Did Arctic Cat Abandon Its Customers?
With Arctic Cat selling out to Textron January 2017, Arctic Cat dealerships and brand-loyal followers and bystanders weren’t exactly sure what would happen if things would become better or worse.
Textron has a history of purchasing and selling companies when the opportunity’s reveal themselves to increase profits. As you already know, most businesses are in business to show a return and profits to investors.
The Good
From the sidelines, we watched as Textron abolished the Arctic Cat off-road vehicles and re-brand it “Textron Offroad.”
We watched as Arctic Cat Dealerships folded under pressure and put their businesses up for sale, hoping an optimistic entrepreneur would step up and see opportunity. We saw a large portion of Arctic Cat Dealers moving to sell Textron brand golf carts and other Textron products to help with the decrease in sales.
We’re not saying this is a bad thing adding diversity and sharing of technology between their extremely large group of companies and it could even be beneficial to the new Textron Brand.
We think adding new models and marketing some new ATVs and side by side to the market under a different name might get some traction, but the numbers are yet to be released, so time will tell.
The Bad
On the other side of things, we saw Textron decided to keep the branding of Arctic Cat Snowmobiles as their customer base is pretty loyal, and they didn’t want to deter the snowmobile enthusiasts. We thought it was a smart move to keep some remnants of the old company.
What we saw next was a huge double-edged sword with colossal ripple effects across the industry. They started aggressively marketing to customers. Textron brought out huge rebates like we mean really big rebates, bigger than any arctic cat dealership has ever seen before.
You would think this was a great move from the heavily paid marketing team at Textron, but then the calls started and gradually increased in frequency.
The Ugly
We started getting calls from Arctic Cat snowmobile riders looking to switch brands because their local dealer was selling the same snowmobile they purchased last year for $4000 – $5000 cheaper than they paid.
The ripple effect a move like this causes is incredible… in a single promotion, Textron destroyed the Arctic Cat pre-owned market, alienated their loyal customer base and caused substantial negative equity to their existing Arctic Cat Snowmobile Riders.
When someone purchases something new or pre-owned, they always expect some depreciation when they drive it away, but could you imagine taking in your regular depreciation but also having to eat an additional $4000 – $5000 worth of depreciation.
For example, let’s say the first year of ownership costs you $2500 to ride in depreciation, so next year, you can upgrade to a new snowmobile, and you know it will cost you $2500. It is pretty straight forward.
Let’s throw in the curveball no one saw coming… Let’s add in that new snowmobile being $5000 cheaper, so now instead of $2500, you now have to pay $7500 for that one year of riding.
Face it… No one will buy a used snowmobile for more money than they can purchase a new never driven snowmobile. There needs to be a large enough gap to justify buying used over new.
Imagine taking advantage of a 60-month financing promotion, and with such a massive depreciation in value, you will never get a favourable equity position on your snowmobile again.
On the other side of things, the big programs might bring a few new riders into the Arctic Cat family with the significant discounts, but for every person who owns an Arctic Cat, the pre-owned market took a large hit for the value of your products.
Conclusion
No one purchases a snowmobile with the expectation that it’s going to go up in value, but the massive drop in Arctic Cat trade values sure has Arctic Cat riders rattled and upset.
Don’t get us wrong we still take them on trade, but with the market, how it is valued isn’t even close to what it was even 12 months ago at the end of 2016.
We would love to hear from riders and other arctic cat dealers to what they are seeing happening in the marketplace. Maybe some Arctic Cat Dealers see something different in the market; if so, please comment below!
I know what you mean bought two new cats last year month later they dropped price by 6- grand on both wicked kick in the nuts
Your not alone Rick we have had tons of customers coming and talking to us and are so upset about what they did to them. From our side and looking at it from the customer side it was a pretty ruthless move from Arctic Cat.
I didn’t buy my snow check for this reason!! Why buy a $16,000 Mountain Cat this year when it will probably only be worth 8 next year…
Textron, if you bought Arctic cat. And me being a Arctic cat lover I am very curious to see what you will be making in the year 2020. To see how advanced the sleds will be. Please do not abondon your Arctic cat customers for the love of Arctic cat.
I cannot complain as a dealer with the Textron take over. My family has had Arctic Cat since the 60’s and the Textron guys have been prettt good. They needed to get way aggressive with the rebates due to all the left over inventory. That inventory was due to poor leadership from Claude Jordan and Christopher Metz. Both had large payouts on there contracts and drove up inventory. These contracts were agreed on by the board and shareholders so it was their own fault. Now that cat is more privately run and has more financial backing product will be better.
