Harley-Davidson (NYSE:HOG) may be suffering from slowing sales, but there's one place it hasn't lost its touch: the flat track race. For the past six years Harley has dominated the circuit against rivals from Ducati to Kawasaki, and after recently unveiling its new XG750R, a bike geared solely for the track, it's indicating it plans on continuing that tradition.
Putting its reputation on the line
Yet as it has been doing successfully on so many fronts the past few years, Indian Motorcycle will be challenging Harley's preeminent position on the flat track course, announcing a return to racing after a 60-year absence. Where once it was a dominant force itself, most notably with the Indian Wrecking Crew, a group of top racers in the late 1940s and early '50s, it disappeared from the scene as financial troubles overtook the company and the motorcycle company folded, one of many times that would happen.
But now its new owner, Polaris Industries (NYSE:PII)says there will be an Indian Racting Team once more, and it will have its own purpose-built bike. Apparently what Indian is doing to Harley on the sales floor it intends on doing on the racetrack too.
Yet in racing, as in other sports, talk is cheap so it will still need to prove itself. While the details of what Polaris intends remain sketchy, it does say the racing team's reemergence from the dustbin of history will be built on an all-new, proprietary, liquid-cooled 750 cc four-valve V-Twin engine, similar to what's powering its Indian Scout model, but specifically designed for the pro flat track and engineered into a specially built chassis.
Indian is smoking its tires
Although Harley-Davidson still owns half the big-bike market, it has seen its share slip in recent years while Polaris has helped Indian catapult itself into second place. Even so, it still trails Harley by a wide margin, with analysts estimating Indian's share at about 5%.
Once upon a time you had to wait weeks if not months to buy a new Harley because they were in such demand, and a used bike could sell for just as much as a new one. Harley-Davidson kicked its production into high gear to meet that demand and shipped almost 350,000 motorcycles worldwide in 2006, just before the recession hit in earnest. These days it's struggling to ship 270,000 bikes, and it's using dubious methods to get there.
Polaris, on the other hand, continues to enjoy double-digit sales growth. Last year sales grew 67% and even in the typically slow first quarter sales were up 18%. Harley, meanwhile, saw global sales barely inch 1.4% higher, while they were down 0.5% in the U.S.
Of course, Indian is starting from a much smaller base so its gains are seen as that much more dramatic, but it's clear Polaris is doing all the right things to make sure Indian is a financial success. Largely that's been accomplished, in part, by challenging Harley-Davidson all across the board.
On the warpath
While the first bike it introduced after resurrecting the nameplate was of necessity the Indian Chief Classic -- it went back to its roots to show the foundation upon which the motorcycle company was built -- it has since sought out all the popular lines and price points on which Harley-Davidson excels. There was the Indian Roadmaster, to take on its rival's cruisers, the most popular class of bikes; the Scout, which like Harley's Street 500 and 750, is geared toward new riders; and then it doubled down on the segment with an even lower-priced Scout Sixty.
Now it's taking on Harley in the prestige racing circuit. To show it's serious, Polaris will have multi-time AMA Grand National Champion Jared Mees serve as a test rider this year, piloting the bike in a number of races with full competition beginning in 2017.
Like the rivalry that exists between the motorcycle companies for the hearts of riders looking for street bikes, Indian's return to the racetrack promises to stoke the fires of competition between it and Harley-Davidson that used to kick up dirt so many years ago.
Rich Duprey has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Polaris Industries. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.