Polaris Industries Inc. Goes All In

Just months after creating Performance Finance, Polaris is doubling down on the innovative alternative to captive lending

In January of 2017, Polaris Industries Inc. announced plans to shut down Victory Motorcycles. While the news surprised many industry insiders, it was an important strategic step for the global powersports leader. In 2016, the company—which produces snowmobiles, off-road vehicles, motorcycles, and other vehicles—launched Performance Finance to provide faster and easier consumer lending options.

As motorcycle sales started to increase at Polaris, Sean Bagan, vice president of finance and treasurer, created the program with his colleagues as an answer to competitors’ captive financing departments. “We’ve partnered with a bank instead of handling this ourselves,” Bagan says. “That limits our credit risk and lets us allocate capital elsewhere in the business, but we can still generate earnings from financing.”

When it began in September of 2016, Performance Finance supported Victory, Indian, and Slingshot products. By discontinuing its Victory line, Polaris can now redirect all two-wheeled motorcycle resources to Indian, thereby sparking faster growth as the company engages in a fierce battle with its large and well-known competitors. “More people are getting approved for an Indian motorcycle, and this program is driving incremental retail sales that weren’t there before,” Bagan says. Additionally, by branding the program as “Performance Finance Powered by Indian Motorcycle,” Polaris has driven consumer confidence and awareness. Users aren’t simply dealing with a third-party bank—they’re dealing with Polaris through a modern and personal web portal.

This new program is producing results. Bagan monitors approval rates and says early numbers are slightly better than expected. Another key metric, penetration rate, is also indicating success. More customers have chosen Performance Finance over any other lending option. Buyers and dealers have embraced the program. Now, together with their partner, Evergreen Bank, Bagan and his team will evaluate how they can expand the offering to propel further growth.