Polaris sales up as power sports vehicle industry suffers

It's been a lousy year for snow, and that's just one of the troubles plaguing companies that make snowmobiles and other power sports vehicles. But Minnesota-based Polaris has defied the downturn and expects sales to jump 30 percent this year.

In the past five to 10 years, sales of snowmobiles, motorcycles, ATVs and other off-road vehicles have dropped by more than half. The recession hammered Polaris as well, but the company kept spending on research to improve its products, especially their ride, handling, performance and reliability.

Polaris CEO Scott Wine said that has allowed the company to attract customers away from the competition.

The company reports sales increases in terms of dollars. It does not disclose the number of machines it sells. For the year, Polaris expects to rack up record sales of about $2.6 billion.

"Most of our gains as a corporation have been market share gains," Wine said. "We were able to offer better products as our competitors kind of took their foot off the gas."

Polaris is pulling ahead of its rivals because it has established a solid reputation for innovation, said Morningstar analyst Jamie Katz.

"They are bringing out products that people really want," she said. "They are adding bells and whistles that are fairly well demanded. People don't want last year's model."

Certainly, some people abhor ATVs and other off-road vehicles, denouncing them as noisy, dangerous and environmentally destructive. But millions of consumers love them.

Polaris has seen a nearly 40 percent jump so far this year in its sale of off-road vehicles.

Behind his Polaris dealership in East Bethel, Dan Richardson has a very bumpy test track where customers can try out different off-road vehicles. During a recent visit, Richardson was showing off a two-seater called the Ranger 800 XP.

"Any of this side-side stuff where you can ride next to another passenger and kind of hold a conversation, do things like that, right now are our most popular models," Richardson said.

This $13,000 machine can go 50 mph, but it has no doors or windshield. It is equipped with seatbelts and a roll bar to keep passengers from getting crushed if the machine flips.

These machines have historically been most popular with farmers and other large landowners, as well as hunters, fishermen and recreational riders.

Lately, the Pentagon also has become increasingly interested. Polaris recently landed a three-year $54 million contract to sell ATVs to the U.S. military and its allies.

Polaris is probably best known for snowmobiles, but Wine says ATVs and other off-road vehicles now account for most of the company's sales. Polaris is far bigger than its home state rival, Arctic Cat.

Polaris opened a manufacturing plant in Monterey, Mexico this year. But Wine said the company's employment in Minnesota, Iowa and Wisconsin is higher than it ever has been with about 3,100 employees.

Craig Kennison, a stock analyst with Robert W. Baird, expects the company's spending on innovation will continue to pay off, especially its recent acquisitions of electric vehicle companies. Since March 2009, the company's stock has increased about 800 percent.

"The future of Polaris will include many more electric vehicles, which is certainly where the planet is heading," Kennison said. "Hunters and the military, in particular, are very interested in what Polaris is doing with its electric vehicles, especially because they are quiet."

Whether the company is selling quiet or noisy machines, Wine said the company can double its sales by 2018. He sees an increasing share of its business coming from India, China and other overseas markets--far from Roseau, Minn. where the company produced its first snowmobile with a track made from a grain elevator conveyer belt and skis devised from pieces of a Chevrolet bumper.

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