PII
#Yes, I think some of it is a sequential improvement just given we were out of the market for a good two months on some of our key products.
When you look at it on a unit basis, it's not a substantial uptick and you are comparing against the last year where we saw things worsen pretty dramatically and that's become somewhat of the new norm that we are dealing with within the current context.
I do think that the fact that we have some pretty impressive new products out on the market, or coming out on the market shortly, is going to be a big driver even in a market that's a bit challenged.
Yes.
We are not going to get into a math exercise on 2017 at this point.
I will tell you, one of the things that we didn't highlight as much as we could, or should have, is the significant progress that Ken Pucel and his team are making on this VIP program.
The year-over-year savings increase in 2016 has been significant.
It's just been consumed by our recall-related costs.
As we roll into 2017, they're going to have additional projects and additional opportunities to drive more savings.
But to look at what's going to be ---+ actually hit the bottom line as we offset the additional engineering cost that <UNK> referred to in the difficult environment, that's just not an exercise we are going to get into today.
But it certainly is fair to say that the work that Ken and the team have done this year with VIP and will do next year will be helpful for the business.
I think ---+ not I think ---+ the word that I used to drop the RZR impact in Q3 was, precipitously dropped.
The July and August decreases were hard to look at and it really had two factors.
One is that there was just not products available for sale and we had a stop ride, stop sale on Turbo for almost the entire month of August and part of September.
So it was dramatic.
I am proud of how the team handled it and fought through and ultimately drove the recovery that we saw in September.
But it was a very, very significant impact for our business and our dealers.
Yes, yes.
We stepped up the promotion level and, if you look at our average selling prices that we have on each of the charts with the Off-Road Vehicle business, you can see our ASPs are down 8%.
That gives you a pretty good context of the significant amount of promotional activity.
I think in light of what we have seen and what we anticipate will continue, we do think it's probably going to continue at least into the first half and at that point we would start to lap some of the activity we have done this year.
We just want to make sure people were thinking that through as they think about margins and overall revenue performance headed into next year.
Hi, <UNK>.
<UNK>, I think it's fair to say that we take our relationship with our dealers extremely seriously.
You have heard ---+ we talked about it earlier today that, that's an area of focus for us.
But let's be clear.
There are a number of our competitors that are accepting extremely low margins to buy their way into our dealerships and we are not going to compete at that level.
As you know, for the longest time Polaris made up for dealer profitability with our significant volume increase and you tack on PG&A, it's a pretty good recipe.
That is not what we're going to be able to do going forward so we're going to have to look to other elements for it.
I've got tremendous confidence in the way that <UNK> Larson and Matt Homan and their teams are looking at how we do this.
But it relates, obviously, to improving our quality so that they have less issues with our customers, making the PG&A stocking, which we have already done, less burdensome for them and ultimately helping with the attachment rates going forward.
What we have done with dealer inventory, I mean I'd put ourselves, at this point, against anyone in the industry and as we drive RFM next year and get to a much shorter lead time and ultimately a position where we can probably get to a make-to-order business model, that's going to be a tremendous benefactor to them on lower carrying costs, as well as higher attachment rates as the customers get the exact vehicle they want.
So it's a multi-pronged approach.
I don't think there's anything that's not on the table except a pocket shift from us to them to get lower profitability like our competitors.
When you say industry, are you talking ORV or are you talking Side-By-Sides.
If it's ORV, I doubt it was up much, without.
Side-By-Sides was probably up slightly.
And we always, always want a better market.
When you are the leading share player, even when you are losing share temporarily, you still want a good market.
Obviously, that has not been the case for much of the year.
We are not projecting it to be a great market going forward, so we are positioning ourselves, as we talked about, to get back to a stabilization on share so that we don't contribute any longer to the down market aspects of it.
So I will tell you that as we looked at the Side-By-Side market, really there's only a couple of players that are doing well.
I don't know that it's necessarily the players that you think.
Part of the reason we have confidence in Matt and the team going into the fourth-quarter is how we have looked at the competitive landscape and where our new model-year 2017 line up puts us, as well as product availability.
It's a dynamic market for sure but we want the industry to be good.
Part of it is, is that's our PG&A shipments into the channel.
