On a roll after recording a record profit of $147.1 million in 2010, Polaris Industries (parent of Victory Motorcycles, etc.) continues full-speed ahead with the acquisition of Indian Motorcycle, the U.S.’s oldest purveyor of motorcycles (off and on) since 1901.
Said Stellican’s Stephen Julius, “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: to 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.”
Polaris CEO Scott Wine waxed equally upbeat: “We are excited to be part of the revitalization of a quintessentially American brand. Indian built America’s first motorcycle. With our technology and vision, we are confident we will deliver the classic Indian motorcycle, enhanced by the quality and performance for which Polaris and Victory are known.”
Polaris reported sales of $1.9 billion in 2010, on sales of Victory motorcycles, off-road vehicles and ATVs such as the Ranger side-by-side, snowmobiles, etc. A week after the Indian deal, Polaris announced an agreement to acquire Global Electric Motorcars LLC (GEM), a wholly owned subsidiary of Chrysler Group LLC and manufacturer of premium electric-powered vehicles.
Tracked down via telephone, Victory VP (and 1971 500cc MX champ, etc.) Mark Blackwell expanded: “The Indian acquisition was a thing we’ve considered for some time, even as far back as the Gilroy days, then more seriously in the last two years or so. We’re very committed to finding opportunities to strengthen the company, to grow it faster. In the last few years you’ve seen us acquire Swissauto, almost acquire KTM, GEM, our alliance with Bobcat… we’ve looked at over 100 companies in the last five years.”
Right now, says Blackwell, everybody—including 95 percent of the public he’s heard from—is convinced that acquiring Indian was a great strategic move. Now comes the hard part: Determining how to combine Victory and Indian. What things can be shared, what things can’t be. One thing that does seem certain is that Victory and Indian will remain two distinct brands.
“For sure, we know we can’t put an Indian badge on a Victory,” emphasizes Blackwell. “Our customers are much more savvy than that, much more discriminating. What we’re looking for are two brands that complement each other.”
What Indian brings to the deal is mostly its name and its history as the oldest motorcycle brand in the U.S. “Our research,” says Blackwell, “in spite of all the changes Indian’s been through, says that name is still very strong, very highly regarded. In fact, it’s kind of amazing how strong the brand is. I mean, as Victory, we’ve worked hard for 12 years in this highly competitive business, we’ve learned firsthand how hard it is to build a brand. And we’ve done a lot right, yet every day we’re reminded how hard it is to build a brand. Acquiring Indian is a nice opportunity to start out with a strong brand. We’re excited; now the hard work begins.”
What Polaris brings is greater manufacturing capability, a robust supply base and much cheaper engineering capabilities. In fact, says Blackwell, one of the main factors that will sink or swim Indian is cost: Though Indian may wind up remaining a premium brand, Polaris knows it needs to bring prices way down to where the bikes will be much more affordable. Part of that will be relocating Indian manufacturing from North Carolina to Victory’s plant in Spirit Lake, Iowa.
Meanwhile, a team of engineers and designers are hard at work at Polaris deciding just what the next Indian will be. “Is it a big V-Twin or could it be something else?” asks Blackwell. “We know as a company we need a broader line going forward, maybe smaller bikes for younger customers. How should we stretch Indian? Should it be stretched at all or just stay big V-Twins? That’s all still to be addressed. One thing we’re not going to do is rush this, we’re going to do it right.”
As for timeline, Blackwell says there isn’t one yet. Stay tuned.