Polaris Industries’ recall saga continued this month with the recall of 23,746 Indian Motorcycles because of possible fuel-leak problems that could lead to a fire.
It wraps up a year of continued recalls in the off-road market that have dogged the Medina-based company’s bottom line — with the latest coming as the company makes inroads in the highly competitive motorcycle market.
“This is a quality improvement [action] and not stemming from any accidents,” said Steve Menneto, president of the motorcycle division. The problem was found during an internal review of all product systems following problems that arose with its off-road four-wheel product line last year.
In a December notice to the National Highway Traffic Safety Administration (NHTSA), Polaris said it first observed a “fuel rail failure” during a warranty review of Indian bikes.
The worry is that the fuel rail — which is flexible — could reposition, contact other components, chafe and result in a fuel leak. “Leaking fuel in the presence of an ignition source could lead to fire,” the NHTSA notice said. About 1 percent of the nearly 24,000 Indian Motorcycles recalled are estimated to have the defective fuel rail. No injuries have been reported to date.
In its filing with the NHTSA, Polaris said its dealers will fix the problem for Indian motorcycle customers free of charge by installing a special bracket that will limit fuel rail movement. The company began notifying dealers and customers on Dec. 14, after the NHTSA signed off on its proposed repair plan.
With the new motorcycle recalls, some analysts wonder if the soaring demand for the bikes could peter out. Polaris’ stock closed at $81.37 a share onThursday. That’s down from $90.72 on Dec. 1, the day before Polaris first notified the NHTSA.
Dealers said the recall timing is good. It’s winter. Many motorcyclists already hung up their helmets for the season. Bringing bikes in for a repair now may not greatly inconvenience customers, several dealers said.
The bike recall “has not been a huge concern. It has not really been talked about,” said dealer Art Welch, who owns Indian Motorcycle of the Twin Cities in St. Paul. “Most of the people [affected] have put their bikes in storage. So they will either get their bikes fixed now or just bring them in the spring. It’s not anything that caused us to stop selling bikes.”
The motorcycle recall is the latest blow to the company, which spent much of the past two years recalling and fixing fire and safety hazards on more than 252,000 off-road, four-wheel recreational vehicles. About 160 fires and at least one death were reported in those vehicles.
Earlier this year, ATV recalls and repair delays upset Polaris customers and investors so much that they complained on social media and hacked down the company’s stock price by half.
This fall, Polaris issued a host of rebates, promotions and customer outreach designed to re-establish goodwill. The company said it planned to spend more than $120 million to research and fix the ATV issues.
Now the concern of a possible fire risk has spread to Polaris’ motorcycle line. This month’s recall strikes at the heart of what many analysts believed was Polaris’ best growth engine — Indian Motorcycles.
Polaris bought the iconic Indian Motorcycle brand from cash-strapped owners in 2011 and injected millions to relaunch new Indian models in 2013. Bike enthusiasts responded with gusto, catapulting the sales of Polaris’ motorcycle division. That surge occurred just as ATV and snowmobile sales plummeted amid an industry slow down.
For the first nine months of this year, Polaris ATV and snowmobile sales fell 14 percent, while motorcycle sales rose 13 percent to $603 million (after rising 67 percent in 2015). With that growth, motorcycle sales now contribute 15 percent of the Polaris’ $4.7 billion in annual revenue.