Arctic Cat Hikes Incentives as Sales Decline

1000xt-2014location-9372Arctic Cat Inc. continues to ramp up financing promotions in response to heightened competition and declining sales, according to the company’s fiscal 2017 second-quarter earnings report yesterday.

“We are committed to decreasing our dealers’ inventory to ensure they’re in a healthy inventory position, despite the weakened environment,” Chief Executive Chris Metz said during the earnings call. “This will put our dealers in a better position to accept our innovative new products as they are introduced.”

For example, Arctic Cat launched a promotion on Oct. 1 through Sheffield Financial for as low as 1.9% financing for 60 months, with no down payment on select ATV models, according to Sheffield’s website.

Arctic Cat’s ATV and recreational off-road vehicle sales were down 38% year over year to $44 million in its second quarter ended Sept. 30, according to the report. Overall net sales were down 22% year over year to $164.6 million. “We are disappointed in the company’s second-quarter results, which were impacted by lower sales volumes, unfavorable product mix, and a heightened promotional environment,” Metz said.

Arctic Cat is “keeping a really close eye” on dealer inventory, Metz said. “We know we’ve got new product coming and we can’t afford to build the channels,” he said. Arctic Cat expects to continue to focus on promotional offers and incentives, he added, which have been elevated year over year. “But we’ve just been doing what we see our competitors doing, and what our dealers are asking of us, to remain competitive on the incentive front,” he said.

Additionally, the OEM announced it signed two strategic partnerships in 2Q. “These exciting and important new partnerships offer us a cost-effective way to enter new adjacent markets,” Metz said, and Arctic Cat anticipates they will “contribute meaningfully” to future revenues.

However, due to contractual reasons, the OEM did not disclose information about either partnership. At this time, it is unclear whether either agreement involves a retail or wholesale financing partner.

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