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Thread: Victory acquires Indian Motorcycles!

  1. #1
    Super Moderator Noor's Avatar
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    Default Victory acquires Indian Motorcycles!

    Victory acquires Indian Motorcycles!

    Polaris wants its acquisition of Indian Motorcycles to help the OEM reach customers in an untapped market segment (read: Harley-Davidson's space) and expand its dealer network into the top motorcycle markets in the United States.

    Through an interview with Dealernews, and in a conference call to discuss the company's first-quarter performance, Polaris executives discussed how Indian will fit with the company's existing motorcycle marque Victory and what the future holds for Indian, the oldest and one of the most iconic brands in American motorcycling history.

    "We made this investment because Polaris has the capabilities and the demonstrated ability to execute new product introductions that are strongly correlated to what the Indian brand needs for success," said Polaris CEO Scott Wine in the April 20 conference call with industry analysts. "Polaris can provide the short-term support to improve and maintain production of their current product line.

    "While we [will] ensure the actual bikes remain distinctly different, the compatibility of the Indian and Victory brands is telling, and will offer a much stronger motorcycle lineup to benefit our current dealers, and drive much-needed dealer expansion in the nation's most desirable motorcycle markets," Wine added.

    Polaris will utilize its considerable engineering, sourcing and design resources to build a lineup of Indian motorcycles that, Wine said, will remain true to the brands long heritage, and feature the kind of performance and quality associated with the Indian name.

    Indeed, Indian is the marque that Polaris/Victory plans to use to help gain a foothold in a portion of the top 100 motorcycle markets. Wine said the company is under-represented in about three-quarters of them.

    Mike Malone, Polaris' VP of finance and CFO, said the Victory dealer network has expanded nicely over the past 18 months but still has room for growth. "We are not going to try to push Indian into all of our dealers, but we are going to make a concerted effort to improve -- to leverage the Indian brand and the strength of those bikes with Victory to establish better representation in [the] top markets," he noted.

    News that the Minnesota-based OEM had purchased Indian was accompanied by reports of strong first-quarter performance for Polaris for both its domestic and international business. Bennett J. Morgan, Polaris president and COO, reported that Victory's international revenue was up 59 percent, while North American sales beat the industry average. Morgan said that with Victorys recent launch in France and continued growth in Germany, Europe will be a growth market for the company's motorcycle business.

    Wine refused to disclose a purchase price for Indian but explained that "it's fair to say that we [have] a history of being frugal in most things that we do, and I think it's fair to assume that with acquisitions as well." Indian Motorcycle sales were approximately $11 million in 2010, Wine said. Expect shipments to decline during the transition process, and accelerate once the brand is relaunched, he added. The company plans to move Indian production from its original Kings Mountain, N.C., plant to Victory's production facility in Spirit Lake, Iowa.

    The addition of Indian will allow Polaris to go where its Victory brand could not take it. With Victory Motorcycles, Polaris carved out a niche made up of performance-oriented cruisers and touring bikes meant to appeal to the kind of riders who put big miles on their motorcycles. Thanks to the Vegas and then the Vision, Victory cemented its place as a forward-looking OEM seeking to build not only high-performance motorcycles, but bikes imbued with a unique aesthetic Victory DNA, as the company calls it.

    Tim Conder, senior analyst with Wells Fargo, said in a report released after the Q1 conference call that it's believed Polaris will offer the Indian brand to its top-tier dealers, while keeping some of Indian's 26 current North American and six international dealers.

    "We view the acquisition as a strategic positive for Polaris, as Indian will be positioned as a premium, classic niche brand vs. Victory as a performance cruiser," Conder said. "Polaris clearly brings strong world-class manufacturing and strong design expertise to the table that should allow them to leverage, over time, the strong historical Indian brand equity in a much more cost-effective offering."

    In an interview with Dealernews, Wine went into detail about the Indian acquisition, as well as the company's recent purchase of the Global Electric Motorcars (GEM) line of electric vehicles from General Motors.

    Dealernews: What does the acquisition of GEM and Indian mean to the current Polaris/Victory dealer network?
    Scott Wine: We are very fortunate to be on a nice little run here. We've had a lot of momentum coming out of 2010 and have been fortunate to build on that in the first quarter. Capping the quarter of strong results by announcing these acquisitions was key to us. We're not going to become a serial acquirer. We've got two great brands here, and we think that it's a very good fit [in regard to] our capabilities as an OEM. One of those competencies that we bring is a very strong dealer network.

    DN: What's the next step?
    SW: We've got a lot of work to do. This is going to be a several-year project for us to fully get Indian bikes and the brand where we want it to be. Right now the bikes are beautiful, but they're very expensive. We're going to have to work on getting the higher-quality, lower-cost motorcycles out there, but are closely tied to the heritage design of the brand. So there will be a lot of work to do for us on the engineering side. While we're doing that, we'll be simultaneously developing a strategy with our dealer network. I think some of our Victory dealers will be a perfect match for the Indian brand I think the better definition is some, rather than most.

    DN: How does Indian complement Victory's existing lineup?
    SW: I think it's a perfect fit. If you look at the heavyweight motorcycle industry, Victory doesn't compete with what we call the diehard market or the weekend riders the people who want an iconic brand who've largely been represented at this point by Harley. We don't go after that crowd. We don't market to them and they don't have a strong affiliation with the Victory motorcycle. What we call the performance enthusiast -- the people who just want a great riding motorcycle, great performance -- they do a ton of research, they expect a lot from their dealer network. What Indian does is take the capabilities that we have with our dealer network, and those customers in the performance enthusiast category? Those customers will now branch into this diehard segment which is much, much larger. Fifty percent of the market or more that didn't even consider a Victory will now consider a Polaris product -- it'll just be an Indian.

    DN: Polaris and Victory are known as performance brands. How will Indian fit?
    SW: We are going to be extremely true to the iconic heritage. We're going to bring the great motorcycle back to the great brand. There will be zero crossover in the design of the bikes with Victory. They're going to be distinctly different bikes and brands.

    DN: How will the GEM acquisition be integrated into Polaris' existing EV business?
    SW: I wouldn't say integrated in; it might even be in some ways a reverse merger. These products are attractive to a very different customer base. If you think about the electric Ranger, it's predominately hunters and horse farmers that really want this type of product. GEM is more of a metropolitan or neighborhood electric vehicle type of category. The Breeze product is somewhat similar, but we've always said the Breeze is more of a 'Let's test and learn and understand the market, and we think that GEM will be a nice way to help broaden the base. But really, if you think about Polaris' ability to drive innovative design and performance, we really like what we can do with the GEM technology and brand.

    DN: What is the market for the GEM vehicle?
    SW: We think that the electric city car/commuter car -- the small electric vehicle like this -- is going to be a market that grows significantly faster than GDP. Those are the investments we make where we can develop or acquire products that are going to perpetuate growth faster than GDP. It's good for us and it's good for our dealer network. If you get a natural lift from a market segment, which we think we're going to get with GEM and this neighborhood electric vehicle space, it's a good thing for the company.

    Source - What Polaris gets out of the Indian acquisition - Dealernews
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  2. #2
    Rusted princesirohi's Avatar
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    good news................

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