Polaris has been in a sort of quandry of late, as a multitude of factors have affected the brand's bottom line. Tariffs, rising consumer anxiety about the economy, the downward trend of pandemic-born spending, customers looking for cheaper options, and a myriad of other small variables have seen the Minnesota company's stock and revenue plummet in the last two years.
Those issues have caused a lot of strife, and bore witness to the brand cutting the Timbersled lineup, selling Indian Motorcycles to a private equity group last month, axing a few side-by-side models that weren't moving, and shifting financial guidance throughout the year. And while from the outside looking in over the last few months has been one seemingly of a slow-moving trainwreck, all the belt-tightening and upheaval might've just started paying off.
As in the brand's Q3 earnings report, sales are up 7%, and that was led by the company's off-road side-by-side market, with Polaris' more expensive units being the main drivers of that revenue increase. And that's super interesting given the state of the world and the economy.
Part of the brand's success in Q3 has been down to Polaris' Factory Authorized Clearance program, which as the name suggests, is a sales program that aims to move dealership inventory ahead of the next model year machines coming onto showroom floors in Q4. Polaris even calls it out in its investor presentation, saying its sales were "Aided by Polaris Factory Authorized Clearance program." But even so, Polaris moved a lot of its more expensive side-by-sides compared to its new, more inexpensive Ranger 500. Though, those moved a lot, too.
In the earnings call, Polaris CEO Mike Speetzen, stated, "Within our Off Road utility segment, our family of RANGER side-by-sides continue to grow and take share with the broadest offering of vehicles in the utility side-by-side category. From the all new Polaris RANGER 500 to the Extreme Duty Polaris RANGER 1500 XD, we've continued to create and redefine the category that remains unmatched by our competitors. Despite recent product launches from our competitors, the Polaris 1500 XD continues to be the highest performing utility side-by-side in the market. Why does this matter? Because our leadership and product allows us to take over 5 points of market share this quarter in the utility side-by-side segment, which is the largest category of vehicles in the ORV industry."
He added, "Remember, last quarter, when I talked about the Polaris XPEDITION and how this product has helped shape the largest share capture story in ORV over the past five years, well, we continue to write new chapters as we gained an estimated 10 points of share in the quarter within the crossover category. Again, despite recent product launches from our competitors, the Polaris XPEDITION continues to be the only product of its kind in the market."
Speetzen did, however, also call out the new Ranger 500 in that it allowed new customers, customers not already within the side-by-side realm, to come into the fold, saying, "To date, over 80% of the customers who bought the RANGER 500 were new to Polaris. This tells us that this is the right vehicle, at the right price to get customers into the dealership and into Polaris vehicle."
The executive also called out one of the pain points that many had pointed to for many dealerships over the last two years, and that was sitting inventory. Thanks to the clearance event, along with stronger-than-targeted sales, dealerships have more normal inventory and aren't just staring at dust collectors. And that'll be good with the MY26 machines likely hitting lots in the near future.
But it'll be interesting to watch to see how the current economy, and the start of snowmobile season, affect those numbers moving forward.
