Robert Mack: And Fred, the last point I’d make is from a sales standpoint because, again, it doesn’t show up in the retail is our PG&A business typically as the market starts to slow, if people aren’t buying new vehicles, they certainly are repairing and upgrading their vehicles. So we know that, that PG&A business is going to resilient in offsetting. So I think in the past, we’ve talked about the retail-driven portion of our revenue is probably in the 40% to 50%. So there’s a number of other factors that play out in terms of PG&A, the commercial, the government as well as international growth and revenue performance that are going to influence those numbers just outside of North American retail.
Operator: The next question comes from Joe Altobello with Raymond James.
Joseph Altobello: I guess first question on margins. What’s the margin drag that you guys are assuming from increased promo activity in ’23. Does pricing offset that dollar for dollar? Or is it margin neutral?
Robert Mack: So in — if you look at ’23 versus ’22, the pricing — the carryover pricing from ’22 into ’23 really carries through the first half, and that will largely offset the increased promo for the year. The other — but the other piece of that drag is dealer finance with floor plans with dealer inventory being up, floor plan rates being up, the floor plan finance cost for us is a drag. So — but promo itself is mostly offset by the carryover of the price.
Michael Speetzen: And Joe, just keep in mind that when we talk about the finance promo, the way Bob has got this structure with our financial partners, we end up pulling back some of that income below the line. So some of that GP margin headwind gets offset much lower in the financial statements.
Joseph Altobello: Okay. But — could you guys quantify the expected headwind? Is it 100 basis points?
Michael Speetzen: No, it’s less than that.
Joseph Altobello: Okay. And then, I guess, second, sort of big picture, could you tell us what the industry was down in ’22? And maybe why that would get better in a tougher economy in ’23?
Michael Speetzen: Well, you have to remember, we’re such a large portion of the industry. And when you have a combination of us on a — especially as we get towards the end of the year, pretty substantial stop sale for our REC business. And then struggling to get the product out for the utility business, that puts a fair amount of pressure on the industry. And as we look into 2023. And as I mentioned earlier, you get a combination of us getting back on pace with Ranger, knowing that the utility segment, at least for the past couple of quarters, has shown resilient demand and we anticipate that to continue for the factors that we outlined earlier and the new products that are going to come into the market, those are going to be enough, at least from a Polaris perspective to obviously drive retail that, as we said, could be flat to up, and that should create more stability in the industry.
What I’ll tell you is, even with that expectation around retail, we’re still down below where we were in 2019, both Polaris as well as the industry. So it’s — I would characterize it more as a stabilization coming off of 2020 when we saw outsized demand and then really continued challenges in ’21 and ’22 as an industry, we were struggling. And obviously, we were disproportionately impacted by the supply chain challenges, and we see that stabilizing as we get into to 2023. And even with a choppy macro, we think the opportunity is specific to Polaris relative to the utility segment, RANGER inventory levels as well as the new products coming on seen that gives us the opportunity for some growth.
Operator: The next question comes from Robin Farley with UBS.
