Recent UTV Recalls

Posted on May 24, 2021 by Marc Cesare

2020 Polaris Ranger Crew 1000 utility vehicle part of recall. — The Polaris 2020 Ranger Crew 1000 is part of a large recall related to a drive belt issue.

UTV Recalls Summary

There have been a number of UTV recalls the last two months. With the exception of the latest Polaris recall involving over 40,000 vehicles, the recalls have been very small. The large Polaris recall includes Ranger 1000 and Ranger Crew 1000, ProXD, Ariens/Gravely and Bobcat models. These models use a common drive belt, which can break and damage the fuel line.

The smaller recalls include John Deere XUV590, Kawasaki Teryx and Polaris RZR Pro XP models. A variety of issues drive the recalls. The recall information below is from the Consumer Product Safety Commission.

UTV Recalls Detailed Information

John Deere Gator UTV Recall

OEM	Model(s)	Hazard	Remedy	Recall Date, Number & Link	Units Involved
John Deere	XUV590 and XUV590 S4 Gator™	An error in the ECU (Engine Control Unit) software can result in the speedometer and several speed-related safety systems not functioning as designed, posing a crash hazard and risk of injury.	Repair	5/20/2021 21-748 Recall lists recalled serial numbers	~90
Polaris	2021 RZR Pro XP & Pro XP 4	The vehicles were manufactured without copper seal washers on the turbocharger’s oil supply line, which can result in an oil leak, posing a fire hazard.	Repair	5/13/2021 21-744	~32
Kawasaki	Teryx S LE, Teryx4, Teryx4 Le, S LE, S LE Camo Gray, S LE Camo	The fuel pump retainer plate bolts can come loose causing fuel leakage over time, posing a fire hazard.	Repair	4/22/2021 21-739	~100
Polaris	2020-2021 Ranger 1000 and Ranger Crew 1000, 2020 ProXD 2000G and 4000G, 2020-2021 Ariens/Gravely JSV3200, JSV3400, and JSV6400, 2020 Bobcat UV34 4×4 Gas and UV34 XL Gas, and 2021 Bobcat UV34 4×4 Gas	The drive belt can break during operation and damage the inner clutch cover assembly and fuel line, which can result in a fuel leak, posing a fire hazard.	Repair	3/25/2021 21-732	~41,500

SVR tracks recalls on an ongoing basis.

Optimus Ride Deepens Partnership with Polaris for Autonomous Vehicles

Posted on April 13, 2021 by Marc Cesare

GEM e6 modified by Optimus Ride for self-driving. — Optimus Ride currently modifies stock GEM LSVs like the GEM e6 for their self-driving service.

Optimus Ride – Polaris Partnership

Polaris is expanding their partnership with Boston-based Optimus Ride to manufacturer autonomous vehicles. Optimus Ride has been slowly rolling out autonomous low-speed vehicle services based on the Polaris Gem. Previously, Optimus modified the GEMs, about 30 in total. Under the expanded partnership, a GEM specifically designed for driverless, autonomous driving will be developed with Polaris and be ready for the second half of 2023 according to Optimus management. The GEM vehicles fall under the Polaris Commercial business division.

Optimus Ride Autonomous Vehicle Background

Optimus Rider Brooklyn Navy Yard Route — The Optimus Ride autonomous vehicle service route in at the Brooklyn Navy Yard.

Optimus Ride started in 2015 and has been proving its’ autonomous vehicle technology since then. Their service has been operating in a number of environments with routes that are relatively short and predictable. The routes are typically 1 to 3 miles with either fixed-route or on-demand services. The vehicles are all low speed vehicles and to date have also featured a safety driver. For example, the company operates a fixed-route autonomous vehicle service at the Brooklyn Navy Yard. In February, 2021 they announced a new service at TheYards waterfront development in Washington DC. Residents and tenants will use the Opti Ride app to schedule on-demand rides. These localized trips in developments, downtown areas and college and corporate campuses overlap significantly with the existing target market for the Polaris GEM product line.

