BRP Inc. continues to face increasing pressure as shifting trade policies under Trump’s administration target its key manufacturing operations in Mexico and Austria. Vulnerable to proposed tariffs, the company faces uncertainty across both fronts: slowed market for recreational products and growth outlook.
BRP Inc. is a world leader in design, development, manufacture, distribution, and marketing of recreational vehicles and propulsion systems. Based in Valcourt, Quebec, Canada, BRP is known for its portfolio of iconic brands Ski-Doo, Sea-Doo, Can-Am, and Rotax. Through innovation and customer experience, the company enhances its products as an obligation to meet the requirements of outdoor enthusiasts.
BRP’s principal products are snowmobiles (Ski-Doo and Lynx), personal watercraft (Sea-Doo), all-terrain vehicles (Can-Am), and marine propulsion systems (Rotax). In addition to its hardware products, the company manufactures related parts, accessories, and apparel. Sales revenues are derived primarily from the sale of recreational products and related accessories.
BRP serves a diversified client base that includes individual customers looking for recreational vehicles for outdoor activities. The end markets include outdoor enthusiasts in different classes, such as winter sports, water sports, and off-road adventures. With its strong presence in over 130 countries, BRP’s goal is to engage customers in the most exciting possible experiences through its innovative product offerings.
Despite all the positives, BRP may be in for a bumpy ride ahead. A significant proportion of its manufacturing takes place in Juarez, Mexico, where it makes many of its best-selling side-by-side ATVs. While this setup was a lifesaver during the COVID-19 demand surge, it’s now a potential weak spot. With Trump winning the election race, promising steep tariffs on Mexican imports (think as high as 200%), BRP’s reliance on these facilities could become a costly matter of course. Given that 60% of the firm’s revenue is derived from U.S. sales, these tariffs could hit hard.
It’s not just Mexico, BRP’s Austria-made snowmobiles could suffer from Trump’s sweeping trade plans as well. While marine products are U.S.-made, its revenue drivers rely heavily on imports. The recreational market is already cooling down and the new tariffs could add the final nail in the coffin. BRP has faced challenges before like the factory fires during the pandemic. This time, however, the stakes are much higher.
I hold a bearish outlook on BRP Inc. as the company’s reliance on offshore manufacturing puts it at the mercy of policy changes, and with trade frictions rising, the potential downsides outweigh the upsides.
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Disclosure: None. This article was originally published at Insider Monkey.
