Mike Speetzen : Well, our inventory right now is down 10%. And the point I was trying to make when I answered the earlier question is, if we anticipate by the end of the year will be either be down slightly versus ‘19 or flat. The thing to keep in mind is we now have XPEDITION and XD shipping into the market. So if you were to adjust for those items, our inventory is definitely down versus ‘19 as we come out of the year. Which is consistent with what we’re seeing around retail performance more broadly.
Operator: The next question is from Dave MacGregor with Longbow Research.
Dave MacGregor: Yes. Good morning, Mike. And congratulations on the progress on the On Road. It’s encouraging. I wanted to ask you about the promotional programs you’re seeing in the marketplace right now. If you could elaborate a little bit further, a little more detail around what you’re seeing, and the competitive behaviors and also are consumers responding to the promotions or is that maybe not so much the case right now?
Mike Speetzen : Yes. I mean, the promotional environment certainly has ticked up. We look at it on a number of different measures and overall as a percentage of revenue, it’s still down about 25% from where it was in 2019. And we’ve gotten much more specific around what we’re doing in terms of tailored promotions directed at specific consumers, as well as the interest rate buydowns. I think on the targeted offers, we see those picking up traction. The interest rate buydowns certainly have garnered a lot of interest, but as Bob mentioned, the banks have tight lending standards and certainly that’s creating some pressure. Obviously, it’s no secret to this community that credit card debt is peaked and anybody taking on a new mortgage is obviously dealing with higher interest rates.
So the banks are getting more particular about installment debt and overall debt loads, and that certainly is preventing some consumers from getting finance. But overall, we feel like we’re putting them into the right spots, still more efficient than what we have been historically. But ultimately, it’s tough to get consumers off the sidelines if they’re worried about much larger issues and we’re not going to get into throwing just huge gobs of money into the marketplace. We’re going to continue to be very targeted in how we drive consumers into the dealer and have it been a high quality lead that the dealer can convert.
Dave MacGregor: Thanks for that. Just as a follow up, can you just talk about what you’re seeing in the used market right now and the extent to which that may be impacting your business?
Mike Speetzen : Yes. I mean, as we talked about, we launched Polaris Xchange. So we obviously have very good visibility into what’s going on. The used market has slowed. Used prices have come down. We see that directly through the vehicles we have coming out of Polaris Adventures and through the Xchange process, I would say it’s normalized relative to some of the very high percentage of MSRP, resell numbers that we saw back in 2021 and even into ‘22. And I would say it mimics more what we’re seeing in the broader new vehicle retail market. Things are just slower than they have been.
Operator: The next question is from Jaime Katz with Morningstar.
Jaime Katz: Hey, good morning. I was hoping you guys could articulate maybe what the differences you’re seeing between the Marine buyers and the traditional Powersports buyers are. I know you’ve spoken a bit about everybody shifting to this like premium purchasing that has been benefiting you in models. But I think in Marine, you’d mentioned that you’re doing some lower price point products. So I’m wondering if that’s a function of just the absolute price points of boats relative to ATVs or if there’s some wider adjustable market or some other thing that’s driving that decision.
Mike Speetzen : Yes, on the Marine side, Jamie, it’s really kind of two things. To your point, the absolute dollar value of the boats makes the — or exacerbates the interest rate problem. You’re looking at boats that average 60,000 to 75,000 and go up as high as 300,000. So that interest rate impact is a lot more. The tenure of the financing is a lot longer. So we think that the interest rates have had a bigger impact in marine. We still see tremendous interest at the high end of our portfolio. But the consumer, as we came through the pandemic, there really just were no kind of entry level boats of ours or even most of our competitors available. And coming out of that, with boat production returning to normal, dealer inventory starting to return to normal, we felt like it was a good time to reinvigorate the entry level of our Bennington line and give another option to try to bring kind of a different consumer into the space, just given the lack of availability of those products over the last two to three years.
So we think it’s good timing. We think it’ll be a positive for the Bennington brand and will help bring that new consumer in.
Bob Mack : And Jamie, the other thing I’d add is, remember, marine is probably more directly correlated to, say, our RZR business, where you’ve got primarily vehicles that are for people to go out and enjoy the outdoors. The utility portion of our business, even though we’re obviously a little bit more cautious than we had been, that does dampen volatility because these vehicles are being used, obviously, for far more than just people going out and enjoying the outdoors. They’re used to get work done. And so that certainly dampens some of what we see when we compare the two categories.
Jaime Katz: Okay. And then any update on the debt that’s about to mature in December?
Mike Speetzen : Yes, so we’re — we have a board meeting after this, the next few days and we’ll be discussing with the board what our options are and what path we want to take and we expect to get that executed. Certainly before the term of the 364 expires in mid-December.
Operator: The next question is from John Healy with Northcoast Research.
John Healy: Great. Thanks for to fit me in. I just wanted to ask a question about feedback from the dealer community largely on inventory levels. I know you mentioned that you’re 10% below today and ended a year, you’ll be comparable to 2019 levels. But are dealers wanting to be at 2019 levels and the thought process and some of the feedback we’ve gotten this morning is questions relating to with ASPs up relative to ‘19 and just the cost to carry that inventory, is ’19 the right way to think about where dealers want to be or should we be thinking about the right level of inventory for a dealer is maybe 80% or 90% of ‘19 levels. So just curious of what the feedback has been about where they would like to be themselves.
Mike Speetzen : Yes, I mean, we spend a lot of time working through that obviously and the tough part about talking about dealer inventory is we don’t do it justice by talking at a high level. We’re looking at this by region by model by sub market. And so we work through that with our dealers in terms of the way we set our profiles in terms of stocking levels. We are below 2019 and that’s on adjusted for the sales price dynamics basis. But the key differences we get to the end of the year is we do have two very new large platforms with XD and XPEDITION. And so when we look at the numbers excluding that, we are at a point where the dealers are below where they were in 2019. And we think and I think broadly they agree that we’re zeroing in on the right range.
