Polaris Industries Inc.‘s retail finance penetration rate declined to 31% in the first quarter, despite a higher credit approval rate, according to the OEM’s earnings report, released today.
By comparison, Polaris reached 40% penetration on a 57% approval rate in the first quarter of 2016.
The decline in penetration was due to less aggressive financing promotions offered this year, Scott Wine, Polaris chairman and chief executive, said on the earnings call today.
Polaris’ retail and wholesale finance portfolio remains “stable,” Wine said. Income from financial services reached $20.4 million for the quarter, up 5% from the same time a year prior. The increase is attributable to higher income from the sale of extended service contracts, which the OEM brought in-house in mid-2016, Wine said.
However, Polaris predicts its income from financial services to decline about 10% in 2017, due to lower dealer inventory levels. The OEM’s off-road vehicle dealer inventory was down 9% year over year, and total dealer inventory was down 8%, according to the earnings. The lower inventory was due, in part, to the OEM’s numerous recalls.
“We have made significant investments in people, process, and technology to support prevention, identification, and remediation of safety and quality issues, and we are identifying them earlier and reacting more quickly,” Wine said. Polaris has recalled more than 338,800 vehicles in the past two years due to various fire and other hazards detected.
Polaris currently has installment retail credit arrangements with FreedomRoad Financial, Sheffield Financial, Synchrony Financial, and Chrome Capital — although Chrome Capital is no longer accepting new lease applications.
Separately, Polaris plans to close its plant in Milford, Iowa, and transfer Milford production to Polaris facilities in Huntsville, Ala.; Roseau, Minn.; and Anaheim, Calif. The move impacts 330 employees who work at the facility. The Milford plant will become a warehouse to support the nearby Polaris plant in Spirit Lake, Iowa, which will continue to manufacture Indian Motorcycles, according to a published report. Product transitions will take effect in phases over this year.