SVR’s Take

This is another sign of Polaris moving towards electrification as well as positioning the company in the micro mobility space. It is also a great way to protect their existing GEM market position in places like college and corporate campuses. These markets are likely to be at the forefront of these limited scope, autonomous vehicle use cases. Now Polaris, through Optimus Ride, will be able to offer their existing customers the next generation of vehicle technology. At the same time, the partnership will likely open up new commercial markets for Polaris.

Marc Cesare, Smallvehicleresource.com

Polaris Recalls Ranger and ProXD UTVs

Posted on March 10, 2021 by Marc Cesare

The 2020 Polaris Pro XD 4000G utility vehicle being recalled is sold to commercial markets.

The 2020 and 2021 Polaris Ranger XP 1000 is also part of the recall.

Ranger and ProXD UTVs Recall Summary

Polaris is recalling model year 2020-2021 Ranger 1000, Crew 1000, XP 1000 and Crew XP 1000 utility vehicles as well as model year 2020 ProXD 2000G, 2000G H, 4000G and 4000G H utility vehicles. The throttle pedal can return to the idle position more slowly than anticipated and create a crash hazard. The recall includes nearly 16,000 vehicles. Owners should stop using the vehicles and contact their local Polaris dealer to schedule a repair. Owners filed 52 reports regarding the issue, including six crashes, but no reported injuries. The following recall details are from the Consumer Product Safety Commission.

Ranger and ProXD UTVs Recall Details

Name of product: Model Year 2020-2021 RANGER 1000, RANGER CREW 1000, RANGER XP 1000, and RANGER CREW XP 1000 and Model Year 2020 ProXD 2000G, ProXD 2000G H, ProXD 4000G, and ProXD 4000G H

Hazard: The throttle pedal can return to the idle position more slowly than anticipated once the pedal is released or stick in the depressed position, posing a crash hazard.

Recall date: March 4, 2021

Units: About 15,800 (In addition, 711 units were sold in Canada)

Consumer Contact: Polaris at 800-765-2747 from 7 a.m. to 7 p.m. CT Monday through Friday or online at www.polaris.comand click on “Off Road Safety Recalls” or https://www.polaris.com/en-us/off-road-recalls/ to check your vehicle identification number “VIN” or go to “Product Safety Recalls” page to see if your vehicle is included in any recalls or online at https://www.polaris.com/en-us/recalls/off-road/.

Description: This recall involves Model Year 2020-2021 RANGER 1000, RANGER CREW 1000, RANGER XP 1000, and RANGER CREW XP 1000 recreational off-highway vehicles and Model Year 2020 ProXD 2000G, ProXD 2000G H, ProXD 4000G, and ProXD 4000G H off-road utility vehicles. The vehicles were sold in the following colors: black, blue, burgundy, camo, gray, green, orange, red, sand, tan, titanium, and white. The RANGER vehicles have three or six seats and the ProXD vehicles have two or four seats. The RANGER and ProXD vehicles have “POLARIS” stamped on the front grille. The model number and VIN are printed on a portion of the left rear frame (on the driver’s side of the vehicle) under the cargo box.

Remedy: Consumers should immediately stop using the recalled vehicles and contact a Polaris dealer to schedule a free repair. Polaris is notifying all dealers and contacting registered owners directly.

Incidents/Injuries: The firm has received 52 reports of throttle pedals returning to the idle position slowly or sticking, including six reports of vehicle crashes resulting in minor property damage. No injuries have been reported.

Sold At: Polaris dealers nationwide from April 2020 through January 2021 for between $13,000 and $31,000.

Manufacturer(s): Polaris Inc., of Medina, Minn.

Manufactured In: United States and Mexico

Recall number: 21-724

SVR’s Take

At 16,000 units the recall is medium sized for Polaris. They are the largest UTV manufacturer by far so you would expect them to have more and larger recalls. However, this is the seventh recall dating back to January of 2020. The recall also has relatively high number of consumer reports. It appears they are still having quality control issues despite making changes after their massive recalls several years ago. SVR tracks recalls on an ongoing basis.

2021: A Turning Point for Electrifying UTV?

Posted on March 3, 2021 by Marc Cesare

Polaris Ranger electric UTV developed in partnership with Zero Motorcycles — An electric Ranger is the first product from the Polaris partnership with Zero Motorcycles.

