Category Archives: globalization

BRP Inaugurates New Mexican Facility

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Aerial view of part of the Queretaro industrial park in Mexico. BRP’s new facility is located in the park.

BRP, manufacturer of Can Am side-by-sides, last week inaugurated their new manufacturing facility in Queretaro, Mexico. The facility assembles Rotax engines for its Can-Am off-road vehicles, assembles the Sea-Doo Spark watercraft and manufactures composite hulls and decks for Sea-Doo watercraft. By 2015, a total of $100 million (Canadian) will have been invested in the facility and 1,100 people will be employed. A sister facility in Juarez, Mexico has been assembling Can Am ATVs and side-by-sides since 2001.  Learn more:  BRP.com

Comment:  BRP isn’t the only UTV manufacturer in Mexico. Polaris has a presence there as well. Part of the move is driven by production cost savings but the other reason is geography and distribution. The Southwest US and in general the South are an area of growth for the UTV market. These facilities put manufacturers closer to these markets as well as expanding markets in Latin and South America. As manufacturers try to shorten ordering cycles for dealers and better manage inventory while more closely aligning product supply to market demand these facilities can offer improvements in those areas.

Polaris Q3 2013 Earning Results Summary

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Polaris Ranger and RZR lines helped drive 3Q ORV sales

Polaris Industries once again had a strong quarter as sales surpassed $1 billion for the first time in the company’s history. The following are some highlights from the earnings call with a focus on the side-by-side market and small vehicle business.

  • Quarterly sales increased 25% to $1.1 billion
  • Third quarter net income from continuing operations rose 24% to $116.9 million
  • Off-Road Vehicles (ORV) which includes side-by-sides and ATVs posted a 23% gain and PG&A jumped 37%
  • Year to date ORV sales increased 12%
  • Polaris North American side-by-side retail sales improved low teens percent, and the side-by-side industry was estimated to have grown in the low double digits.
  • Key drivers included higher demand for the Ranger line, RZR XP 1000 and the new XP 4.
  •  The Polaris ORV Commercial business was up double digits in the third quarter, led by the new Brutus product rollout and sales to Bobcat. However sales were slower than expected and more marketing resources are being put into the effort as dealers have to adapt to the business to business sales process.
  • Small vehicle revenue increased over $21 million and 188% for the third quarter, due primarily to the Aixam purchase. Year-to-date, revenue was up 136%.
  • For the GEM line  retail sales are up over 50% through the third quarter and year to date as the dealer network and B2B sales efforts gained traction. The company just introduced the new eM1400 electric utility vehicle as well.
  • Aixam had a good quarter expanding share of the European quadricycle market share lead in the third quarter and year-to-date as retail sales remained roughly flat while the overall market declined upper single digits.
  • Goupil revenue grew nicely year-over-year, and year-to-date, customer orders are up double digits.  
  • In Europe the ORV industry remains relatively weak, with third quarter and year-to-date sales down about 12%. Polaris is building on its market share leadership position, with third quarter retail sales about flat and year-to-date retail sales down low single digits.
Looking forward:
  • Management increased the full year sales guidance to up 15% to 16% over 2012.
  • Sales of Off-Road Vehicles are expected to increase in the 11% to 12% range, up from prior guidance, with retail sales of side-by-side vehicles and ATVs continuing to outpace the overall market in both North America and internationally.
  • Competition has increased in the ORV market.
  • Management expects ORV market share to increase in 2013 but at a slower rate than recent years.
  •  For small vehicles, sales are expected to increase over 150% for the full year 2013.
  •  Monterrey, Mexico plant will deliver well over half of Polaris’s side-by-side volume in 2014.
  • In India the Eicher partnership is moving ahead with a plant under construction in Jaipur, India for a late 2014 launch of a new vehicle solution for that market.
  • More resources will be put into the Brutus sales efforts as the longer purchase cycle in the business to business market has tempered sales expectations. Efforts will likely focus on “…some of our most capable and committed subset of our existing Polaris ORV channel.”

Learn more: Seekingalpha.com (earnings call transcript)

Indian Start-Up Gets Funds For Low-Cost Rural UTV

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Evomo Research & Advancement Pvt Ltd of India has received funds from a local business incubator for development of a low-cost rural utility vehicle. Started in 2010, Evomo, will use the unspecified amount of funds to get to a stage where it can take preorders for actual sales. The management, in part, sees the vehicle as a safety issue since it can replace many of the dangerous makeshift vehicles that are now used in many rural areas.

