Jun. 30, 2008 – Reaching into growing segments

By Neil Pascale
Editor
THIEF RIVER FALLS, Minn. — In response to last year’s drop in ATV sales, Arctic Cat is reaching out to growing parts of the industry’s four-wheel business.
The Minnesota manufacturer unveiled products at each end of the UTV displacement spectrum as well as showed off a couple of new high-displacement products for niche segments of the ATV business at its recent dealer meetings. All total, Arctic Cat spotlighted 10 new products at the meetings, which were held over two weeks at Thief River Falls, Minn., home of its largest production plant.
Perhaps most notable in that package of new products were the additions to the Prowler line, which will include the flagship XTZ 1000 H1 EFI, sporting an industry-leading 951cc V-twin engine, and the 550 Flatbed, which also includes EFI.
“We’re trying to get a broad spectrum of price points as we can in that market,” said Ole Tweet, general manager of Arctic Cat’s ATV division.
That market is undoubtedly the quickest growing segment in the industry and one that Arctic Cat hopes to profit from further in the coming year. While its overall ATV sales were down nearly 20 percent last year, Arctic Cat’s Prowler sales did increase. However, percentage-wise, its UTV sales do not account for as large a percentage of its overall quad sales as compared to rival Polaris, which has said its side-by-side sales make up roughly 40 percent of its ATV revenue.
“It’s important to us,” Tweet said of Prowler sales, “but it’s financially not as big an impact percentage-wise as Polaris. It’s growing faster than any other segment in the market so it has the potential to be a pretty good chunk pretty soon.”
With that in mind, Arctic Cat added what it hopes to be attractive features to its Prowlers, from tilt steering on its XTX 700 to a new suspension and a parking brake — just like what’s found on a car — on the XTZ 1000.
“We’re not a cheap Gator with no suspension, no ride or no speed or no four-wheel drive,” Tweet said of the Prowler series. “We’re a recreational off-highway vehicle, and our people want and demand a certain level of features, so we can’t play in a cheap market. But we’re trying to give (dealers) as good an option as we can, as low a price as we can.”
Arctic Cat also is trying to reach some niche areas in the market, especially those in the higher-displacement segments.
“What’s been growing in the market has been more in the high-end stuff, both in regular ATVs and two-ups,” Tweet said, noting the current U.S. economic challenges have not impacted the premium sector but have definitely hit other segments. “The guys who were really buying on price, they didn’t have much money to start off and they have even less now,” Tweet said.
With the higher-end consumer in mind, Arctic Cat added the TRV 1000H2 and 700H1 EFI cruisers, a two-up-style quad that features a distinctive two-piece fairing and windshield. Arctic Cat officials said the 2-up segment, which currently only includes three OEMs, grew 33 percent in North America and 45 percent in Canada in 2007 compared to the previous year. It’s the Canadian market and its long, scenic trails that Arctic Cat sees as a potential big hit for its higher-displacement cruisers, which offer luxurious features in heated driver and passenger handgrips not to mention a sizeable, locking travel case.
Arctic Cat also showcased a higher-displacement model for a completely different riding environment — the mud. The company’s 700 H1 EFI Mudpro features 14 inches of ground clearance and an intake and clutch snorkel to keep the CVT belt dry and cool through the deepest mud pits. Craig Kennedy, Arctic Cat’s ATV product team manager, estimated consumers would have to spend nearly $5,000 in aftermarket materials to turn a basic 700 into the stock Mudpro, a product that should be especially noteworthy in the South.
While Arctic Cat aggressively pursues the high-end market, it hasn’t forgotten the youth side. In fact, company officials said their holiday sales program for its youth models was so successful that they have planned a similar program this year. Last year’s program not only included a significant marketing venture but a special 50cc product with unique Arctic Cat colors.
“What’s been most amazing is the lingering effect,” Tweet said of the program, noting the company’s youth model sales were not only healthy in December but have continued through the first quarter. In fact, Tweet says the company’s youth model sales are up 15 percent compared to last year while the industry as a whole is down 30 percent.
Arctic Cat added to its youth models with a 150cc product that is geared toward teenagers, 14 and over, who have outgrown a smaller-displacement model but aren’t quite big enough to handle a 250cc.
Where Arctic Cat still hasn’t dwelled too much is in the ATV sports market.
“It’s pretty obvious we have a much more utility image in our product line,” Tweet said. “The sport line, while it’s suffering a bit now with a downturn in sales, is still a significant part of the market, and yes, we’re still looking at that. We see that as still having a market position we’d like to play in.
“We have had some very interesting concept vehicles running around for awhile. Sooner or later, one of them will hit the street.”