END OF THE ROAD FOR VICTORY MOTORCYCLES…An American Motorcycle Company Dies Before Its Time…
Big News! Polaris Industries announces the end of Victory Motorcycles…Got to admit, I did not see this news coming on Monday, January 9, 2017.
I will always remember where I was when I received the official media Press Release via email from Skyya Communications, Polaris’s PR pros. That warm sunny SoCal morning quickly turned cold as I read the announcement…Say what??? Big market cap Polaris Industries, an almost $6.0 billion corporation, could no longer afford to support the Victory Motorcycle brand? Wow, I said to myself as I boarded on a jet plane for a business trip to the east coast. Where’s the “American Muscle” in that newswire?
My history with Victory
As a long time friend and supporter of Victory motorcycles, the announcement both surprised and saddened me. What a shame I pondered as I looked out the airplane window…what the hell happened I wondered? How could such a supposedly powerful big enterprise like Polaris Industries give up on a true American brand after only 18 years in the marketplace?
The making of an American motorcycle brand
In order to make sense of why Polaris Industries Chairman and CEO, Scott Wine, President of Motorcycles, Steve Menneto, and the Polaris Board of Directors decided to drop the Victory brand, one must get some perspective and context around what could lead to such a big, brand-killing, strategically-relevant, and future corporate brand positioning decision.
Remember back almost two decades to 1998, Victory was the motorcycle that was going to be the biker’s alternative to market leader, Harley-Davidson.
Victory’s first motorcycle, the V92C, was lauded as the new exciting American-made motorcycle that riders could fall in love with. The press loved it! Polaris championed it. And so began the building of a loyal fan base of Victory owners.
Market excitement for the new motorcycle company jumped exponentially when Arlen Ness Motorcycles of Dublin, CA signed on as a Victory dealership in 1999. The legendary Arlen Ness and his son, Cory, added huge credibility and brand relevancy to America’s new motorcycle company. They also signed on as styling consultants and as accessories supplier to Victory and in 2004, the Nesses created a cool series of sleek looking limited-edition Ness Signature Victory models. A third generation Ness, Zach, even got into the act joining the company after college and championed his own Zach Ness Signature Vegas model in 2011. The Ness family collaboration with the Victory team looked like a match made in motorcycle heaven from all I could see.
2008 was a big year with the introduction of the Freedom 106 V-twin.
I first learned about the new Freedom 106 motor during the summer of 2008 when the Victory Vision demo rides arrived at Ness Motorcycles. Victory added this industry-leading powerplant to the Hammers and Vegas models a year later.
By 2013, every Victory model sported the Freedom 106ci V-Twin motor. I loved the power, the acceleration and the look of this engine and, I loved the fact that its 1,731cc became viewed by Harley-Davidson as a serious contender with all its power and torque.
In 2015, I was fortunate to hook up with then External Relations Manager for Polaris Motorcycles, Robert Pandya. Robert put me in the saddle of a new Victory Magnum for a major roadtest across half the country that would lead me to the 75th Anniversary of Sturgis…and, what an amazing ride it was from San Diego, California to Sturgis, South Dakota.
I made it a point to visit over 10 Polaris/Victory dealers along the way so that I could get a feel for the excitement around the new Victory bikes and to admire the inventory on their showroom floors. The bike ran smooth and cool. It handled really well even as I rode half the trip through heavy rain, thunder and lightning. I will never forget that ride.
The world of big money and big company decisions.
Polaris Industries (NYSE: PII) is a giant powersports company. The company had a market cap of $5.8 billion at November 2016. For perspective and comparison, competitor Harley-Davidson (NYSE: HOG) has a market cap of $10.6 billion. Other competitors of note are Thor Industries (NYSE: THO) which had a market cap of $4.3 billion and Brunswick Industries (NYSE: BC) also around $4.3 billion in 2016.