The Evomo UTV is an off-road vehicle for both passengers and goods in rural areas. Management claims the vehicle is legal, less polluting, handles rough terrain, can be transformed from people carrier to goods carrier and performs some of the agricultural functions like pumping water and carrying cargo. Powered by a diesel engine it has a top speed of 50-60 km/hour.

Learn more:  VCCircle.com

Consumers Switching From ATVs To UTVs In Australia

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Similar to the US market, a story out of Australia indicates that UTVs are displacing ATVs. The switch started occurring over the last four years or to five years and is expected to continue. The main reasons for the switch are safety and the ease in which users, especially older users, can get into and out of utility vehicles compared to getting onto and off an ATV. Safety is important for larger corporations and government entities supplying vehicles to workers. One dealer noted that in more rural areas and for smaller private operations ATVs are still holding their own. Learn more:  ABC.net.au

Comment:  This is not surprising to hear since the end user applications for STOVs have many similarities across the world, and market forces can be the same as well. UTVs can be more versatile with their cargo and seating capacity. UTVs also offer more safety features. ATVs offer a significantly lower cost and are better for narrow trails and work environments with limited space for maneuvering.  UTVs are likely to continue to take market share from ATVs but there will always be a demand for these vehicles that are more affordable and can perform very well in specific applications that don’t require all the functionality of a UTV.

A story out of Texas talks about the versatility of UTVs and their growing use over the last ten years. The ability to hunt, work and trail ride with a UTV makes them a year round multi-use vehicle. The safety features of the UTVs and the additional skill to use an ATV is also noted.  Learn more:  Amarillo.com

IndyCar Champion Ryan Hunter-Reay Is Now A Garia Ambassador

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IndyCar champion Ryan Hunter-Reay with his high-end race car and high-end golf car from Garia

While at first glance the juxtaposition of a high speed IndyCar champion with a Garia street-legal low speed vehicle might seem funny, the pairing of a race car driver and a high-end golf car is more common then you think. A golf car dealer I know has in fact built a number of customized golf cars for some of the top NASCAR drivers and owners. These are highly customized vehicles that are often made to match the driver’s traveling coach and are taken along as they travel from race to race. They are quite handy for traveling around the racetrack grounds. They also involve quite a bit of engineering since they are a little faster than your typical golf car. Add in the bling and custom paint jobs and you are talking about a $20,000 to $30,000 vehicle or more.

The press release from Garia follows:

INDYCAR CHAMPION RYAN HUNTER-REAY IS NOW A GARIA AMBASSADOR

Garia, the manufacturer of the ultimate luxury golf and leisure car is pleased to announce a new exciting partnership with IndyCar Champion Ryan Hunter-Reay.

Ryan Hunter-Reay is the reigning IndyCar Champion and the most successful American currently competing in the IZOD IndyCar Series with more than three times as many wins as all the other current American drivers combined. Ryan is the recipient of the 2013 ESPY for best driver.  Ryan is also the only driver to have earned wins in IndyCar, CART, ChampCar, ALMS and GrandAm.

With Garia’s unique combination of craftsmanship, passion and performance the Ambassadorship is a perfect match. Ryan Hunter-Reay is dedicated to his sport and has a unique winning mentality. He is an expert in car performance and knows the importance of excellent craftsmanship and functionality, however he is also a family man.

Garia has built a four-seater street legal LSV for Ryan Hunter-Reay, with customized Garia Mansory accessories such as super-car inspired steering wheel, dashboard and side mirrors handcrafted in carbon fiber.

“This street legal Garia is the ideal leisure car for me and my family’s active lifestyle. The quality, driving performance and braking system gives me and my family a feeling of safety, especially when we have our baby boy on board. We love the design of the Garia and its amazing carbon fiber accessories!” said Ryan Hunter-Reay.

Ryan will be bringing his Garia with him on the racing tour enabling it to function as his primary transportation when not in the race car. The street legal ability of the Garia allows it to not only be driven inside the race circuit, but also taken outside and driven on public roads. Ryan has added a custom Hydra-Lift to his motorcoach which will transport the Garia to the various race events from Florida to California and points in-between.