Polaris’ New Push to Electrify UTVs

Polaris’ announcement that they will be producing a new electric Ranger in collaboration with Zero Motorcycles is a strong indication that 2021 may be a turning point for the electrifying UTVs. They are the leading UTV manufacturer and already produces an electric Ranger but with traditional lead acid battery technology. There was a lithium ion battery equipped option at one time, but the model was prohibitively priced. The Ranger EV with a lithium battery pack cost approximately $10,000 higher than the lead acid version. This new Ranger EV is another step by Polaris as they increase investment towards electrifying UTVs and other powersports products.

At the end of 2019 the company created a new position, senior vice president of Electrification Strategy. Signaling the initiative’s importance, they filled it with the then president of Off Road, the company’s largest business division. In September, 2020 they announced a 10-year partnership with Zero Motorcycles as a cornerstone to their electrification strategy. Named rEV’d up, the strategy aims to offer electric vehicle options within each of its core product segments by 2025. Zero Motorcycles is one of the leading electric powertrain technology companies.

Polaris Has Extensive EV Experience

Polaris actually has quite a bit of experience in electric vehicles, but mostly outside of their powersports segments. Through the years the company has acquired GEM, Goupil, Brammo Electric Motorcycles and Taylor-Dunn, all manufacturers of electric vehicles. However, these companies are primarily active in markets that are more tangential to powersports. Polaris used the Brammo technology in the Ranger EV but not a motorcycle. Goupil produces light-duty commercial vehicles for the European market, GEM produces light-duty utility vehicles and transporters for college/corporate campuses and such, and Taylor-Dunn produces industrial utility vehicles. While these acquisitions were for commercial markets not powersports, Polaris gained a wealth of experience with electric vehicles.

Volcon is a startup looking to electrify powersports.

Moving forward, these product lines can provide manufacturing volume and a broad product development base to further spread the cost of developing new electric powertrain technology. This could become a distinct advantage for Polaris that most of their competitors do not have. Can-Am, their leading powersports rival, is also moving into electrification, but is not active in other electric vehicle segments. Others, like Textron and Yamaha are major players in the golf car market. More interesting and potentially tougher competitors may be new entrants into the market like Texas-based Volcon Motors. This electric vehicle start-up has plans to introduce an all-terrain electric motorcycle in the Spring of 2021, a two-seat electric UTV later in 2021 and a four-seat UTV in 2022. Start-ups lack the financial resources, manufacturing expertise and distribution networks of established players but aren’t burdened by cultural legacies and management incentives tied to ICE based vehicles.

Electrifying UTVs is Challenging

Electrifying UTVs poses a unique challenge because of their size, performance requirements and usage profile. They need both power and range but still must remain reasonably priced. They need the power because, well, its powersports after all and a vehicle’s horsepower is a defining characteristic. Work oriented UTVs, especially for heavy duty work applications, need plenty of horsepower as well. Users want to make long trail rides without being stranded in the middle of nowhere, or be productive work throughout the work day.

There is limited space for a battery pack in these very compact vehicles. In addition, a large sized battery pack will make the vehicles prohibitively expensive. It’s not surprising that they are starting with the lower priced Ranger. A small but efficient motor and small battery pack could keep prices low enough while still delivering better performance than the existing ICE engine in the Ranger. The new Ranger EV could also fit in nicely on college and corporate campuses or smaller farms/ranches where the range and work requirements would be not as demanding.

High-end, off-road performance vehicles might be the next step. Already a premium market, they may be able to more readily absorb the additional expense of a large battery pack. These higher-end models could also serve to demonstrate the unique performance characteristics of an electric powertrain as well as gauge the interest of a customer base that likes the sound of ICE engines. An interesting aspect is that the performance customer is likely to wear out the rest of the vehicle before the advanced battery pack. Selling or leasing the battery pack separately from the rest of the vehicle may become an option. Approaching the UTV market from both ends may be the most likely strategy. Moving up the lower priced work-oriented UTVs and moving down from the highest priced, off-road performance UTVs, as electric powertrain technology improves and becomes more affordable.

Marc Cesare, Smallvehicleresource.com

Polaris Recalls RZR UTVs

Posted on November 30, 2020 by Marc Cesare

2021 RZR PRO XP 4 utility vehicle is part of a Polaris recall — The 2021 RZR PRO XP 4 is part of the latest Polaris recall.

