Polaris 2015 Annual Report Download - page 28

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Snowmobiles. In the early 1950’s, a predecessor to Polaris produced a ‘‘gas powered sled,’’ which became the
forerunner of the Polaris snowmobile. Snowmobiles have been manufactured under the Polaris name since
1954. Originally conceived as a utility vehicle for northern, rural environments, over time the snowmobile
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 worldwide industry grew to approximately 260,000 units before gradually
declining through the 2012 season, but grew again in 2013 and 2014. We estimate that during the season
ended March 31, 2015, world-wide industry sales of snowmobiles decreased four percent from the previous
season levels with an estimated 151,000 units sold worldwide.
Motorcycles. Polaris’ Motorcycles segment consists of Victory↧, Indian Motorcycle↧, and the moto-roadster,
Slingshot↧. Heavyweight and mid-size 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. In 2014, we entered the mid-size motorcycle
market with the launch of Scout, and also introduced the Company’s first moto-roadster motorcycle, Slingshot.
The North America heavyweight industry retail cruiser and touring 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 to 2014, but slightly
declined in 2015. We estimate that the combined 900cc and above cruiser and touring market segments
(including Slingshot) increased low-single digits percent in 2015 compared to 2014 levels with an estimated
243,000 heavyweight cruiser, touring, and mid-size 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, Suzuki and BRP. We
estimate that during 2015, worldwide combined 900cc and above cruiser and touring market segments
(including Slingshot) sales were approximately flat with 2014 levels, with an estimated 344,000 units sold
worldwide.
Global Adjacent Markets. We introduced our initial Global Adjacent Markets vehicles with the 2011
acquisitions of Global Electric Motorcars LLC (‘‘GEM’’) and Goupil Industries S.A. (‘‘Goupil’’). We expanded
our portfolio in 2013 by acquiring A.M. Holding S.A.S., which operates under the name Aixam Mega S.A.S.
(‘‘Aixam’’). Aixam is based in France and manufactures and sells enclosed on-road quadricycles and light duty
commercial vehicles. Through these acquisitions, we now offer products in the light-duty hauling, people
mover and urban/suburban commuting sub-sectors of the Work and Transportation industry. We estimate the
worldwide target market for Work and Transportation vehicles at approximately $4.0 billion in 2015, which
includes master planned communities and golf courses, light duty hauling, people movers, urban/suburban
commuting and related quadricycles. Other major Work and Transportation manufacturers include
Textron Inc.’s ‘‘E-Z-GO,’’ Ingersoll-Rand Plc.’s ‘‘Club Car,’’ Yamaha and DrivePlanet’s ‘‘Ligier.’’ Our Polaris
Defense business provides ultra-light tactical vehicles designed for defense forces around the world.
Products
Off-Road Vehicles. 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
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 2007, we introduced our first recreational side-by-side vehicle, the RZR, and
our first six-passenger side-by-side vehicle, the RANGER Crew↧. In 2014, we introduced the single-seat,
Polaris ACE off-road vehicle. Our full line of ORVs (excluding military vehicles) consists of 55 models,
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