In 2015, the recreational vehicles segment accounted for a whopping 78.6% of total company sales according to information available from Polaris Investor Relations. Motorcycles generated only 14.8% of total sales. Looking at motorcycle sales over the past several years, you’ll want to note the following:
2012 = $195,789,000 or 6.1% of total company sales of $3.2 billion came from motorcycles
2015 = $698,257,000 or 14.8% of total sales of $4.7 billion originated from motorcycles. Estimates are that the Victory brand accounted for $114 million or only 20.2% of all motorcycle sales at Polaris in 2015.
Looking back, one can summize that the arrival of the iconic Indian motorcycle brand at Polaris in 2011 was the beginning of the end for Victory motorcycles.
According to published financial reports and insiders in my network, sales and profits from the motorcycle segment increased over the past several years primarily due to aggressive marketing, dealership promotion and company leadership enthusiasm for Indian Motorcycles and Polaris’s new 3-wheeled moto-roadster, the Slingshot.
The Victory brand…Well, retail sales were down a whopping 15% in the fourth quarter of 2015 due to “continued low product availability” and since the arrival of the Indian Motorcycle brand in 2011, there was a real loss of enthusiasm within company leadership to aggressively market and sell the Victory brand, according to my sources. Combine this with the fact that the Victory brand lost money in three of the past five years, according to published reports, and you have a formula for failure.
Media reporting around the industry indicated that Victory Motorcycles accounted for only 3% of the company’s total sales in 2015. ($141 million or viewed another way, Victory accounted for 20.2% of Polaris’s total motorcycle sales in 2015.)
Imagine if Polaris had applied the same marketing strategy and distribution excitement towards selling the Victory story during the first 10 years of the brand’s existence…as it has during the past four years on the promotion of Indian and the Slingshot brands?
This is where I believe the company lost its way with Victory…in the marketing, sales and distribution of the Victory brand going all the way back to 2008 when the company introduced its new motor, the Freedom 106.
From cruiser to tourer, every Victory model was outfitted with the powerhouse, industry-leading Freedom 106ci motor in 2013. The brand was ripe for great marketing and a new distribution strategy to accelerate its sales from all I could tell at the time. I got so excited myself that I bought a new Victory High-Ball in early 2014 just for fun.
By the end of 2014, reports show that Indian had an estimated 140 dealers in the U.S. and 70 dealers internationally. Globally, Polaris had over 600 Victory Dealers…think about this for a moment. Over 600 established Victory Dealers supposedly selling the Victory brand but sales lagged and did not meet expectations?
While attractive Indian-branded dealerships sprouted up across the U.S. and internationally from 2013 and continues to this day, Victory bikes were lucky to get front door positioning in Polaris’s powersports focused dealerships. Some new Indian dealers also sold Victory bikes but the bikes got mostly back of the showroom floor status from all I saw visiting numerous dealerships across the country. For some reason, the impressive marketing and selling blitz focused on the Indian and Slingshot brands was nowhere to be seen for Victory. I began to wonder back in 2013 why Polaris had decided to not to fully champion the brand.
The key leadership player – Steve Menneto, President of Victory and Indian Motorcycle brands.
If you believe that Polaris had the financial means, engineering prowess and talented executives like Steve Menneto running the motorcycle segment, you got to wonder about the real reasons why the Victory brand got de-prioritized over the past several years?
Steven D. Menneto, has been the President of Motorcycles at Polaris Industries Inc. and around the Victory Motorcycle brand in numerous leadership capacities since 2009 according to his LinkedIn profile.
According to Bloomberg, he gained valuable experience in various other key roles at Polaris; Director of Dealer & Retail Development, Director of Consumer Sales, Regional Sales and he even dabbled in a Dealer Development Quality intitiative. He
Take note blog fans: Polaris will release its fourth quarter and full-year 2016 financial results and provide 2017 guidance on Tuesday, January 24, 2017.
My expectation is that the topic of the Victory brand kill (official announcement here) and its impact on the Polaris brand as a viable motorcycle manufacturer long term will be a hot topic for the Polaris executives in attendance.
Webcast and conference call will be held at 9:00 a.m. Central Time to discuss results. A slide presentation and link to the webcast will be posted on the Polaris Investor Relations website at ir.polaris.com. To listen to the conference call by phone, dial 877-706-7543 in the U.S. and Canada, or 478-219-0273 Internationally. The Conference ID is #45015597. This is one corporate conference communication you don’t want to miss if you care about the future of American made motorcycles.
