Sales of the On-Road Vehicles division decreased 3% from Q1 2012 to $62.8 million. The On-Road Vehicles division manufactures Indian and Victory motorcycles. Polaris purchased Indian Motorcycles, the other American motorcycle company to survive the Great Depression, in 2011 and plans to launch a range of new Indian bike models later this year. Polaris created Victory Motorcycles in 1998 to compete directly with Harley-Davidson, Inc. (NYSE:HOG)’s heavyweight cruisers.
Overall, North American heavyweight cruiser and touring motorcycle retail sales decreased about 10% from Q1 2012 to Q1 2013. The Motorcycle Industry Council stated that the drop in sales was caused by unseasonably cold and rainy weather at the beginning of the riding season. Polaris’ subsidiary, Victory Motorcycles, also saw sales decline in Q1 2013. However, the decline wasn’t as significant as the industry’s because of Polaris’ continued efforts to gain market share.
Still the king
The fight to dethrone Harley-Davidson, Inc. (NYSE:HOG) is heating up quickly. In North America, Honda motorcycle sales increased 25% in 2013. And Polaris is introducing a new line of Indian bikes expected to take some share. But, it’s unlikely that the competition will overtake Harley as Harley continues to expand its brand community to new demographics, like Hispanics and women, and as sales of Harley-Davidson, Inc. (NYSE:HOG) bikes flourish in developing markets, like Brazil and India.
If you own shares of Harley-Davidson stock, stay the course. But here are two warning signs to watch for:
1). Eye the USD-JPY exchange rate, a strengthening dollar hurts Honda’s profits but helps Harley as it reduces Harley’s international import costs.
2). Watch Polaris to launch its new line of Indian bikes. Strong sales may indicate a revival for the second-oldest American motorcycle manufacturer and increase Polaris’ market share, at the expense of Harley.
At the end of the day, however, the HOG remains in first place in the US motorcycle market. Long live the king.
This article was written by Santiago Rodriguez and edited by Chris Marasco. Chris Marasco is Head Editor of ADifferentAngle. Neither has a position in any stocks mentioned. Marie Palumbo has no position in any stocks mentioned. The Motley Fool recommends Polaris Industries.
The article Can The King Remain Atop Its Throne? originally appeared on Fool.com and is written by Marie Palumbo.
Marie is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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