The company will compete with Harley-Davidson, Inc. (NYSE:HOG) in this product segment. Harley-Davidson, Inc. (NYSE:HOG) dominates the U.S. heavyweight motorcycle market with 57% market share, while its other competitors have market share under 10% individually. Polaris Industries Inc. (NYSE:PII) is known for its snowmobiles and all-terrain vehicles, but with the re-launch of Indian motorcycle, the company is betting to gain market share in the heavyweight motorcycle segment. Due to Harley-Davidson, Inc. (NYSE:HOG)’s dominant market position and its strong brand affinity, it is expected that Indian motorcycles won’t take away from Harley-Davidson, Inc. (NYSE:HOG)’s market share. Moreover, the U.S. heavyweight motorcycle market is expected to increase from 293,000 units last year to 343,000 by 2017. With the expanding market, there is enough space for both the companies to grow.
Strong sales fosters the growth
Customers purchasing motorcycles from Harley-Davidson, Inc. (NYSE:HOG) tend to customize their purchase to achieve a unique look. The company’s parts and accessories segment caters to customers. In addition, these customers often purchase general merchandise, which includes motorcycle apparel, t-shirts, leather products, and toys. Sales of parts and accessories largely depend on the motorcycle sales and cross-selling. To increase the sales of Harley-Davidson motorcycles, the company is executing a strategy to transform its motorcycles from traditional to sporty.
The company generated 11.8% of total revenue last year from its operations in Europe. It will launch its VRSC line of cruiser motorcycles to attract the younger generation. VRSC bikes are trendy, sporty, and distinctly different from traditional Harley-Davidson bikes. These motorcycles will have the latest technology, including a water-cooled engine, which was designed with the help of Porsche. Due to this launch, the company’s market share in Europe is expected to increase from 15.9% last year to 16.2% in the current fiscal year.
Conclusion:
All three recreational manufacturing companies have the potential to grow in the future, due to strong sales, new technology, the latest acquisitions, and re-launching of product.
Harley-Davidson, Inc. (NYSE:HOG) will benefit due to surging demand for motorcycles, which will increase parts, accessories, and merchandise segment revenue. In addition, the launch of VRSC motorcycles will increase Harley’s market share in Europe. Meanwhile, Thor Industries, Inc. (NYSE:THO)’s rising sales of recreational vehicles, and its new plant will result in growing revenue. With the re-launching of the Indian motorcycle brand, Polaris Industries Inc. (NYSE:PII)’s revenue will increase by leaps and bounds. I recommend a buy for all three stocks.
The article Will the Stellar Performance of These Recreational Vehicle Companies Continue? originally appeared on Fool.com and is written by Madhukar Dubey.
Madhukar Dubey has no position in any stocks mentioned. The Motley Fool recommends Polaris Industries (NYSE:PII). Madhukar 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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