Polaris reports Q1 retail sales down 7 percent in North America

Results from Polaris’ Q1 2025 were in line with the company’s expectations, as it continued to prioritize supporting its dealer network and managing a prolonged industry downturn, according to a statement released April 29.

“While consumer uncertainty and a dynamic tariff environment are near-term hurdles, we are thoughtfully navigating these challenges. Our team continues to make progress on the strategic efforts within our control, from innovation and quality advancements in our lineup to our operational efficiency and working capital efforts. We expect this unrelenting focus on long-term growth and profitability will enable us to emerge stronger from this downturn and reinforce our position as the industry leader.

– Mike Speetzen, chief executive officer of Polaris Inc.

Polaris executives said North American retail was down 7%, with relatively better performance in its utility business versus recreational products. On a prior earnings call, Speetzen highlighted the positive indicators around ridership, pent-up demand and continued interest in the powersports category. This point was reinforced this last quarter in the snowmobile business, according to Snow Goer reporting, as late-season snow in the flatlands resulted in strong retail growth of approximately 50% in the quarter.

Additionally, Speetzen says in a RZR consumer study it recently conducted, which looked at vehicle usage and owner repurchase rates, that RZR ridership and engagement within the category remain strong.

“In fact, over 90% of RZR riders in our study say they are planning to ride the same or more than last year,” says the CEO. “However, more than 40% of those we surveyed acknowledge that they’re holding on to their vehicle longer than they typically would given factors like interest rates and economic uncertainty.”

Later in the presentation, Speetzen comments about tariffs and the decision to withdraw its full year guidance.

“We’ve decided to withdraw our full year guidance that we provided in January. This was not an easy decision,” says Speezten. “However, given the fluidity of the tariff environment, including the frequency of new tariffs, changing tariff rates and the temporary suspension of certain tariffs, coupled with the potential impact to consumer spending, we have determined that withdrawing our full year guidance is the most prudent course of action. We’re actively monitoring developments, and we’ll reevaluate our decision on guidance once we have greater clarity. Our commitment remains to stay focused on navigating these challenges and positioning Polaris for sustained long-term success.”

Speaking of OHVs, Speetzen says, “Recreation was down high teens, driven by greater than 20% declines in RZR and used vehicles.” But then he adds that the Polaris Xpedition, Ranger XD and Ranger XP North Star were up. Speetzen also claimed that Polaris gained marketshare in pontoons and motorcycles.

One thing to note about Speetzen’s opening statement is that their take on being a U.S. manufacturer actually puts them at a bigger disadvantage. That one is puzzling to us, but then again, so is the trade war.

Shifting gears to tariffs

Every day seems to bring a new headline or new information, according to the CEO. “So we’re staying focused, keeping a level head and being proactive,” he says. “This includes going to Washington, D.C. to meet with our elected officials and their staff to reemphasize the fact that we are the only major U.S.-based powersports company.”

Speetzen points out that Polaris started more than 70 years ago as a small business founded in Minnesota, but it is now a global company. “We maintain our strong sense of pride being headquartered in the U.S. with the most significant U.S. manufacturing, testing, and R&D presence in the industry. We employ more than 8,000 Americans while supporting approximately 35,000 American workers employed by our U.S. dealers. In addition, approximately 65% of our U.S. production value stems from U.S. content.”

The tariff policies are creating a disadvantage, according to Speetzen. “Unfortunately, the tariff policies as written today have created an environment that disadvantages Polaris for our U.S. manufacturing footprint. As we mentioned at our Capital Markets Day in March, we import approximately $250 million worth of components from China to the U.S. for use in assembling vehicles. Under the current tariff regime for China, we are forecasting an incremental tariff rate of approximately 145% on our U.S.-imported Chinese components, which would equate to $200 million to $240 million in new estimated tariff costs this year,” he says.

“This 145% tariff rate doesn’t apply to competitors who also source from China, but manufacture in other countries like Mexico or Japan and then ship products to the U.S. The same goes for many of the retaliatory tariffs throughout the rest of the world, which equates to a potential gross tariff impact this year of approximately $35 million,” Speetzen adds.

“This current environment puts us at a competitive disadvantage because we have a U.S. manufacturing footprint,” he continues. “All in, we expect to incur between approximately $320 million to $370 million of gross tariff costs, of which approximately $60 million to $70 million was budgeted within our original guidance. With costs being capitalized in inventory, we can defer a large portion of these costs into the back half of the year and 2026.”

Polaris Performance

For the first quarter, Polaris Inc. reported worldwide sales of $1.56 billion, down 12% compared to the first quarter of 2024. North America sales of $1.29 billion represented 84 percent of total company sales and decreased 11 percent from $1.44 billion in 2024. International sales of $246 million, representing 16 percent of total Company sales, decreased 16 percent compared to the first quarter of 2024.

Total company sales in the first quarter of 2025 were negatively impacted by lower volume and net pricing, driven by higher promotional activity, but partially offset by a favorable product mix. For the first quarter, net loss attributable to Polaris was $67 million compared to net income attributable to Polaris of $4 million for the first quarter of 2024. Adjusted net loss attributable to Polaris for the quarter was $51 million.

Q1 2025 Earnings Results

Gross profit margin decreased 16.0 percent for the first quarter, as compared to the first quarter of 2024. Adjusted gross profit margin of 16.6 percent decreased primarily due to higher promotional activity and negative foreign exchange, partially offset by favorable operational costs and lower warranty expense, as compared to the first quarter of 2024. Operating expenses were $303 million in the first quarter of 2025 compared to $313 million in the first quarter of 2024 due to lower R&D and G&A expenses. Operating expenses, as a percentage

Off-road segment driven by these factors:

Sales were driven by lower volume in snow and off-road vehicles. PG&A sales increased by one percent. Gross profit margin performance was driven by lower net pricing, resulting from higher promotional activity and negative foreign exchange (FX) expenses, partially offset by a favorable mix and lower warranty expenses. Polaris North America ORV unit retail sales were down 11 percent. Estimated North America industry ORV unit retail sales were down low-single digits percent.

On-road segment driven by these factors:

Sales were driven by lower volumes in Polaris/Indian’s on-road segment. PG&A sales decreased five percent. Gross profit margin performance was driven by negative product mix and higher promotional activity, partially offset by operational efficiencies. North American unit retail sales for Indian Motorcycle were down in the low teens percent. Estimated North America unit retail sales for the comparable motorcycle industry were down mid-twenties percent.

Marine segment driven by these factors:

Sales results were driven by lower volumes for Polaris’ marine business category. Gross profit margin performance was impacted by a decrease in sales volumes and negative absorption.

2025 Outlook

Polaris introduced Q2 2025 sales guidance of $1.6 billion to $1.8 billion but is withdrawing its full-year 2025 guidance due to trade and economic uncertainty.