And so we have obviously modified our ---+ as we indicated in the past ---+ our process for how we ship into our dealers.
Again, this is aimed at helping them from an inventory standpoint, more frequent ordering, lower quantities.
It's also somewhat driven by the mix shift that we have seen.
As <UNK> indicated, we are selling disproportionately more of the smaller bikes, like the Scout, Scout Sixty and the Octane and those typically carry less PG&A along with them.
Those are going to be the big overall drivers.
Well, there's a whole bunch in there.
When you talk about heat shield, the heat shield is just one of the elements that we've corrected on the RZR.
There's reflashes, there is a fairly complex list of corrective actions that we have taken.
Obviously, I can't stress ---+ and I will use this public speaking opportunity to talk about it ---+ the importance of heat shields and any of our consumers that have that vehicles to make sure that they are on because they are an important part of our thermal safety of our vehicles.
But what we have done is gone through an extensive ---+ and I mean extensive ---+ effort to understand any thermal risks on our RZRs and other vehicles.
Part of the issue, the reason that we didn't see it in 2013 and 2014 is that we didn't have the processes and tools to get the information from the field as quickly as we could and manage the information flow and, ultimately, it took us a while to recognize the trend and, ultimately these are very complex issues.
We have had some of the best engineering experts in the industry, including the automotive industry, to help us review these situations.
And in some cases it would take us many months to ultimately define the root cause.
And we went as aggressively as we could once we understood the risks and it just took us a while to figure it out.
As I said in my remarks, we have embodied all of that knowledge now into both our processes and our products going forward and we feel extremely confident in our ability to manage this thing, the thermal risk of our vehicles going forward.
I think from a ---+ maybe taking the Motorcycle piece first.
Our expectations coming out of the last quarter was for the industry be down low-single digits.
The industry has weakened.
I think you've heard that from one of our major competitors.
We are now anticipating the industry probably will be down mid-single digits.
Our performance is still significantly better than that just given the focus and attention and the progress we are making with Indian.
It's tough for us to say.
I think the oil and ag weight that we are seeing, that's impacting our Off-Road Vehicle business is obviously impacting our Motorcycle business.
These are significant cash outlays and a lot of the same states are driving as significant a reduction and, as we indicated in our prepared remarks, we don't anticipate that to get significantly better.
I think the play that we have that's proving to be very successful is, with the introduction of Scout, Scout Sixty and Octane, we are attracting a slightly different demographic and that's giving us some opportunity as the age demographic is starting to cause some of the declines in the motorcycle market.
That's giving us an opportunity to outperform and we don't anticipate that changing as we move forward.
Yes, so if you looked at us through the first half, ASPs were down about 3%.
It gives you some context around the significant shift.
I'd say the majority of it is directly related to what we're doing from a promotional standpoint as opposed to anything dramatic from a mix perspective.
And then I would just reference back to the comments we made that we think the promotional levels are going to remain consistent at the second half of 2016 as we head into 2017.
Is it going to snow are not.
(Laughter) Actually, we do believe it's going to be a slightly better snow year and Chris and the team are on top of that from a product perspective.
I think probably the Side-By-Side space is going to continue to be the best space in the market as that just becomes the preferred choice of so many people and that's where a lot of the innovation is being driven.
Obviously, where we are driving innovation and have a big market share, we want that to be the fastest growing part of the market.
That's your name.
Yes, so essentially as we've indicated, and we're obviously talking 2016, TAP adds just over $740 million worth of revenue and our existing Aftermarket portfolio is right around ---+ just over $90 million and that Aftermarket portfolio, as we indicated, is KLIM, Kolpin, 509, Trail Tech.
Yes.
And we'll ---+ as we provide our guidance, as I indicated, when we provide our guidance for next year, we will obviously provide historical context so that you guys can update your models.
Mostly related to SnowCheck, <UNK>.
We have year-over-year, sometimes we'll have more SnowCheck and we will ship them early and sometimes we don't.
I think that was just strictly a timing issue there.
Obviously, we don't worry much about snow until November and, actually, late October, November then it starts to matter.
But until then these small shifts based on year-over-year SnowChecks don't worry us much.