Its nice to hear from a dealer in regards to the subject. We don’t sell Arctic Cat but we definitely know lots of dealers and for years they were complaining about Arctic Cat jamming product at them. Hopefully the new management will have its priorities straight. Thanks for the insight Tom
It doesn’t matter what Textron puts on the sleds for rebates, they could put $10,000 rebates on them. The market will find equilibrium regardless.
Do last years buyers feel cheated in the short term? Probably, but if these machines should be selling on the used market for thousands more eventually that equilibrium will be reached.
Its possible it will rebound but we suspect it may take 4+ years before we see that happening.
Reality is what you write is true! Never thought about this . Unaware! Scary
It sure makes you think. It will be interesting to see how it all plays out.
Well not only did I buy the worst year of cat now you are saying the resale value is not there it doesn’t make me want to buy another one I have put so much into my sled to get it to be rideable with the new front end shocks sterring post clutches gears jack shaft and so on I will never be able to sell it that just flat out sucks I new I should have bought a skidoo
I’m a Polaris guy but ride with all makes. Cat has been total junk since owned by kymco. “Chinese Offshore”. I promise you that you won’t be let down with brp. You pay more but you get more. Look into market share. That’s what dictates a solid company. Brp’s technology is second to none
Both BRP and Polaris are ahead of most in technology and ride but make sure you don’t forget about Yamaha they are a big company and take a while to gear up and focus. In the last few years Yamaha has started bring tons of new products to market, we even saw them bring a Yamaha made 850cc engine out which we thought would never happen.
What a joke. I would love to see where you can trade up a sled one year old to a new one for $2500. Yes Textron bought out AC and that was good. They put rebates out there to alleviate the prior managements woes and to move units with older technology. As most are aware AC has released a new Turbo last year and a new 800 this year. The dealers have reported that Textron is a breath of fresh air and I as an AC rider feel that Textron will take the company to new levels. I have 5700 miles on my 2014 ZR 8000 with no problems and a great engine. We can also talk about Polaris with their pre Axys 800 engines that require aftermarket “fix” kits. Talk about abandoning their customers as they spend $3000 dollars to be able to ride again and nobody who is in the know will buy one of these. This is just a poor way of slamming your competition and making your dealership look bad, because that’s all it does. I am happy that their are 4 healthy manufacturers left and you should be too, it’s good for the sport.
Thanks for taking some time to write down your thoughts Dan. You must of read the article wrong. We said for example if it cost $2500 not that’s what it cost. If you must know thought we have lots of customers that upgrade every year for on average $3000 – $4000 difference and on occasion the $2500 mark depending miles and condition. I’m not sure that asking other arctic cat dealers and riders about what is really happening and what they are thinking makes Westshore Marine look bad but you are entitled to your own opinion. Its turning out to a good start to the snowmobile year. Happy Riding.
Dennis was doing trades at 2500 per year, now 3000 to 3500 CAD which is close to 2500 USD
This is crazy , I work for a Arctic cat dealership .We didn’t order anything this year ! Why order it when they still have 2015s new in stock ! So we are just letting the Arctic cat dealership go . We only have 2 ZR 120s left , so we are in great shape . We ordered 20 sleds and atvs last year which cost about 200 hundred grand . We made 205,000 dollars . Why have it when you only make $5000 ? Makes no sense .
On another note anybody else feel like they dropped the ball with their clothing line, I thought that buying Motorfist would upgrade their stock. Now nobody sells it cause all the big dealers are undercut the small guys and only big it in at the beginning of the season with no stock after its sold
There are a couple problems with your assessment.
1. The “ugly” section of your article sounds like a nice sales pitch to get Arctic Cat customers to jump ship. Your “customer’s” claims of $4k-$5k off is a little inflated. Yes, you can get a hold over for $3k-$4k off msrp. This is the same fall sale that it has been the past handful of years. This is no different than any other year, so your first statement in the “ugly” section simply isn’t true or is coming from customers who are not familiar with what the market has shown for the past 5 years. As a quality dealer, you could have informed them that this situation is standard instead of trying to put a negative spin on it as you try to sell them a different brand.
2. There is obviously a surplus of inventory in Thief River Falls caused by terrible decision making by the previous management teams. From there it is simply supply and demand. The huge surplus in inventory and low demand for old technology can only cause prices to go in one direction. Again, as a quality dealer you can inform customers of the situation instead of putting a negative spin on new leadership team.
Thanks for taking some time. We aren’t trying to switch people to another brand rather just bring light to a few issues. We have lots of customers who ride arctic cats that they purchased from us and are really happy with them. There’s no such thing as a bad brand just bad dealerships to deal with and bad corporate decisions / management at times.