Seven months after the re-launch of the Indian brand and a few weeks after the introduction of a new 2015 Victory model (the Gunner), while in Daytona for Bike Week. I sat down with Steve Menneto for an interview. As a fast introduction, let me mention that Menetto is a former Polaris dealer who became 16 years ago Polaris director of sales, then taking responsibility for the Victory Motorcycles line up in 2009 and in April 2011 becoming the Vice President of Motorcycles for both Indian and Victory motorcycles. He is the man who convinced the board of Polaris that the acquisition of the Indian brand would help grow the company from a 3 billion to a 5 billion business. (photography @ H. Roesler & Polaris for Cyril Huze)
Cyril. Marketing 2 motorcycle brands requires a clear definition of what they should be as products, of how they should be perceived by the consumers and how they should evolve in the future to never interfere with each other but instead contribute both fully, if not equally, to Polaris growth. Please, tell me your strategy to have Indian and Victory play their own distinct market and be successful at it.
Steve. We have spent a lot of time and effort in this area. The purchase of the Indian Motorcycle brand actually frees up Victory to some degree. We believe we can be very successful with a two-brand strategy. Each brand has its own individual personalities, Indian more Premium and Heritage, Victory more Performance and Modern, and when you take the time to ask the riders, they have clear reason why they like either brand. Victory and Indian will continue to appeal to different segments of the market. We believe we have the perfect combination of brands to be very competitive.
Cyril. During the fourth quarter of 2013, Polaris saw motorcycle sales increase 94% year over year from $35.4 million to approximately $68.8 million. This huge increase was driven by your new line of Indian Chief bikes, not by Victory. Indian will always be a bigger brand than Victory now standing at about 5% market share in the heavyweight motorcycle market. How do you intend to accelerate the momentum for Victory motorcycles? With brand new models competing with both Harley and metric bikes? Privileging tourers versus cruisers? Showing innovation with a brand new performance powertrain? etc…
Steve. We do not speak about future products for obvious competitive reasons. The rapid growth of Indian Motorcycle is of course important to the parent company, so is maintaining strength of Victory. Incidentally, the Q4 market percentage does not tell the full story – in the segments that Victory competes – heavy weight cruisers, baggers and touring bikes – Victory is #2 in the market. We continue to work hard to create competitive and profitable brands for our dealers and exciting brands for our consumers.
Cyril. Since unveiled in my website, many times my readers have expressed a great interest for the Victory CORE concept motorcycle. Is Polaris still considering bringing this model to market? If not, why?
Steve. Sorry, again we do not talk about future products. CORE represented just some of the technology we have access to at Polaris Industries. The ID team wanted to build it as a styling exercise – the surprise was that it could, and does, run. CORE shows how we can create a complex casting that has multiple roles, frame air intake and body mounting – just as we do on Victory touring motorcycles, and in the new Indian Chief series.
Cyril. Polaris is competing against top hog Harley-Davidson for market share in the heavyweight motorcycles segment. In 2013 Harley-Davidson claimed a US market share of 56.5% in this segment. What percentage would you like Victory and Indian combined to represent at the end of 2014?
Steve. Again, we do not share detailed internal numbers by year – however we do see a long term opportunity for our two brands combined to achieve a 15-20% share position.
Cyril. As of today, how many Polaris dealers selling motorcycles are there in the US, in Europe, in Asia? How many sell only Victory motorcycles, only Indian motorcycles and both? Are you represented by some Harley dealers having decided to also sell the Indian brand? Total number of Indian dealers you would like set up at the end of the year 2014 in the US and abroad?
Steve. I can’t share our entire growth plan, however to give you a sense of momentum, last January we started with 13 dealers that carried over from King Mountain. We closed 2013 with roughly 140 Indian dealers in North America and 70 international dealers. Not all are open and retailing yet, some are finishing new buildings and others remodeling. We have over 600 Victory Dealers globally. Our goal is to grow our dealer base smartly and for the long term, we want dealers who are committed to our brands and to providing an outstanding customer experience.
Steve. We didn’t hear anything that really caught us by surprise because we had done so much voice of customer work prior to the launch. We certainly heard from customers what they like and what they may want to see different in terms of features, accessories, colors etc. Which our product team has been evaluating and adjusting our plan. Anything we bring to market, we will take the time to do it right, and we highest quality.
Cyril. The Indian’s launch has been a kind of Lovefest. But what surprised us the most, both media and bikers, was the unexpected launch of a hard bagger, the Indian Chieftain with its bold design and power windshield on a fork-mounted fairing. Since it’s the 1st bagger ever produced under the Indian name, was it internally a difficult decision to take since some could have argued that it didn’t belong to the Indian heritage?
Steve. Not really – after some discussion we knew that we needed to build a Chief Classic and a Chief Vintage. But being who we are, we push for the next level, and taking the opportunity to surprise the public and the media with a bagger was just a great opportunity to show that we are serious about the product range, and our commitment to making Indian Motorcycle a long term viable competitor, so the team pushed and created the Chieftain. The Chieftain has already won some shoot-outs, so it shows our capabilities, our depth of commitment, and where we are taking Indian Motorcycles in the future.
Cyril. Can you tell me what percentage of your Indian sales each Chief model – Classic, Vintage, Chieftain- represents. How many are produced every day in you manufacturing facility of Spirit Lake, Iowa?
Steve. We do not share sales and production numbers for competitive reasons. However, we have invested in our Spirit Lake facility to be able to handle future demand.
Cyril. Please, explain to my readers your “Retail Flow Management Program” (RFM). If I order an Indian Chief model not currently on the show floor of my Indian dealer, how long will I have to wait to get it delivered?
Steve. RFM is a sophisticated system integrated into what many know as a “just in time” delivery system. We will strive for both the flexibility and the speed to get our dealers the products they need as efficiently and as fast as possible to satisfy consumers.
Cyril. You have said several times that Polaris was open to the launch of many different platforms, V-Twin, Indian Four or others in different applications to occupy as many segments as possible of the motorcycle market. You justified the Chiefs as the 1s models sold by Polaris because they were expected to bring the largest number of sales. The Scout is the other iconic model of the Indian brand. So, I guess it’s in your future. Can it be a few months away?
Steve. Sorry, we cannot speak to future products. However, Indian is just getting started.
Cyril. At what date and where will you launch the 2015 Indian and Victory models? How many new models of each brand can we expect? Will you release a new motor? At least, give my readers a few hints…
Steve. The fact is that we are investing in product development for both brands. I’ll ask you to look back in history and chart our progress with the Victory brand. We will continue to bring products to market and deliver the quality, reliability and performance that customers expect from Polaris Industries. As far as launch plans, we have been pretty consistent with the Motorcycle industry timing.
Steve. Racing is an important part of our past, and may be part of our future. Presently, we will concentrate on making sure that we spend our resources on expanding our range to satisfy our customers and dealers. We do not want to get distracted now as we build a great foundation for the future. Maybe the earliest you could expect us is 3-5 years. Right now we are focused on building our Indian Motorcycle business and racing could be a big part of our future.
Cyril. Indian already brought new life to Polaris’ motorcycle operations and can potentially be a big and fast growing part of the company success. This last spring, potential buyers were primed by an extensive marketing blitz and a flurry of commendable, hard-won reviews. Your display at the International Speedway during Daytona Bike Week is close by the one of Harley-Davidson. Here, every day you see consumers making their motorcycle brand choice. How does it make you feel to be part of a company now considered a very serious Harley competitor?
Steve. Damn proud. We respect our competitors, We’re ready to work relentlessly to deliver the choice that many riders are looking for in an American Motorcycle.