Although Indian Motorcycle's return to the flat-track racing circuit after a 60-year absence is causing a lot of excitement because it will once again pit the two dominant American-made motorcycle companies against each another, the bigger story may just be how fast Polaris Industries (NYSE:PII) was able to move from design to testing with its new purpose-built Scout FTR 750.
A few trips around the track
Founded in 1901, Indian Motorcycle was the first American motorcycle company, with Harley-Davidson (NYSE:HOG) coming along two years later. Both companies, though, have a storied history in both motorcycling and racing, and where Indian was the early track legend -- particularly with its famed Indian Wrecking Crew who rode their "Big Base" Scouts to victories in the years after World War II -- its troubled financial history ultimately led it to bow out of the circuit and the marketplace, leaving the field to Harley, which continues to dominate both the sport and the industry.
That's why Indian's return to racing is generating so many headlines. Think of the greatest sports matchups and rivalries in history: Ali-Frazier. Yankees-Red Sox. Army-Navy. Pitting Indian against Harley-Davidson on the racetrack is in the same league.
This is why Polaris Industries taking the new Scout FTR 750 from concept to racetrack in less than a year is pretty remarkable. It was last October that it made the first hints at a racing comeback, and last week unveiled the bike at the famed Buffalo Chip campground during the 76th annual Sturgis Motorcycle Rally. On hand were two of the surviving Indian Wrecking Crew members, Bobby Hill and Bill Tuman. When the wraps came off, the Scout featured Tuman's No. 51, honoring his being the last person to win the Grand National Championship on an Indian.
Built for speed
AMA Pro Racing approved Indian's race-only 750 twin engine earlier this year, the first new 750 engine approved for flat-track racing since the 1980s. Polaris assigned the task of building the engine to its elite swissauto division that it acquired in 2010 and which has a history of developing top-tier racing engines. On-track tests seem to confirm that swissauto and Polaris hit the mark dead-on with this bike.
Yet it's not so much the racing itself that is important, though it does bring back an air of excitement to an already exciting sport, but rather it's what it means for Polaris Industries.
Having resurrected the Indian nameplate out of bankruptcy three years ago, Polaris has marched the brand to progressively higher sales and has stolen significant swaths of market share from Harley-Davidson in the process. The moving back to the racing circuit is just the next step in its recovery and challenging the leader.
Fast off the line
And it could be one of the most important ones it takes. While getting back on the track alone won't sell many bikes -- the Scout FTR 750 is designed solely for racing and won't see any street time -- it is the introduction of the name to a generation that may be unfamiliar with the Indian brand and its racing history that could move more bikes off showroom floors.
Just as car manufacturers deliver millions of hardcore racing fans to their dealerships, Polaris can move more bikes as it takes on its rivals on the track. Even if flat-track racing isn't comparable to NASCAR, it still has legions of fans that could be induced to once again support the motorcycling legend.
There's a significant financial investment that goes into building a race-only bike and then supporting a racing team to ride it. What it gets back in the form of brand recognition from consumers is tough to measure but it can make the cash outlay worthwhile.
Ford (NYSE:F), for example, gets plenty out of its relationship with NASCAR. Its Partnership Recognition Program helped it sell more than 3,500 vehicles to NASCAR partners, co-marketed programs with MillerCoors, Goodyear, and SiriusXM that helped sell nearly 900 vehicles, and it executed deals that it says were worth more than $5 million. Getting back into AMA Pro Racing might not deliver the same returns for Polaris, but it could help incrementally move more bikes.
Still king of the road
Of course, Harley-Davidson isn't content to let its rival have all the attention. Earlier this year, it unveiled its own new flat-track race bike, the XG750R, its first new racing bike in 44 years. And as noted before, it still dominates both the industry and the sport. Yet just as Harley can no longer ignore the threat that Indian Motorcycle represents to its own bike sales, the racing legend's return to the flat-track racing circuit can't be dismissed, either. Not only will the bike makers and the industry benefit from this renewed, healthy rivalry, but the fans and consumers as well stand to gain.
Rich Duprey has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Ford and 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.