Polaris Retail Finance Penetration Set to Rise in 2Q

Polaris Industries Inc.’s retail finance approval and penetration rates were down but relatively unchanged so far this year — despite the OEM’s decision in January to shutter the Victory Motorcycles brand. However, retail financing could tick up this quarter amid increased finance promotions.

Retail finance approval rates are at 59%, down from 61% in the fourth quarter 2016,  according to the OEM’s mid-year investor’s report released last week. Retail finance penetration rates also dropped slightly, reaching 31% compared with 33% at the end of last year.

The decline in penetration was due to less aggressive financing promotions offered in the first quarter, Scott Wine, Polaris chairman and chief executive, said on the company’s earnings call in April.

However, given Polaris’ recent special offers, finance penetration appears poised to increase. For example, Polaris Industries is offering as low as 2.99% APR for 36 months on select 2013-2017 new and unregistered models purchased between June 1 and June 30. The offer includes rebates up to $2,000, and is valid through June 30.

Additionally, Polaris is well positioned this year to match promotions as offered by competitors, thanks to Performance Finance. Polaris currently has installment retail credit arrangements with Sheffield Financial and Synchrony Financial, as well as FreedomRoad Financial for its “captive-like” program called Performance Finance.

“While the promotional apparatus will not be as seamless as it would be if this [Performance Finance] were a true captive like Harley-Davidson Financial Services, Polaris believes that it can now match Harley’s financing promotions, and in some instances be even more aggressive,” according to an analyst call late last year between Polaris management and Wedbush Securities Inc.

The Medina, Minn.-based manufacturer has 10,000 employees worldwide, 19 manufacturing locations, and 1,800 North American dealers, according to the report.

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