Polaris Recall Summary

Polaris recently announced the recall of almost 19,000 RZR utility vehicles sold in the US and Canada. The vehicle’s clutch can fail and create an injury hazard. The Polaris recall involves model year 2020-2021 RZR PRO XP, PRO XP 4 and model year 2021 RZR Turbo S, Turbo S4, XP Turbo and XP 4 Turbo vehicles. Owners should stop using the vehicles and contact their local Polaris dealer for a free inspection and repair.

Polaris Recall Details

The following details are from the Consumer Product Safety Commission.

Name of product: Model Years 2020-2021 RZR PRO XP, PRO XP4 and Model Year 2021 RZR Turbo S, Turbo S4, XP Turbo and XP 4 Turbo ROV

Hazard: The vehicle’s clutch can fail, posing an injury hazard.

Remedy: Repair

Recall date: November 19, 2020

Units: About 18,400 (In addition, about 560 units were sold in Canada)

Consumer Contact: Polaris at 800-765-2747 from 7 a.m. to 7 p.m. CT Monday through Friday or online at www.polaris.com and click on “Off Road Safety Recalls” for more information. In addition, check your vehicle identification number “VIN” on the “Product Safety Recalls” page to see if your vehicle is included in any recalls.

Description: This recall involves Model Year 2020 RZR PRO XP and RZR PRO XP 4 and Model Year 2021 RZR PRO XP, RZR PRO XP 4, RZR Turbo S, RZR Turbo S 4, RZR XP Turbo and RZR XP 4 Turbo recreational off-highway vehicles. The two or four-seat vehicles were sold in the following colors: Black, blue, gray, lime (green), sand (light brown), orange, red, titanium (silver) and white. POLARIS is stamped on the front grille and POLARIS and RZR are printed on the sides of the vehicles.

Model Year	Model Name
2020	RZR PRO XP
2020	RZR PRO XP 4
2021	RZR PRO XP
2021	RZR PRO XP 4
2021	RZR Turbo S
2021	RZR Turbo S 4
2021	RZR XP Turbo
2021	RZR XP 4 Turbo

Remedy: Consumers should immediately stop using the recalled vehicles and contact a Polaris dealer to schedule a free inspection and repair. Polaris is notifying all dealers and contacting registered owners directly.

Incidents/Injuries: Polaris has received 136 reports of clutch failure, including 8 reports of debris and clutch component ejection that damaged nearby parts of the vehicle. No injuries have been reported.

Sold At: Polaris dealers nationwide from March 2019 through October 2020 for between $18,600 and $32,300.

Manufacturer(s): Polaris Inc., of Medina, Minn.

Manufactured In: Mexico

Recall number: 21-709

SVR’s Take

This is the 7th recall by Polaris in 2020. As the largest manufacturer you would expect them to have more recalls but this seems to be a disproportionate amount. The recall must also be disconcerting for management in the context of the company’s massive recalls of several years ago and their focused attempts to address quality control issues. In addition, the recall involves their most recent top line UTVs, the RZR PRO XP. There is also a relatively high number of incidents for this recall. Typically there are only a handful of incidents or even none at the time of the recall. SVR tracks industry recalls on an ongoing basis.

Polaris Q2 2020 Earnings

Posted on August 4, 2020 by Marc Cesare

Polaris General 4 1000 utility vehicle — Four-passenger UTVs like the Polaris General 4 1000 helped drive retail sales despite the pandemic.

Polaris Q2 2020 Earnings summary

Polaris recently reported their financial results for fiscal year 2020 2nd quarter and they were better than expected. The company reported sales of $1.512 billion for the quarter, a decrease of 15% year over year. Adjusted income decreased 25% from $107 to $81 million. Management stated that results “significantly outpaced company expectations” in the face of the pandemic. In the ORV/Snow segment sales were $953 million, a decrease of 9% year over year with ORV decreasing 14%. The powersports industry experienced strong retail sales, especially in off-road vehicles. Management attributed the strong sales to people seeking family enjoyment, having more free time and fewer alternatives for spending money because of the pandemic.

