New Polaris vehicle drops cost of going off-road

Polaris Industries on Wednesday unveiled a new side-by-side, four-wheel vehicle that executives hope will appeal to price-conscious consumers. Price tag: $7,999.

For off-road aficionados, that's an eye-catching price. The least expensive Ranger side-by-side that Polaris offered for the 2009 model year was $9,699.

Polaris is attempting to build sales during the recession by enticing power-sports consumers with values.

"We understand our customers are under tremendous pressure," Polaris President Bennett Morgan said during an analyst meeting at the St. Paul Hotel. "Their purchasing power has been eroded" and their confidence weakened.

The full force of the recession hit Medina-based Polaris last November. Last week, the company reported a second-quarter revenue decline of 24 percent, and Polaris estimates its sales will be down 20 to 25 percent for all of 2009.

But on Wednesday, executives focused on the potential of new products and new markets to help the company ride out the recession and build market share. Off-road vehicles comprised two-thirds of Polaris sales in 2008, when the company generated $1.3 billion in revenue from its side-by-sides and all-terrain vehicles.

The new side-by-side priced at $7,999 is called the Ranger 400, and the 2010 models will start shipping in August. It's a smaller version of the Ranger 500, offered at a list price about 18 percent lower than the 2010 version of the 500.

Polaris holds the No. 1 market share position in off-road vehicles, ahead of Honda and Yamaha.

Wine rode the new Ranger 400 Tuesday at the Polaris research and development facility in Wyoming, Minn., and the company is letting analysts take test runs on Polaris vehicles today.

Wine stressed that across its entire line, Polaris is focused on delivering "premium products to the value market."

Dealers get a look

About 700 Polaris dealers also gathered in St. Paul Wednesday to get a look at the new products. Polaris, which got its start as a snowmobile manufacturer, has struggled to sell Victory motorcycles. But Wine said the company is launching two new bikes in the touring sector that should open the field to more Polaris customers.

But Wine told analysts: "Growing in power sports is not enough."

Polaris is jointly producing new vehicles with Bobcat for commercial use, and it is focused on building its military business. Already, it is supplying all-terrain vehicles and side-by-sides for U.S. forces. But Matt Homan, Polaris vice president, said there are more sales opportunities with the U.S. military and its allies in Europe and the Middle East. He also said that Polaris can expand by selling to other federal customers, such as the Border Patrol, the Fish and Wildlife Service and Bureau of Land Management.

While Polaris has room to grow through sales of its core products, Wine said, "part of that [growth] is going to be acquisitions." Wine said he and the board will be looking at opportunities that will take Polaris beyond its power sports niche, but he added they would look for a deal that "adds incremental value" to the company's profitability rather than simply making the company larger.

Wednesday's briefing also gave analysts a window into the Polaris customer base. The profile of an average ATV customer is a 38-year-old man who makes $60,000 a year. The top use of ATVs is riding trails, followed by agriculture uses and hunting.

The side-by-side buyer is older and more affluent, with the typical customer a 48-year-old man who earns about $80,000 and wants to use the vehicle for hauling things on a multi-acre home site.