Polaris Credit Approval Rate Climbs 300 Basis Points in 3Q

Polaris Industries Inc. reported a 300 basis point year over year rise in its credit approval rate to 65% in the third quarter, despite a 100-basis-point drop in its retail finance penetration rate to 30%, according to the company’s earnings last week.

Polaris currently has financial partnerships with FreedomRoad Financial (for Performance Finance), Sheffield Financial, and Synchrony Financial.

Income from financial services dropped 6% year over year to $19 million for the quarter. However, the OEM’s projections for income from financial services for the year has improved.

“Income from financial services is now expected to be down about 5% for the year,” Mike Speetzen, Polaris’ executive vice president of finance and chief financial officer, said on the earnings call. In the first and second quarters, the company predicted income to decline about 10% in 2017 due to lower dealer inventory levels.

The improvement in financial services income is driven by “better retail performance,” Speetzen said on the call.

Meanwhile, wholesale finance receivables also dropped for Polaris. The manufacturer’s floorplan financer Polaris Acceptance (PA) saw a 7% year-over-year decrease in wholesale receivables from U.S. dealers to $1.2 billion, which is “trending with dealer inventory,” according to the earnings presentation.

PA is a joint venture between Commercial Distribution Finance (CDF) and Polaris Industries Inc. which provides floorplan financing to Polaris dealers. The partnership is set to expire in February 2022.

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