Polaris Q2 2020 Earnings Highlights

The following are highlights from the earnings call that relate to the small task-oriented vehicle market.

NA powersports industry retail was up high 30% in Q2
Polaris off-road vehicle retail increased low 60% as side-by-side and ATV sales were both strong.
New customers were key drivers with more females, people of color, families and younger buyers
Management reported that 75% of their off-road vehicle and motorcycle buyers in Q2 were new to Polaris.
Solid demand for four seat and crew UTVs for family usage
A significant portion of ORV sales came from existing dealer inventory which decreased 45% in the quarter as Polaris shutdown or decreased plant production
Production is “chasing demand with some shortage”.
Japanese competitors are gaining share, in part, due to having more product available.
Global Adjacent Market sales decreased 36% for the quarter to $78 million from $122 million
ORV retail sales continued strong growth in July

Guidance for 2nd Half

Polaris retail sales anticipated to outpace overall market.
Strong performance in second half expected by ORV.
ORV/Snow sales down 7% for the first half of the year but expected to be up overall for the full year as dealer inventory is replenished and powersports demand maintains modest growth.
Management anticipates continued weakness in adjacent markets given the dependence on government, university, commercial and rental sales.

Learn more: Polaris Q2 2020 Earnings Call Transcript

SVR’s Take

The fallout from the pandemic appears to have been good for the off-road utility vehicle market, at least for recreational purposes. As a relatively safe activity in terms of avoiding the virus, riding UTVs appears to have provided an antidote to being in lockdown or some degree of it. It will be interesting to see if it continues to do so. They are still large purchases and with the virus flaring up in many places, potential buyers could become more cautious. However, the acquisition of a large portion of new customers to date bodes well for Polaris in the future. Marc Cesare, Smallvehicleresource.com

2020 Small Task-Oriented Vehicle Study

Posted on July 31, 2020 by Marc Cesare

In a new market study on the small task-oriented vehicle (STOV) market in the US and Canada, Small Vehicle Resource (SVR), LLC describes an industry in midstream transition as:

Climate policies, COVID-19 effects and new technologies usher in the urban/suburban mobility market and underpin an expanding consumer market for personal transportation vehicles (PTVs), as well as commercial markets for light duty utility vehicles;
The transition from lead acid to lithium batteries continues, raising performance and transforming vehicle longevity and recycling value.
The maturing off-road utility and recreational UTV market remains fundamentally strong and highly competitive, and is poised to follow the automobile and golf-car type vehicle markets into electrification;

The study provides a strategic analysis of the rise of urban/suburban mobility market driven in the context of the STOV industry. Steve Metzger, SVR Managing Director, states that, “The intersection of climate policy, new technologies and COVID-19 effects will lead to a ‘dispersed living lifestyle’, and provide new opportunities in the urban/suburban mobility market.” He further remarks, “The STOV industry, particularly the Big Three golf manufacturers with a foothold in gated communities, have the core competencies to transition from golf-centric to urban/suburban centric. The question is will they?”

Marc Cesare, SVR Managing Director, adds that, “While the UTV manufacturers will see solid growth in their market, some are capable of pursuing the urban/suburban mobility market as well. However, their DNA, profit centers and distribution channels are primarily off-road and powersports. Culturally, the pursuit of the urban/suburban mobility opportunity may be a difficult paradigm shift.”

The study, the tenth in the series since 2000, covers market trends from 2016 and develops projections to 2025. The key segments are golf fleet, personal transportation vehicles, light-duty utility vehicles, and off-road utility and recreation vehicles. In total, these segments are forecasted to reach close to 1,200,000 new vehicles in 2025. Electric powered vehicles continue to make inroads. Approximately a third of the market is electric powered, primarily in the form of fleet golf cars, PTVs, as well as light duty utility vehicles, of which approximately 80% will be electric by 2025. Key trends and projections for the market include:

Demand for electric powered STOV vehicles will increase to over 450,000 vehicles in 2025.
Golf course fleet demand will decline slightly during the trend period but will remain overwhelmingly electric powered, around 80%.
Demand for PTVs will be strong.
Lithium battery powered vehicles will continue to make inroads as more models become available with this option.

