Polaris Industries Inc. is working with one of its third-party financial partners “to target deeper into lower credit bands,” Mike Speetzen, the manufacturer’s executive vice president of finance and chief financial officer, said during an earnings call today, “but we are doing it in a deliberate manner” in an effort to serve consumers who may lack credit history.
Consumer credit quality “is not materially different” from where it has been in the past, Speetzen added. “We continue to have discipline in that arena.”
Polaris saw a 3% uptick in its penetration rate for its retail finance programs in the second quarter, driven in connection with finance incentives that are currently “underway,” Speetzen said. Income from financial services was up 16% year over year to $20.5 million, from $17.6 million the same time a year prior. The growth was attributed to the higher penetration rate for retail financing programs in 2Q, he added.
Polaris continues to maintain “high standards” when it comes to its consumer credit quality, Speetzen said during the company’s first-quarter earnings call. “We work through several of our retail financing partners that are very strong, and we are not looking to expand the credit profile down into areas that are going to put us in a position for increased loss reserves.”
Polaris’ retail financing partners provide the “right level of customer service” when reviewing consumer loan applicants, Speetzen told Powersports Finance in May. “If there is a problem, it gets reviewed. If there needs to be an exception or the file needs a second look, this occurs and we support this approach with our lending partners. Flexibility is important.”
Polaris currently has installment retail credit arrangements with FreedomRoad Financial, Sheffield Financial, Synchrony Financial, and others. The manufacturer also had a revolving retail credit arrangement with Capital One Financial Corp., which expired after the lender announced its exit from the powersports industry.