My bottom line…
I love motorcycles but I really love the American brands of Harley-Davidson, Indian and Victory. I’ve owned all three brands, among others, at one time or another over the past 45 years.
The bottom line is that Polaris Industries is a powersports powerhouse with a powersports-trained distribution system (dealerships). Motorcycles and other hybrid on-road vehicles make up less than 20% of their total revenues. The Victory Motorcycle brand, in my opinion, got lost in dealership showroom clutter and when pinned against lower priced foreign motorcycle brands, it never had a chance.
Why Polaris leaders did not market the Victory brand separately as it is doing so effectively today with the Indian Motorcycle brand we may never know?
I do believe that the Indian brand will benefit from having its step-child Victory model out of its corporate way as long as it continues to be marketed with its own branded, Indian products and services story. For how long, who knows given the demographics buying Indian motorcycles? Me, I own a 2014 Indian Chieftain today with 40,000 miles on it and I love it. Great bagger I do admit.
As for the 3-wheeler, quasi-roadster, registered as a “motorcycle” Slingshot, it too is being promoted through existing Polaris dealership showrooms and parking lots…tucked away amongst the 4×4 ATVs. Some are even getting good front door placements. All the best to Polaris’s marketing pros as they continue to position this innovative vehicle in the marketplace. Click on this Slingshot link to read my original roadtest blog post.
My bottom line…Victory Motorcycles were well-engineered, sleek good lookers and even attractively priced but they simply could not compete hidden amongst the powersports Side x Side 4-wheelers, ATVs, lower priced foreign motorcycle brands and walls and walls of motocross boots, helmets, duffel bags…etc. Add to this that Victory inspired logo wear and accessories were limited until only a few years ago and the brand was clearly handicapped from a marketing point of view.
Furthermore, except for my many positive visits to the Ness Dealership in NorCal over the years, I never did feel dealer passion for Victory Motorcycles from any of the dozens of Polaris dealers I have visited over the years.
Talk about a missed opportunity for Polaris to fully develop an excellent motorcycle brand in Victory and to prove to Harley-Davidson that they will be a tough competitor for decades to come. Talk about bad news for us motorcycle riders from a price and product standpoint…Less competition, higher prices.
RIP Victory Motorcycles…you will be missed by this motorcycle enthusiast.
About Motorcycle Marc – I’m a motoblogger. Some say a key motorcycle industry influencer. I prefer to ride motorcycles but when I can’t ride, I blog about it. Since 2009, I’ve developed a strong loyal following of thousands of gearheads, motorheads, biker-wannabes and 2-wheeled adventurers who love motorcycles and everything motorcycle-related. Welcome to my world. #RideSafeOutThere – Marc J. Beaulieu (MJB)
About Polaris Industries Inc. (NYSE: PII). Polaris Industries is a global powersports leader with annual 2015 sales of $4.7 billion. Polaris fuels the passion of riders, workers and outdoor enthusiasts with some of the world’s leading recreational vehicle brands; RANGER®, RZR® and POLARIS GENERAL™ side-by-side off-road vehicles; the SPORTSMAN® and POLARIS ACE® all-terrain off-road vehicles; INDIAN MOTORCYCLE® midsize and heavyweight motorcycles; SLINGSHOT® moto-roadsters; and Polaris RMK®, INDY®, SWITCHBACK® and RUSH® snowmobiles. Go to www.polaris.com for more information.
About Arlen Ness Enterprises – Arlen Ness Motorcycles is the motorcycle dealership associated with Arlen Ness Enterprises. They have one of the best reputations anywhere for personal customer service and standing by their wide variety of products. The dealership will continue to service your Victory bikes so there’s no need to worry about that. As you can imagine, given the elimination of the Victory brand by Polaris, all Victory brands at Arlen Ness Motorcycles are on clearance with limited inventory available. Once they are gone off the showroom floor that’s it. Best to get to the dealership asap!
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