Why have many of the powersports vendors chosen to remain locked in battle with their franchised dealerships?
35 years back, when I was 20 years old, I woke up on Christmas day in snowy Germany, and that night went to bed in Saudi Arabia. I spent the next 9 months with the 1/37 Armor Bandits – 1st Armored Division in a round trip journey across Iraq, through Kuwait, then back to Saudi, and finally back home to Vilseck.
When I enlisted, deploying to war really wasn’t on my mind, but it’s always a possibility. I didn’t sign up to kill people, but that’s what we were trained to do. We didn’t win that war because we were lucky, we won because we were better trained, better equipped, had strong leadership, and worked with our coalition partners. Personally, I didn’t have anything against the people we killed. They were doing their job, we were doing ours, and we did it better.
At 21 years old, I was relatively ambivalent to our accomplishments. We won, I earned my combat patch, what’s next. 35 years on, hundreds of discussions, thousands of nightmares, and lots of introspection, our accomplishments mean a lot more to me. It all means a lot more to me now than it did back then.
A decade back I heard that the executive team at Polaris Inc. referred to their meeting space as “the war room”. I took exception to the use of that term, they hadn’t earned it, and they had no right to use it. They weren’t soldiers, they weren’t veterans, and for the most part lives weren’t on the line. I wrote a letter to the then CEO expressing my displeasure at their choice of words. Until someone makes a sacrifice for this country, there are certain things you don’t get to do.
Why the long story, because it has meaning. As it currently stands, Polaris and many of the other vendors are battling their dealers. They’ve chosen to take the easy path, not the hard one. They have chosen to work against their dealers, not with them.
These days, I spend incredible amounts of time on the following tasks and projects
- Has every person completed mandatory training
- It’s Wednesday, does X vendor have the first spot on my website rotator
- Did we meet with the rep who showed up unannounced at 9:15 on Tuesday morning (not realizing that unlike him, I have a job)
- Got to take a call from the ticked off customer who has a machine he can’t operate because of a recall, and the vendor can’t tell me when we will have parts
- Did we submit all the showroom pictures
- Time to sign another dealer agreement. Wonder what violations of state law they will attempt to slip into this one
- Where are we going to put all the duplicate inventory that the shipper just dropped off
- Did we order the vehicles we never sell
- Did we deal with the 1-star review from the guy who is upset that his engine blew up because the vendor didn’t tighten the con-rod bolts
- Inventory profiles put us having about 1.5 turns of inventory. I know the rep has his lips loaded with OE BS about why it’s a good idea, what reports to I need to run to highlight reality
- Did we check off 472 boxes on this month’s certification checklist
- Multiply times 8 more vendors
The other day I told my GM that I’m not smart enough to understand how much flooring we’ll have on the Ranger we receive next month. And in most cases, it will be 3-4 months before we know what we made on the General we sold last week. This is not an efficient way to run a business.
WE DEALERS NOW SPEND SO MUCH TIME FILLING OUT BS TPS REPORTS THAT WE DON’T HAVE ANY TIME LEFT TO TRAIN AND SELL.
It’s interesting when you ask the auto guys over at NCM Associates who the best auto manufacturer is. Toyota Motor Corporation. No deviation, no hesitation, and there isn’t really a second or 3rd place. It’s Toyota, and then everyone else. Why? Because Toyota chose to partner with their franchises, not battle them. And who is the most successful auto brand right now? Toyota.
I say all this as
- A shareholder
- A dealer
- A rider
My challenge to the board at Polaris is to be honest with yourself and to recognize that you’ve gone down the wrong path. It’s not too late to recover, but if you don’t make a course correction in the near future, in a decade you will be irrelevant. Not only is it time for a major shakeup of the executive team, but you also need to expand the board to include dealership representation. And all pay plans need to be based on long-term company performance. It’s time to start playing the long game, because you won’t get to the finish line with the current team.
Look at all the ways you are currently failing
- Stock price at the same level it was at 5 years back
- Rarely a week goes by when a new recall isn’t announced
- Your Fall 2024 RFM program was such a massive failure that you had to walk it back
- Margins on your products are some of the lowest of any OEM in the industry
- Members of your executive team have major conflicts of interest in the industry (my wife works for the Department of Education and I am heavily restricted to what stocks I can own, you have executives/family who have ownership in franchises)
- You’ve essentially neutered your MAP program – Polaris is teetering on the end of no longer being perceived as a “premium” brand
- Management held on to pandemic surcharges for a year too long
- The company’s debt load has ballooned over the last 5 years and falling margins/increasing rates are going to continue to erode legitimate company profitability (not the EBITDA shell game that many public companies like to focus on)
- Rebates and programs are now often available on current year machines
- BRP now has higher market cap
You aren’t #Winning – You have embraced #Losing
So back to the beginning. What’s the image of the wrecked tank? According to all the news reports, not one M1 Abrams was destroyed in combat. The statement is correct, but only if you account for enemy fire. This Abrams (and 3 others in our battalion) were taken out by friendly fire. Brigade Apaches were nice enough to launch a salvo of TOW missiles into the exhaust ports of our front line. Luckily, everyone limped/hobbled away and survived to fight another day (getting those hulls out of there was another story). We were happy to hear that the Apache Brigade Commander (a Colonel) was relieved on day 3 of the war. That’s what happens with failed leaders, you don’t let them run the clock out, you replace them.
The statement about the “fog of war” is real. You can have the best laid plans, but once the artillery starts landing, everything changes.
As dealers, we have choices. It’s critical that each of you know who your business partners are, and who your vendors are. Stock and sell accordingly. We can choose to work together with our business partners to achieve big things, or we stay locked in a battle of attrition with the vendors, seeing who can suffer the fewest number of friendly fire casualties.
#Powersports #DesertStorm #Polaris #War #Army #FriendlyFire #BlueOnBlue #Winning #Losing #BRP