Please ensure Javascript is enabled for purposes of website accessibility

Is This Polaris' Last Chance for the Slingshot 3-Wheeler?

By Rich Duprey - Jan 19, 2020 at 9:15AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

If the new updated design doesn't get sales growing again, there may be no saving the three-wheeler.

This could be the end of the road for the Slingshot motorcycle from Polaris (PII 4.79%). The powersports vehicle maker is introducing its new 2020 model of the three-wheeler, which features a new automatic transmission.

After years of Slingshot's falling sales, and CEO Scott Wine saying his patience is wearing thin with the decline, this new version could be Polaris' last go of it with the trike. 

Two Polaris Slingshot three-wheel motorcycles

Image source: Polaris Industries.

Waiting for sales to boomerang

Maybe the lack of an automatic transmission is what's been holding the Slingshot back. After launching the three-wheeler to generally positive reviews in 2014, the powersports vehicle manufacturer has suffered through several product recalls and quarter after quarter of declining sales. 

Although Polaris doesn't break out sales numbers for its different vehicles, it did say that third-quarter motorcycle segment sales, which includes both the Slingshot and Indian Motorcycle, had fallen by double-digit percentages.

At the same time, rival BRP (DOOO 0.37%) has enjoyed sales growth of around 30% for the past few quarters for its year-round products, which it attributes not only to growth in side-by-side vehicles and ATVs, but also the introduction of its new Can-Am Ryker three-wheeler.

Aimed at the same younger demographic Polaris is going after with the Slingshot, BRP's Ryker, which also features an automatic transmission, has been able to hit the ground running.

A bigger reason for downshifting sales

There's something to be said for making it easier for people to drive and ride your vehicles. It's estimated only a shockingly low 18% of Americans know how to drive a stick shift, so with an admittedly niche product like the three-wheeled Slingshot, Polaris was already unwittingly eliminating a huge segment of consumers who might be interested in buying one.

But Polaris might have a bigger problem than just whether its Batmobile-like motorcycle comes with a manual or automatic transmission. The larger issue may be price.

The Slingshot has a base price of $21,000, making it a high hurdle to jump over, but that's for the manual transmission. The new AutoDrive model will start at $26,500 and top out at almost $33,000.

In comparison, the new Ryker starts at just $8,500, a much more accessible figure, particularly if you're targeting millennials as both companies are. 

Premium prestige comes at a cost

In that regard, Polaris is acting like Harley-Davidson (HOG 4.92%), which despite seeing sales of its motorcycles collapse over the past five years, refuses to discount its premium-priced bikes. While there's something to be said for Polaris preserving the prestige of the brand and protecting profit margins, it's also leading to a protracted decline that a new electric motorcycle -- priced at just under $30,000 -- won't help it escape.

But Harley has an advantage unavailable to Polaris in three-wheelers or motorcycles generally. The big bike maker still owns nearly half of the heavyweight motorcycle market, and though Polaris has gained a lot of market share over the years after it resurrected the Indian nameplate out of bankruptcy, it's still a distant second.

In the trike market, though, BRP's Can-Am Spyder has long been the leader, and with the F3 starting at $16,000, even the original is cheaper than the Slingshot. BRP's five-year plan for the company includes growing the Can-Am business to $5 billion in sales, an 80% increase, though it still needs to prove the Ryker has staying power and wasn't just capturing pent-up demand for a low-priced Spyder.

Big wheels in motion

That is why Polaris' difficulty is more than just whether someone needs assistance to shift gears. Fortunately, the Slingshot business is not particularly material to the powersports vehicle maker's overall business.

Motorcycle segment sales represent less than 10% of Polaris' revenue, and most of that comes from Indian Motorcycle. It's not so much that Slingshot is a vanity project, but even if Wine does decide to end the three-wheeled experiment, it's not going to impede the overall trajectory of the company, since the majority of its sales, or 60%, come from off-road vehicles and snowmobiles.

Still, it diverts attention and resources away from more important matters. An automatic transmission Slingshot may boost revenue a little, but it seems doubtful it will matter regardless of which way its sales head.

 

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Polaris Industries Inc. Stock Quote
Polaris Industries Inc.
PII
$111.88 (4.79%) $5.11
Harley-Davidson, Inc. Stock Quote
Harley-Davidson, Inc.
HOG
$38.41 (4.92%) $1.80
BRP Inc. Stock Quote
BRP Inc.
DOOO
$79.18 (0.37%) $0.29

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
338%
 
S&P 500 Returns
119%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/18/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.