The study is entitled, Trends and Outlook for Small, Task-Oriented Vehicles-2016-2025- An Analysis of the Emerging Urban/Suburban Mobility Market. For additional, detailed information see the study brochure with table of contents or contact:

Steve Metzger smetzger@smallvehicleresource.com

(914) 293-7577

Multiple Polaris Recalls

Posted on May 11, 2020 by Marc Cesare

Polaris Ranger XP 1000 utility vehicle — Models like the Polaris Ranger XP 1000 that helped drive sales is part of a large recall.

In April Polaris announced three recalls, two involving Ranger XP 1000 utility vehicles and one related to the PRO XD and several Ranger models. The largest recall covers 80,000 model year 2018 to 2020 Ranger XP 1000 and Crew XP 1000 utility vehicles. The clutch belt can break and damage the secondary clutch and fuel line and create a potential fire hazard. The second recall covers model year 2019 and 2020 Ranger XP 1000 and Crew XP 1000 and involves 7,000 vehicles. The fuel line can be misrouted above the bracket that protects the fuel line from a clutch belt failure, posing a fire hazard. The final recall involves model year 2019 PRO XD and several model year 2020 Ranger vehicles. The seat belts on the vehicles can fail, posing an injury hazard in certain crash situations. The following details are from Consumer Product Safety Commission.

Recall Details

Recall 1	Recall 2	Recall 3
Models 2018 Ranger XP 1000 EPS 2019 & 2020 Ranger XP 1000 & Crew XP 1000	Models 2019 Ranger XP 1000 EPS & Crew XP 1000 EPS 2020 Ranger XP 1000 & Crew XP 1000	Models 2019 PRO XD 4000D AWD 2020 Ranger 500, 570, 1000, Crew 570, Crew XP 1000, EV, XP 1000
The clutch belt can break and damage the secondary clutch and the fuel line, posing a fire hazard to the rider	The fuel line can be misrouted above the bracket that protects the fuel line from a clutch belt failure, posing a fire hazard	The seat belts on the vehicles can fail, posing an injury hazard to the user if they were to be in a collision or tip-over incident.
Consumers should immediately stop using the recalled vehicles and contact a Polaris dealer for a free inspection & repair.	Consumers should immediately stop using the recalled vehicles and contact a Polaris dealer for a free inspection & repair.	Consumers should immediately stop using the recalled vehicles and contact a Polaris dealer for a free inspection & repair.
80,000 UTVs recalled	7,000 UTVs recalled	10,500 UTVs recalled
See CPSC for affected VIN information	See CPSC for affected VIN information	See CPSC for more details
Recall number: 20-733	Recall number: 20-734	Recall number: 20-735
Sold Oct. 2016 – Oct. 2019	Sold Aug. 2019 – Dec. 2019	Sold Oct. 2019 – Dec. 2019

Polaris is notifying dealers and contacting registered owners directly. Consumers can contact Polaris at 800-765-2747 from 7 a.m. to 7 p.m. CT Monday through Friday or online at www.polaris.com and click on “Off Road Safety Recalls” for more information. In addition, check your vehicle identification number (VIN) on the “Product Safety Recalls” page to see if your vehicle is included in any recalls.

SVR’s Take

Polaris appeared to have improved their quality and significantly alleviated their recall problems before this latest round. The Ranger XP 1000 is a very important vehicle for their Ranger business and an 80,000 vehicle recall is very large. This will only add to the difficulties of dealing with the pandemic. SVR tracks industry recalls on an ongoing basis.

Polaris Covid-19 Response

Posted on March 24, 2020 by Marc Cesare

Polaris PRO XD 400D AWD utility Vehicle — Sales of the new PRO XD 400D AWD from Polaris Commercial is likely feeling the effects of the Covid-19 crisis.

Polaris Covid-19: Operations & Dealer Response

The Polaris Covid-19 response is wide ranging and impactful. The management is suspending operations at eight plants across the United States, Mexico and Poland for a week. As part of the suspension the company is providing US employees with up to 10 days of pay. For dealers, they are allowing home delivery of products, providing product flooring support and covering flooring interest payments for off-road vehicles and motorcycles through May 31st.

Polaris Covid-19: Financial Response

On the financial side Polaris management announced a:

Drawing down of cash from their revolving credit facility
Reduction in capital expenditures
Suspension of share repurchases.