“Garia’s marketing strategy has focus on golf and leisure. Last year we introduced the world-famous golfer Paula Creamer as our brand ambassador. Today we are very proud to introduce IndyCar Champion Ryan Hunter-Reay to our brand ambassador family. We feel the four-seater street legal LSV truly complements Ryan’s active lifestyle. We have many shared values such as dedication to craftsmanship, performance and the passion for the joy of driving a high quality car. We are confident the Garia will suit his needs” said Anders Lynge, designer of the Garia.

The Garia is created in collaboration with golf professionals and is designed, engineered and built in Europe. The Garia design team has been uncompromising in its efforts to create the best golf car in the world. Luxury features on the Garia include a built-in refrigerator, extra comfortable sport seat and 12” alloy wheels. With the Garia Mansory Accessory Program, it is possible to customize the luxury golf and leisure car into the vehicle you always only dreamt of. The Garia is available in various models, including street legal, two- and four-seater versions as well as a roadster.

Explore more

Press images of Ryan Hunter-Reay and his Garia, please contact press@garia.com

More information about this new partnership http://garia.com/explore/Ambassador-Ryan-Hunter-Reay/

More information about Garia http://www.garia.com

More information about our recent model http://www.garia.com/vehicles/garia-mansory-currus-edition

Follow Ryan Hunter-Reay on Twitter: @ryanhunterreay

Follow Garia on Twitter: @gariagolfcar

Trojan Battery Expands Distribution in South Korea for the Golf Car Market

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The Trojan T105 battery is popular in the golf car market.

Trojan Battery Company, the world’s leading manufacturer of deep-cycle batteries, today announced TAIJIN Instrument & Electric Co., Ltd. will distribute Trojan’s deep-cycle batteries in South Korea. TAIJIN will sell and service Trojan products for the golf car market in the region. Trojan estimates that there are 400 golf courses in the country.

TAIJIN is a leading supplier for the region’s golf industry and will offer Trojan’s broad line of deep-cycle flooded, AGM and gel batteries. The company will maintain an extensive stock of Trojan battery models to ensure product availability to meet immediate customer needs.

Learn more:  Golfcourseindustry.com

How to Buy Used UTVs

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UK dealer Murray Boss gives some pointers on buying a used UTV
Credit: Farmers Guardian

I came across an article out of the UK about how to approach buying a used UTV.  Not only is the article informative but it gives me a chance to make a few comments about the used UTV market.

In talks with dealers for our various research projects, most have told us that they do not sell a lot of used UTVs. One reason is that trade-ins are not that common. There is a good chance that the buyer has really worked their current UTV very hard and there is not much value left in it, if at all. In addition a lot of used UTVs are sold directly between private owners, bypassing the dealer channel. The UTV market has also seen a large number of first-time buyers in the last few years as ATV owners switch to UTVs and entirely new customers discover the advantages of UTVs, so they have no UTVs to trade-in.

It is likely in the coming years that the used UTV market will grow. The strong growth in the market over the last few years has built a large existing population of UTVs in the market. As that population grows the number of used UTVs available is likely to grow which brings us back to the article.

The heavy workload that many UTVs experience means buyer beware and knowledgeable about what to look for when buying a second hand vehicle. The article is worth a read if you are in the market for a used UTV and offers quite a few pointers on how to evaluate a vehicle and identify any potential problems. Some of these include:

  • Looking at tire wear for clues about the suspension
  • Using vehicle hours and miles to gauge how the vehicle was used
  • Considering the simplicity of the vehicle design in the context carrying out repairs

Learn more:  Farmersguardian.com

Polaris Starts Construction on First European Factory

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In August Polaris started construction on it’s first European factory located in Opole, Poland within the Wałbrzych Economic Zone Invest-Park. The factory will produce ATVs and UTVs for the European market and is expected to be completed in February, 2014. The facility will include approximately 200,000 square feet of production space, 37,000 square feet of warehouse space and another 42,000 square feet for administrative offices. Learn more:  Property-magazine.eu

Polaris Reports Another Strong Quarter for Q2 2013

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Polaris Ranger XP 900 helped drive overall sales in the second quarter of 2013

Polaris Industries just announced their Q2 2013 financial results and reported another quarter of strong earnings and market share gains. The following are the highlights of the earnings call with analysts with a focus on the STOV segments.

