Polaris 2013 Annual Report Download - page 28

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gained popularity as a recreational vehicle. From the mid-1950’s through the late 1960’s, over 100 producers
entered the snowmobile market and snowmobile sales reached a peak of approximately 495,000 units in 1971.
The Polaris product survived the industry decline in which snowmobile sales fell to a low point of
approximately 87,000 units in 1983 and the number of snowmobile manufacturers serving the North American
market declined to four: Yamaha, BRP’s Ski-Doo product line, Arctic Cat and Polaris. These four
manufacturers also sell snowmobiles in certain overseas markets where the climate is conducive to snowmobile
riding. From 1984 to 1997 the industry grew to approximately 260,000 units before gradually declining through
the 2012 season. We estimate that during the season ended March 31, 2013, industry sales of snowmobiles on
a worldwide basis are estimated at 136,000 units, up approximately four percent from the previous season.
Motorcycles. Polaris’ Motorcycles division consists of Victory↧ and Indian↧ motorcycles. Heavyweight
motorcycles are utilized as a mode of transportation as well as for recreational purposes. The industry is
comprised of four segments: cruisers, touring, sport bikes and standard motorcycles. We entered the
heavyweight motorcycle market in 1998 with an initial Victory product in the cruiser segment. We entered the
touring segment in 2000. In 2011, we purchased the Indian Motorcycle brand to complement our Victory
brand of motorcycles. In 2013, we re-launched the Indian brand by releasing the first three Indian motorcycle
models engineered by Polaris. The North America industry retail cruiser sales more than doubled from 1996
to 2006; however, the motorcycle industry declined in 2007 through 2010 due to weak overall economic
conditions. The motorcycle industry has rebounded with growth beginning in 2011. We estimate that the
combined 1,400 cc and above cruiser and touring market segments increased six percent in 2013 compared to
2012 levels with an estimated 184,000 heavyweight cruiser and touring motorcycles sold in the North American
market. Other major heavyweight cruiser and touring motorcycle manufacturers include BMW of North
America, LLC (‘‘BMW’’), Triumph Motorcycles Ltd., Harley-Davidson, Inc., Honda, Yamaha, Kawasaki and
Suzuki.
Small Vehicles. We introduced our initial SV product, the Polaris Breeze↧, in 2009, which was an electric
powered vehicle primarily used in master planned communities in the Sunbelt region of the United States. In
2011, we ceased production of the Breeze line of products and made two SV acquisitions, Global Electric
Motorcars LLC (GEM) and Goupil Industries S.A. (‘‘Goupil’’). We expanded our SV portfolio in 2013 by
acquiring A.M. Holding S.A.S., which operates under the name Aixam Mega S.A.S. (Aixam). Through these
acquisitions, we now offer products in the light-duty hauling, people mover and urban/suburban commuting
sub-sectors of the small vehicles industry. We estimate the worldwide target market for small vehicles at
approximately $4.0 billion in 2013, which includes master planned communities and golf courses, light duty
hauling, people movers, urban/suburban commuting and related quadricycles. Other major small vehicle
manufacturers include Textron Inc.’s ‘‘E-Z-GO,’’ Ingersoll-Rand Plc.’s ‘‘Club Car,’’ Yamaha and DrivePlanet’s
‘‘Ligier.’’
Products
Off-Road Vehicles. We entered the ORV market in 1985 with an ATV. We currently produce four-wheel ATVs,
which provide more stability for the rider than earlier three-wheel versions. In 2000, we introduced our first
youth ATV models. In 1998, we introduced the Polaris RANGER, a six-wheeled off-road side-by-side utility
vehicle and in 2000, we introduced a four-wheeled version of the RANGER utility vehicle. In 2004, we
introduced a military version ATV and side-by-side vehicles with features specifically designed for ultra-light
tactical military applications. In 2007, we introduced our first recreational side-by-side vehicle, the RZR↧, and
our first six-passenger side-by-side vehicle, the RANGER Crew↧. Our standard line of military and government
vehicles for 2014 consists of 7 models at suggested United States retail prices ranging from approximately
$7,000 to $55,000. Our full line of ORVs beyond military vehicles consists of approximately 40 models,
including two-, four- and six-wheel drive general purpose, commercial, recreational and side-by-side models,
with 2014 model year suggested United States retail prices ranging from approximately $2,100 to $22,000.
Most of our ORVs feature the totally automatic Polaris variable transmission, which requires no manual
shifting, and several have a MacPherson↧ strut front suspension, which enhances control and stability. Our
‘‘on demand’’ all-wheel drive provides industry leading traction performance and ride quality due to its
4