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Polaris Considers More Price Increases

Bernd Becker September 14, 2021 4 min read
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The company behind the Polaris 10 and Polaris 11 GPUs has announced that it will be increasing prices by 5% on April 1st. This is not a surprising move, as the company has been steadily raising prices since its inception in 2016.

As component shortages hurt the sports-vehicle maker’s retail sales, Polaris Inc.’s finance chief is considering more price hikes and new suppliers.

Chief Financial Officer Bob Mack said the Medina, Minn.-based maker of bikes, boats, and utility terrain vehicles increased prices by an average of 2.5 percent across its portfolio in May and may boost them again if necessary.

Polaris, like other sports-vehicle manufacturers, has been dealing with shortages of critical components and commodities such as electronics, specialized plastics, and steel in recent months. It has also had to contend with rising transportation and raw material prices as the US economy struggles to recover from the impact of the coronavirus epidemic.

Consumers must now wait six to ten weeks for some Polaris cars, according to Chief Executive Michael Speetzen, who spoke on an earnings call Tuesday. Mr. Mack said this is up from four to eight weeks in the prior quarter.


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When compared to the same quarter last year, the company’s cost of sales increased by 32.8 percent to $1.57 billion. Polaris refused to give an estimate of its inflation-related expenses, but said that they are substantial.

“We’re spending a lot of effort monitoring all of these expenses to make sure they don’t become baked into the long-term run rate as the climate normalizes,” Mr. Mack said.

The business is now determining how much to charge for its goods, including new ones that will be released in the second part of the year. Surcharges for transportation and commodity expenses are also being considered.

Polaris claimed it has cut down on sales promotions in recent months but wouldn’t say how much less. Mr. Mack said the company has modified certain car gauges to work with chip sets that are more widely accessible than the ones it previously used.

Polaris’ chief financial officer, Bob Mack.

Thomas Strand/Thomas Strand/Thomas Strand/Thomas Strand/Th

Polaris sales increased by 3.6 percent to $7.03 billion in 2020, as customers spent more money on outdoor vehicles. However, supply-chain limitations have made it more difficult for the business to meet demand for its goods, which has remained robust in recent months, according to Mr. Mack. Retail sales in North America dropped by 28% in the third quarter, owing to a lack of product availability. The United States and Canada account for approximately 85% of overall income.

Mr. Mack, who joined the business in 2016, said he and Corporate Controller John Melsen talk to the company’s operations teams on a weekly basis about logistics and commodity prices.

Every week, Polaris officials evaluate the production of its facilities in the United States, Mexico, France, and China, he added. Mr. Mack stated that although the business is producing more this year than the previous two years, it is unable to produce as much as it would want owing to component shortages. In late 2022 or early 2023, Polaris anticipates inventories of its leisure sports cars to return to normal.

When compared to the same time the previous year, Polaris’ revenues increased by 40% to $2.12 billion. The business had a net profit of $158.4 million, compared to a net loss of $235.4 million, which was mostly attributable to an impairment charge taken during the pandemic.

The United States’ inflation rate recently hit a 13-year high, sparking speculation over whether the nation is approaching an inflationary era akin to the 1970s. Jon Hilsenrath of the Wall Street Journal examines what customers may anticipate next.

Polaris’ recent price hikes are helping to offset increased expenses, but they may not be enough for the remainder of the year, according to Jaime Katz, a stock analyst at Morningstar Research Services LLC. More aggressive price increases, on the other hand, may alienate customers and harm sales, according to Ms. Katz.

Polaris has also added new suppliers to its network and made one-time purchases for specialized resins and chips in recent weeks, according to Mr. Mack.

According to Mr. Mack, the business sources from all around the globe, including the United States, China, Southeast Asia, India, Latin America, and Europe. Polaris wouldn’t disclose how many vendors it works with.

He added, “We’re doing all we can to produce as many units as we can because we know there’s a lot of demand out there.”

Mark Maurer can be reached at mark.maurer@wsj.com.

Dow Jones & Company, Inc. All Rights Reserved. Copyright 2021 Dow Jones & Company, Inc. 87990cbe856818d5eddac44c7b1cdeb8

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