  • Sales for the second quarter increased 12%, to a record $844.8 million driven by share gains and double-digit retail growth in North America
  • Polaris captured market share in ATVs and side-by-sides which also drove significant gains in PG&A business
  • Second quarter net income rose 15% to $80 million yielding record earnings per share of $1.13, a15% improvement over the prior year period.
  • PG&A sales increased 33% for the quarter
  • ORV segment which includes ATVs and UTVs  performed well fueled by the RANGER 900 XP and supported by RZR products.
  • Revenue for ORV was up 7%, which is less than retail as inventory was reduced in preparation for new model launches.
  • Gained North American market share in both ATVs and side-by-sides.
  • North American side-by-side retail sales strengthened in the second quarter, up double-digits percent driven by growth in both RANGER and RZR categories. In fact, both brands had their largest unit retail quarters in their history.
  • Management estimates the North American side-by-side industry also improved, growing just under 10% in the second quarter and is now up upper-single digits year-to-date.
  • Initial Brutus shipments began into over 400 Polaris commercial dealers.
  • In the military segment Polaris remains the clear #1 in ultralight tactical vehicle space with the new MRZR is selling well globally
  • Due primarily to the Aixam purchase and contributions from GEM and Goupil, small vehicle revenues increased $22 million and 190% for the second quarter. Year-to-date, sales are up 109%.
  • GEM business is improving with second quarter retail sales were up in excess of 50%. Management reports better operations for GEM and improved traction in the B2B market place, particularly in the People Mover sub-segment.
  • Goupil also had a strong second quarter with orders up over 30% and notable cost and productivity improvements in operations, driving gross margin improvements.
  • ORV PG&A sales increased 25% and small vehicles 165%.  “The attachment rate that we’ve seen on the Ranger 900 XP with the new integrated cab system is phenomenal.”
  • In Europe – Polaris’ Q2 ORV retail grew and year-to-date, is about flat in an ORV industry that remains down double digits. Polaris maintains their leading position.

Looking ahead:

  • Future Sales of Off-Road Vehicles are expected to increase in the 8% to 10% range with retail sales of side-by-side vehicles and ATVs outpacing the overall market in North America and internationally
  • ORV market share is expected to continue to increase in 2013
  • For small vehicles, which includes the GEM and Goupil businesses, along with the recently acquired Aixam Mega, sales are expected to increase well over 100% for the full year 2013.
  • Both GEM and Goupil are expected to increase sales for the full year over last year total company sales increase in the range of 13% to 15% for the full year 2013.
  • Management is not feeling pricing pressure in the UTV market as they are confident that the Polaris brand/product can garner a price premium
  • Process improvement in small vehicle operations are improving quality and delivery as well as reducing costs. Management feels they are positioned very well in this space for strong growth.
  • The Bobcat dealer network has lagged Polaris in the commercial utility segment and the sell through of the Brutus vehicles will be slower than consumer vehicles because of the slower commercial vehicle buying cycle.
  • Management was even more upbeat than usually about the 2014 models that will be announced at the dealer meeting in a few days.

Learn more:  Seekingalpha.com (Earnings call transcript)

Comment:  Polaris management continues to execute on their strategic plans very well. They are setting the industry standard for inventory management, operational efficiency and product development and innovation. In an increasingly competitive market it will be interesting to see what features and innovations their new models will have.

News from Lithium Boost Technologies

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Lithium Boost Technologies signs manufacturing agreement with Bright Technologies

Lithium Boost Technologies, which produces a lithium battery system to replace the lead acid battery pack in golf cars, industrial and utility vehicles, recently announced a new safety feature and strategic manufacturing agreement. Their new interlock feature locks the vehicle in place to prevent the user from moving it while the battery is in the charging process.

The company also signed a manufacturing agreement with US/Mexico based Bright Manufacturing to produce wiring harnesses and electronic boards for the the battery systems. The agreement will allow the Lithium Boost to improve delivery time and meet growing demand.

Lithium Boost offers a variety of lithium iron phosphate battery solutions including, LithiumBoost Plus for leisure use, LithiumBoost Pro for industrial, and LithiumBoost Ultra for off-road. Depending on vehicle application, the product is available in 36, 48, & 72 volt systems and 60ah-200ah lithium-ion battery cells. Learn more:  Lithiumboost.com