Polaris, Victory and Indian grab the motorcycle spotlight

Polaris Industries, a company that has built the Victory Motorcycles brand one eye-catching model at a time has surprised the riding world by bringing the historically reverent pedigree of the Indian name into their line-up.

“Polaris closed the acquisition of the Indian Motorcycle Company, one of the most storied brands in heavyweight motorcycles,” Polaris CEO Scott Wine said on a conference call, “By uniting the Indian brand with the capabilities Polaris has developed in its 13 years with Victory, we are confident over time that we will accelerate the growth and profitability of both brands and our overall motorcycle business.”

Recently, Polaris led its Victory Motorcycle brand to the front of the American motorcycle manufacturing industry pack with its increased sales and more importantly, improved profits. Officials feel they can do the same for the sometimes struggling, but historic brand.

“A brief review of history will show that Indian built the first American motorcycle in 1901 and the world’s first V-Twin engine in 1907 and went on to become one of the great motorcycle companies in America in the first half of the 20th Century,” Wine confidently stated.

The announcement and excitement rode through the motorcycle world after an agreement was made between snowmobile and off-road vehicle manufacturer Polaris and the two U.K. investment firms that control Indian Motorcycle, Stellican Limited and Novator Partners LLP.

While no dollar figures were cited (‘Unless required to, we will never disclose what we paid for an acquisition’, Wine replied to the question of price) Polaris view the new acquisition as a fresh riding road for the American multi-vehicle manufacturer, noting it was “excited to be part of the revitalization of a quintessentially American brand.”

And it appears the company will have the cash to help the Indian brand ride out of any marketing storms. Yesterday Polaris reported its sales increased in the first quarter over the same time last year by 49%. Sales for the first quarter 2011 totaled $537.2 million compared to last year’s first quarter sales of $361.7 million.

“We are extremely pleased with our first quarter results, as the momentum we built throughout 2010 continued into 2011,” Wine stated while reporting the financial results, “Retail demand for Polaris products in North America remained strong throughout the first quarter and we continued to gain market share.”

Formed in 1901 in Springfield, Massachusetts by a group of bicycle enthusiasts, Indian Motorcycle Co. was actually the first of its kind in North America. Its brand is considered by many as iconic as Harley-Davidson’s.

Aside from its unique styling and reputation as an uphill racer the American manufacturer also pioneered a number of engineering firsts, including electric start and lights, swing-arm suspension, leak-proof engine cases and the first V-Twin motorcycle engine built in North America.

But the original company ceased production in 1953 and while the legendary name endured different attempts at a revival, it wasn’t until the present group of investors opened its factory doors in 2006 in the North Carolina town of Kings Mountain that the Indian brand really was ready for the open road again.

“We have no intentions of living in the past and fully recognize that the brand has had many ups and downs over the past 60 years but the heritage and style that Indian brings to Polaris significantly expands our target customer base,” explained Wine on the conference call discussing the acquisition.

While the amount Polaris paid for the Indian Brand may not be known, what they intend to do with it and who they plan to attract is no secret.

“As we look at the breakdown of motorcycle consumers, Victory has established a strong brand position with the performance enthusiast segment where customers are most interested in our modern styling, performance, quality and value of the bike,” Scott outlined, “With the Indian brand in our stable, we will gain access to what we call the “die-hard” segment where riders look for classic styling and iconic brand. This acquisition more than doubled the scope of our target market.”

It’s not just the name Polaris has purchased, but the entire Indian Motorcycles company including the engineers, production line and its people. It seems Polaris is aware of the dangers of the appearance of homogenization of the most recent incarnation of the Indian motorcycle.

This careful dance will be made with the harsh realities of manufacturing efficiencies and cost effective production lines motorcycle manufacturers have been working so hard to perfect over the last few years.

“It’s just not scaled there right now,” Wine observed about the Indian production facilities, “We’ve got very good assembly capability and capacity in Spirit Lake but it’s worth noting again that buying this iconic brand, we will be very disciplined to make sure that there’s a very distinct difference between any Indian bike we develop and any Victory bike that comes out of Spirit Lake.”

And just because you have the riding world’s attention, the change of ownership doesn’t necessarily mean they be jumping into the saddle of a new Indian motorcycle anytime soon.

“There’s a distinct difference between having access to and actually penetrating any segment of the highly competitive heavyweight motorcycle market,” Wine contemplated, “We made this investment to pursue the capabilities, including a world-class engineering team and a demonstrated ability to execute new product introduction that are strongly correlated to what the Indian brand needs for success.”

The feedback from Indian fans has been positive with the expectation of more dealerships featuring the famous motorcycle and a possible wider price range, making it more affordable to ride the classic brand. A possible hint of the range of models from the new owners of Indian came as Scott Wine outlined the short term future with the phrase ‘new heritage’ making its first (possibly official) appearance.

“Indian Motorcycle sales were approximately $11 million in 2010 and we project shipments will decline slightly before they accelerate with the re-launch of the new heritage bikes we develop” Wine said, “This business will be distributed to suppliers as we make these necessary but national investments, but we are confident that in time these investments will yield quite strong returns. We have a detailed plan and a strong team to accomplish the hard work ahead to make Indian Motorcycles the top contender and to continue its legacy.”

And as for dealerships, Polaris may take this opportunity to expand its own presence in the marketplace.

“We put a lot of thought and study into how this might work and our Victory dealer network has done a decent job of expanding over the last 18 months, but we’re still very much under-represented in the Top 100 markets in the United States,” Wine explained, “So we’re not going to try and push Indian into all our of our dealers but we are going to make a concerted effort to improve and leverage the Indian brand and the strength of those bikes with Victory to establish better representation in the top markets for motorcycles in the United States. I think over the next couple of years you’ll see that strategy play out.”

Although not discussed during the conversation about the acquisition, taking an American brand abroad must certainly be in the long term plans of the captains of the Indian brand. In the first quarter results for Polaris, the company’s international sales were up 21% compared to the same period last year and they celebrated the grand opening of its European headquarters in Switzerland during the quarter.

Speaking of international, the now-former owners of Indian Motorcycles are confident they are leaving the famous name in very good hands.

“We are delighted to have reached an agreement with Polaris,” said Stellican Chairman Stephen Julius in a statement, “Polaris will utilize its well-known strengths in engineering, manufacturing, and distribution to complete the mission we undertook upon re-launching the brand in 2006: harness the enormous potential of the Indian brand.”

“Polaris is the most logical owner of Indian Motorcycle. Indian’s heritage brand will allow Polaris to aggressively compete across an expanded spectrum of the motorcycle market,” Julius said.

Novator Partners LLP, Indian’s other former owner, is a London-based investment firm founded and led by the investor Thor Bjorgolfsson, an avid motorcycle enthusiast.

“After a troubled past, our goal was to bring the legendary Indian bikes back on the roads,” Bjorgolfsson said. “The initial phase of that project is done and now our great partners at Polaris will carry on the work to realize the full potential of this classic American brand.”