They have also withdrawn their financial guidance for the first quarter and full year.

SVR’s Take

This is not surprising given the current economic conditions brought on by the Covid virus. Similarly, BRP, maker of Can-Am products, withdrew their financial guidance for the year, suspended their dividend and drew down their $700 million revolving credit line. They are also considering reducing shifts and possibly suspending some plant operations.

Since the powersports industry in general is reliant on discretionary income, particularly in the recreational segment, they will be hard hit by the economic fallout from the Covid-19 virus. Polaris is more diversified than BRP with more commercial customers and products like Taylor-Dunn, Goupil, GEM and military vehicles. In addition, they have a large installed base and customers may choose to fix existing vehicles rather than purchase new ones. On the bright side Polaris points to the ability to maintain social distancing while still enjoying off-road vehicles.

Furthermore, the companies will be hit by sharply lower oil prices in important oil producing states and farmers still feeling the effects of the tariff wars. Several years ago these two sub-segments helped restrain growth in the side-by-side market. Oil prices were lower but not quite this low and farm income was low as well.

Marc Cesare, Smallvehicleresource.com

Polaris Earnings Call: Strong Annual Sales; Low 4Q Growth

Posted on February 18, 2020 by Marc Cesare

Polaris Earnings Overview

In their recent earnings call Polaris management reported strong annual sales despite relatively low fourth quarter growth. Overall sales increased to $6.78 billion for the full year, an increase of 12% from last year. All segments grew with the ORV/Snow segment increasing by 7%. For the fourth quarter sales increased 7% to $1.74 billion despite North American powersports retail sales increasing by only 2%. There was strength in Ranger/General side-by-sides, full-size ATVs and Indian Motorcycles unit sales. In addition, PG&A sales outside of the TAP business performed very well, up 22%. The company continues to be hampered somewhat by tariffs, a $90 million cost in FY2019. However, the management has been able to receive some exemptions and managed to pass some of the cost on to suppliers.

Polaris Earnings Call

The following are highlights related to small, task-oriented vehicles from the recent Polaris earnings call for fiscal year 2019 fourth quarter.

ORV segment (UTVs & ATVs) sales increased by 13%
ORV retail increased mid-single digits %
Side-by-sides retail up low single digits percent
ATV retail up mid-single digits
Management reports that the ramp up of 2020 side-by-side retail sales were slightly below expectations and dealer inventory increased as a result
They named a top executive from their ORV business head-up their electrification strategy
Company-wide average selling price (ASP) jumped by 8% on the strength of ORV and motorcycles
ORV ASP increased 10% with more unit sales and more side-by-side sales
The company boosted prices 3% to 3.5% on many models earlier in the year
Recently they reduced prices substantially on select RZR models
Global Adjacent Markets decreased 1% to $120 million with vehicle sales declining but PG&A increasing

Full Year Sales Guidance

Full year sales are expected to improve 2% to 4%
ORV/Snow segment is expected to increase low single digits percent with ORV up low single digits percent
The Global Adjacent Markets segment is expected to increase high single digits percent as all product lines should show growth
Side-by-side shipments to dealers should decline in the first quarter as management tries to reduce dealer inventory that increased slightly the last two quarters.

Learn more: Seekingalpha.com (Earnings call transcript)

SVR’s Take

One of the most interesting pieces of information coming out of the earnings call was the appointment of a Senior Vice President for electrification strategy. Management noted that the powersports industry tends to lag the auto industry by 5 – 10 years. They think there is currently an inflection point in the market with regards to electrification. In addition, they talked about making investments and see a need to become more competitive in their core powersports business as it relates to electrification.

While Ranger sales continued to drive growth, RZR sales were not as impressive. This is likely where the higher dealer inventory levels originated. The price reduction of some of their RZR S models is likely a reflection of increased competition in the market segment. Kawasaki and Honda are the last two entrants into the high performance segment which has now become quite crowded. In addition, Polaris lowered RZR XP Turbo prices. This reduction may be to remain competitive as well as an effort to create pricing differentiation between the XP Turbo and their higher priced Pro XP models.

Marc Cesare, Smallvehicleresource.com