealer network coverage for ORV and Spyder has increased by 10%. The management is targeting 200 to 300 new dealers in total by the end of FY17. 
  • Management is focusing not only on increasing the number of dealers but improving the quality with better showrooms, as well as increasing the number of BRP product lines that existing dealers are carrying.
  • Ramp up time for new dealers is averaging about 12 months, which is slower than expected but management appears satisfied with the quality of the dealers and is taking a long-term approach.
  • The company is continuing to invest in and shift manufacturing operations with an emphasis on their facilities in Mexico, which have lower production costs, are closer to ORV and water products market and a offer a good location for international shipping.
  • Their Queretaro facility in Mexico will build engines for ORVs and other products. BRP is investing $55 million in their Juarez II facility in Mexico which will handle new ORV growth and brings chassis painting in-house. The facility is expected to have enough capacity for their growth plans through at least FY2020.
  • Capital expenditures will increase significantly from $175 million in FY2015 to $200-220 million in FY2016.
  • Guidance for Year Round Products for FY2016 is an increase in revenues of 7%-11%.

ORV Related Growth Areas

  • Management is targeting the utility segment of the UTV market as a growth area and the biggest opportunity in the Year Round Products division.
  • Overseas, China represents a sizable off-road opportunity and BRP plans to increase the number of dealerships from 19 to 30 by the end of FY16.
  • Another growth area related to ORVs that is being targeted is in Parts, Accessories and Clothing which has grown at a CAGR of 12% over the last five years.

Comment:  While not explicitly stated by the management, expect BRP to introduce new UTVs this year targeting the utility/work market segment. The challenge for the powersports UTV manufacturers is reaching the utility/work customers with their existing dealer networks. Some portions of this market segment is often reached by non-powersports distribution channels and involve different selling processes at which powersports dealers may not excel or be interested in pursuing. Nevertheless, the continued entry into other UTV segments by various powersports manufacturers as well as the expansion of dealer networks should help drive growth in the NA UTV market. Overseas, there are some currency and macro economic headwinds but BRP and other OEMs appear to be committed to the long term development of the ORV market.

CFMoto Hitting The Value Price Point

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The UForce 800 from CFMoto.

The UForce 800 from CFMoto.

A recent article in PowerSports Business highlighted the popularity of CFMoto’s UForce 800 utility vehicle. Targeting the work segment, like ranches and farms, the UForce 800 offers features like a 62.5 hp, V-twin-powered, 8-valve, 4-stroke liquid cooled engine with EFI, 3,500 lb winch, LED headlights, hydraulic disc brakes, AGM battery, 14″ ally wheels and 11 inches of ground clearance. A key to its popularity is the relatively low price point with an MSRP of $9,999 and $10,799 for the model with electronic power steering. CFMoto offers a lineup of work and recreational UTVs with prices ranging from $8,449 to $11,299. The company has been working with Minnesota-based company KFI to provide popular aftermarket accessories for their vehicles but also plans on manufacturing their own in the near future. Learn more:  Powersportsbusiness.com

Comment:  The more well known brands in the UTV market have been able to consistently increase prices for their vehicles for a number of years, reflecting the strong demand for UTVs as well as ongoing improvements in the vehicle offerings. While the name brand vehicles continue to offer value even at their higher price points, they are providing space in the market for even more value oriented competitors in the $8,500 – $11,000 price range.  CFMoto has found some success in this space as well as companies such as Kymco. Typically this success has been with work utility vehicles and some recreational use vehicles. However, the latter are not for the more hard-core sport or high performance recreational use. It’s all about buying a specific set of functionality combined with sufficient quality to get a job done for a reasonable price.

NEVs Help Drive EV Sales in China

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Kandi Technologies NEV

Kandi Technologies NEV

According to China’s Association of Automobile Manufacturers sales of battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs) reached 78,499 units, 3.5 times of such figure in last year.

Among the total, BEV was 48,605 units and PHEV was 29,894 units, 2.4 times and 8.1 times from the previous year respectively. As for the sales, the total volume reached 74,763 units, 3.2 times from a year earlier, of which BEV was 45,048 units and PHEV was 29,715 units, 2.1 times and 8.8 times of that of last year.”

While exact figures are not available it is believed that half or more of the the BEV sales can be attributed to BEVs. Learn more:  Insideevs.com

Comment:  The Chinese market for NEVs is more conducive to the use of NEVs than the US because of the amount of intra-city driving which requires a lower top speed and less range. The Chinese government is also making a big push for electric vehicles.

Ashok Leyland Plans for Electric Version of Dost Mini-truck

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The current ICE powered Dost from Ashok Leyland may get an electric brethren.

The current ICE powered Dost from Ashok Leyland may get an electric brethren.

India-based Ashok Leyland is working on an electric version of their Dost light commercial vehicle. A prototype was recently revealed along with electric versions of a larger truck and a bus. The Dost will be undergoing testing by the company to validate the concept. There is no timetable for when the vehicle will be commercially available. Learn more:  Thehindu.com

Textron Acquires Douglas Equipment

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The Tugmaster DC5 - 42 from Douglas Equipment is part of the product line Textron is adding to their Specialized Vehicle division.

The Tugmaster DC5 – 42 from Douglas Equipment is part of the product line Textron is adding to their Specialized Vehicle Group with their latest acquisition.

Textron has acquired Douglas Equipment, a UK-based supplier of ground support equipment to airlines, from Curtiss-Wright Flow Controls. Douglas Equipment will become part of the Textron’s subsidiary Textron Specialized Vehicle Group which manufacturers golf cars, utility vehicles and ground support equipment under brands such as E-Z-GO, Cushman, Bad Boy Buggies and TUG. The subsidiary already sells ground support equipment to airlines under the TUG brand and Douglas Equipment products are expected to complement those products. Douglas Equipment specializes in conventional aircraft tractors and runway friction measuring devices. Textron management expects the acquisition to expand their ground support equipment product line and add customers. Learn more:  Zacks.com

Comment:  Golf car manufacturers are looking for new growth areas with the continued decline of the golf fleet market. They are attempting to do this with new product offerings to boost sales in existing markets or to target new markets. Another method is through complementary acquisitions such as this. What we haven’t seen yet is an acquisition in a completely untapped market, such as an acquisition in the recreational vehicle segment of the STOV market. While golf car manufacturers have made some moves into the off-road UTV segment, it has been primarily been with work vehicles with some light recreational crossover applications but nothing in the purely recreational segment.

Polaris Acquires Hammerhead Off-Road

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The Hammerhead GTS Platinum off-road go-kart.

The Hammerhead GTS Platinum off-road go-kart.

Polaris Industries announced the acquisition of HH Investment Limited, a Shanghai-based company that manufactures off-road go-karts, light-utility and electric utility vehicles, which are sold under the Hammerhead Off-Road brand name in the US. In addition to its main manufacturing facility in Shanghai, Hammerhead has a sales, distribution and light-assembly operation in Dallas. The company also has some private label agreements with other OEMs. Hammerhead Off-road will continue to operate as a standalone entity. Learn more:  Polaris.com

Comment:  The acquisition fits many of the strategic objectives that Polaris has including growing their international revenues and expanding into electric vehicles. The addition of go-karts further extends the breadth of Polaris’ offerings of off-road vehicles from work to recreational applications as well as in terms of customers and price points. Their product line retails for between $1,000 and $3,500 and some of them are go-karts for kids. The assembly operation in Texas may also prove useful for serving the growth of UTVs in the southern tier of the US. Even though the company will operate as a standalone entity, it will be interesting to see if some Polaris dealers start picking up the product line. Hammerhead could benefit from the extensive Polaris dealer network.