Polaris Acquires GEM

Yesterday Polaris Industries announced that they will acquire Global Electric Motorcars, LLC (GEM) from the Chrysler Group.  GEM has annual sales estimated to be $30 million and has been the leading LSV manufacturer.  IMS estimates their annual sales volume to be around 3,000 units, although they have been under pressure lately as more manufacturers have entered the market.  The sale will take about two months to complete and will strengthen Polaris’s On-Road division.  Polaris also recently acquired Indian Motorcycle.   Learn more:  Tradershuddle.com

Comment:  GEM is strong in the commercial LSV segment particularly in government and fleet sales to end user such as parks and universities.  Polaris already has their Breeze LSV for the consumer personal transportation market and an LSV version of their Ranger EV which originally targeted the military segment but has commercial applications as well.  The acquisition gives Polaris probably the most recognized brand in the LSV market and saves them time and money spent developing a brand of their own.  GEM has not substantially changed their vehicles in recent years so they will definitely benefit from high level and continuous innovation that Polaris puts into their product lines, as witnessed by their model development in the UTV market.  In addition, Polaris has an existing network of dealers that is around ten times the size of GEM’s current network.  The acquisition could add a real boost to the level of competition in the LSV market.

Another question is whether Polaris will be seeking more acquisitions in this space.  While GEM is more oriented to the commercial market, a company like Tomberlin produces LSVs targeting the consumer market.  Tomberlin’s management has a relationship with Polaris from helping them develop some of their off-road products in the past.  Tomberlin also has other products such as the Vanish electric UTV, electric ATVs and the Schwinn brand of scooters that could supplement Polaris’s existing product lines .

Bad Boy Buggies Recall & Acquisition

Recently acquired Bad Boy Buggies announced a large recall to address ongoing acceleration problems with their Classic model.  The recall covers approximately 9,300 vehicles sold from 2003 to 2010 including models involved in a 2009 recall that unsuccessfully attempted to solve the same problem. The vehicles can accelerate without warning and have led to some injuries.  Learn more:  CPSC.gov

Bad Boy Buggies was acquired by E-Z-Go in October 2010 and now operates as BB Buggies, Inc.  Given the extent of the recall and assuming management new the recall was imminent, being acquired may have been the only recourse for the company.  For E-Z-Go the vehicle line adds a 4-by-4 electric platform to their extensive product line.  In our discussion with executives about the acquisition they remarked that they see potential in the platform beyond its current positioning as primarily a hunting vehicle.  In local newspaper reports E-Z-Go management has stated that for now they will be keeping manufacturing facilities in the Natchez, MS but will be analyzing the best course of action in the future.  Bad Boy Buggies CEO Skrabo noted the top-notch engineering and manufacturing facilities E-Z-Go brings to the situation.  Learn more:  Chronicle.augusta.com