Polaris Industries launches its vehicles like Sno Traveler in India

Polaris foraying into India

Polaris Industries, producing sports vehicles, is eyeing the growing Indian market. It’s President and CEO Bennett J Morgan finds his job of manufacturing sports vehicles quite interesting and fascinating. The company manufactures ATVs (All Terrain Vehicles). Global market for the ATVs is dwindling because of the economic crisis in USA and Europe. When sales in the industry as a whole fell by 10% last year, Polaris registered an increase of 15% in its revenues. This shows the popularity of the company’s vehicles in the international market. For its future growth, the company is planning to focus on emerging markets such as China, Brazil and India. The company rightly feels that India is a nascent market for ATVs but with a great potential. The company is US-based.

Japanese dominate in vehicles segment

In the vehicles segment, it is the Japanese who dominate. Kawasaki, Suzuki, Honda and Yamaha are dominating the two wheeler markets in India. Suzuki is dominating the four wheeler market. American companies like Ford and General Motors have forayed into Indian market for quite long, but with little success. The reason is that American vehicles are perceived to be costlier than Japanese vehicles. But in the quality front, American vehicles are either superior or at least at par with their Japanese counterparts. Therefore, there is a great scope for Polaris to make inroads into the Indian market. India is a growing economy and is growing fast. The economic crisis in Europe and USA has not affected it very much due to huge domestic demand. In fact, India is offering to help the European countries to come out of this crisis. India is the fifth largest economy in the world next to USA, Germany, Japan and China. India is the third largest economy in Asia next to Japan and China. In terms of purchasing power, India comes third in the world. There is a prosperous middle class that is growing every year. Therefore, if Polaris is patient and focuses on its marketing, it will succeed in India eventually.

Dubey is the right man with rich experience

Polaris is planning to set up an assembly facility in India in about five year’s time. It is anticipating revenues upwards of $400 million every year from its Indian operations. Polaris is planning to introduce high-end motorcycles in India in about three to five years’ time. It is also planning to start a R&D centre in India. Polaris has already started its operations in India through its wholly owned subsidiary Polaris India Pvt Ltd. Pankaj Dubey has been appointed as the Managing Director of the company. Dubey carries a rich experience as the former head of India Yamaha National Business.

Wrong strategy

In the next five years, Polaris is targeting a sales turnover of $5 billion globally. The company considers India as a long term opportunity. Polaris introduced its ATVs in India priced between Rs.2.40 lakh and Rs.20 lakh. The company will be importing the vehicles as completely built from its production facilities in Mexico and USA. By doing this, the company is paying a heavy duty of 116% to the government as customs duty, which has to be necessarily passed on to the customers. The company says that once volume increases and stabilises, it will think of setting up an assembly plant in India. But the company is following a wrong strategy. First the company has to set up an assembly plant, preferably in auto hubs like Sanand in Gujarat or near Pune in Maharashtra or near Chennai in Tamil Nadu. It should import its vehicles in CKD (Completely Knocked Down) condition and then assemble them in India. By doing this, it will save the customs duty and can price the vehicles cheaply. That will attract more volumes and the cycle will be repeated. The doctor cannot tell the patient ‘first let the disease get cured, then I will prescribe medicines’. The doctor should first give medicines and then only the disease will get cured. Mercedes Benz learnt this truth and has set up an assembly plant in India.

Avoid local partners

Polaris is also planning to tie up with a local partner to manufacture the vehicles under a contract manufacturing agreement. But this strategy also seems to be incorrect. Look at the experience of Peugeot a decade back. It partnered with Premier Automobiles, but no progress was made and it had to eat the humble pie and quit India. Now it has re-entered into India and is setting up its own plant in Sanand in Gujarat without the help of any tie-ups or partnerships. Fiat partnered with Tata Motors but with little success. Now Fiat is thinking of going its own way. Therefore, foreign automobile companies with reputation entering India should be prepared to stand on their own legs instead of depending on any local partners. Suzuki learnt it the hard way and ultimately took control of Maruti on its own. Honda has severed its ties with Hero Motors and is standing on its own. Therefore, Polaris, beware of the trap.

Rajdoot understands Indian roads better

Polaris said that it will be investing significant amount in India but refused to quantify the amount. Going by the investment of Peugeot, it may be around Rs.3000 crore to Rs.5000 crore if manufacturing is going to take place in India. But one good thing the company will be doing is to bring out its vehicles suited to Indian conditions. In two wheelers, Yamaha, Suzuki, Kawasaki, Honda and many foreign companies have introduced their motorcycles with latest technology and gadgets. But these vehicles pale into insignificance when compared to the performance of Rajdoot motorcycle on Indian roads. Of course, Rajdoot is languishing because of poor marketing. I have driven Rajdoot and admired its sturdy performance on city as well as rural roads. Polaris said that the products it introduces in India will be different from the products it makes in USA. Its R&D centre will also take into account Indian road and other conditions before coming out with products for the Indian consumers. Polaris is also considering setting up a design centre in India to design models for the emerging markets. Polaris has already commenced a technical centre in partnership with the Indian engineering giant Larsen & Toubro (L&T). For the IT services, it has tied up with TCS.

F1 racing has kindled interest in speciality vehicles

The sports vehicles and gadgets industry in India has taken off with the successful conclusion of F1 racing in Noida, Delhi recently. All the participants appreciated the racing track constructed for the purpose. The All Terrain Vehicles manufactured by Polaris can glide even on snow and in rough mountainous tracks. A car cannot travel the rough roads of a mountain and will fall off. But a jeep with special tyres can manage to ascend a mountainous path. But special vehicles like the ATVs of Polaris will make the journey very happy and sail smooth. The vehicles can travel in the sandy areas of a beach. Polaris is a 50 years-old company. Its revenues amounted to $1.99 billion last year. All over the world the company is known for ‘understanding the riding experience, living the riding experience and working to make it better’. The company, in its first phase of its launch in India, will introduce Polaris ATV, Side-by-Side vehicles, Ranger RZR and Snowmobiles. The company has established dealership in big cities like Chennai, Delhi, Kolkata, Mumbai, Ahmedabad, Jaipur, Jammu, Kochi and Patna. All the company’s showrooms will have a test track to make the customer feel satisfied. Whether it is vehicle performance, in-ride comfort or ease of operation, the company has promised to deliver a heightened user experience on all levels. Polaris considers India as one of the top three important markets. Polaris feels great potential for off-road vehicles in India and plans to invest in infrastructure, manpower and machinery in India to develop.

Polaris has a bright future in India

The company assembles its vehicles at its manufacturing facility at Roseau, Minnesota. It also has facilities in Spirit Lake, Iowa, Osceola, Wisconsin and Monterrey, Mexico. Polaris will also be stressing on the utility application of its vehicles in areas like construction, agriculture, forest patrolling, mining, paramilitary forces and defence apart from its utility as a recreation vehicles. There are numerous on-road vehicles plying on Indian roads, but very little activity is witnessed in off-road vehicles. Mahindra & Mahindra is probably the topper in its rugged vehicles which can be driven in tough terrain. Other companies like Maruti have come out with their jeep variation that can to some extent negotiate rough roads, but are of no match to ATVs rolled out by Polaris. Therefore, Polaris has a great future in India.