Independent Indian part of ‘a secret plan’

When Indian Motorcycle Australia sent a shock email to customers at 11pm on 10 January 2020 saying it was closing its four company-owned Australia stores to go to independent dealerships, it was simply accelerating a long-held secret plan.

No other market had experienced the luxury of palatial company-owned Indian dealerships which offered a heightened customer service for the revived brand. It seemed the dream run was now nearing an end.

Secret plan

However, the shock email was simply accelerating a long-held secret plan within Aussie HQ in Melbourne.

Our sources reveal that a secret plan had been hatched some time ago to quietly find alternative independent dealers to take over as leases came up for renewal.

We spoke with several current and former company employees, customers and even online rider group members who mostly agreed to talk if we withheld their identity.

The real shock to most of them was not that it was happening, but that the secret plan was accelerated and made public.

Its timing followed the resignation of Australian boss Peter Alexander and the switch at global level from Steve Menneto to Mike Dougherty. It seems the new management had a different view of how things should run Down Under.

Many in the industry and in the company, as well as customers, acknowledged that it was an excessive and unsustainable business model.

But it still came as a shock that the long-held secret plan was suddenly made public in January, reminiscent of the 2017 shock announcement that Polaris would axe the Victory brand.

However, our sources say this indie dealership move is not part of a plan to axe Indian Motorcycle.

Good future

“Indian is not going anywhere,” one senior source told us.

That stands to reason as the company has just spent millions developing the new, cleaner and more powerful liquid-cooled 1770cc Powerplus engine that motivates the new Challenger touring range and likely more models in future.

“You don’t invest that much money and then close down the brand,” the source says.

Another former employee says he can see “a good future ahead and more sales once the network expands”.

“Time will tell, but you gotta have a bigger network to sell more bikes; that’s what this business is all about,” he says.

Indian and various sources say the move to independent dealers could create a wider and more regional network of dealers, providing more customers with better access.

Nervous shockwaves

However, the announcement has sent nervous shockwaves through the industry and among customers.

“They had been trying to do it secretly; going public with the plan was not smart,” a source says.

“It leaves too many questions out there.”

It is expected other brands will seek to take advantage of the move and it is admitted by our sources that Indian Motorcycle Australia will take a big hit in sales.

“Our ownership of the dealerships was an investment in the brand,” one source says.

“There are plenty of good indie dealers out there, but I don’t think they will invest at the same level as we did.”

The Indian business model of a mix of company-owned and independent dealers has been operating since Polaris kickstarted its Victory Motorcycles brand in Australia in 2008.

Indian Motorcycle was added in 2013 after being bought by Polaris. They sold 102 Indian Chief models in their first year.

Former Indian Motorcycle executive and now a senior US motorcycle industry consultant, Robert Pandya, said the factory-owned dealership was needed to establish the brand in a new market but had now run its course.

One former employee says the Australian model set new standards for motorcycle industry.

“We raised the bar for other brands, Harley included,” he says.

Well respected

Indian Motorcycle Australia had substantive hubris and was so well respected by HQ in Minnesota that the relaunch of the brand was simultaneously conducted in the USA and Sydney.

Customers have expressed their concerns on various forums that they will not get the same luxury customer experience and will find it more difficult to access parts and service.

However, the official notice emphasised: “It will remain business as usual at our company-owned stores in the interim while we bring new dealer partners onboard.”

Polaris Australia boss Alan Collins said customers needed “more locations and more support”.

“Moving to an independent franchised network of dealers is more sustainable for us and our partners as we look to grow in order to meet demand, while also enabling a broader network of support and options for our customers.”

Alan said they would double their dealer network in the next two years and confirmed ongoing warranty and parts support.

It’s actually federal legislation that parts supply and warranty must continue for 10 years which is what Polaris is honouring for Victory customers.

Staffing

Indian Motorcycle Australia also said it would look after about 30 staff and try to deploy them in the new dealerships.

One former staffer says he believes current techs will find a job “reasonably quick as they’re very capable”.

“All I’m worried about are the sales staff and admin. It’s harder for them considering the current environment,” he says.

Sales trends

The current environment is certainly grim.

Road bike sales in Australia dropped 11.9% last year, slipping from the top category to second behind off-road sales.

Indian has experienced strong growth in Australia, even during the past few parlous years of motorcycle sales, but last year recorded a 3.9% decrease to 803 sales.

Meanwhile, main competitor Harley-Davidson was down 7.9% to 6462 bikes.

Globally, Polaris Industries has announced that their motorcycle division was up 7% despite a drop in four-wheeler Slingshot sales.

CEO Scott Wine claimed the increase was largely due to the new FTR 1200 and Challenger bagger.

Despite only being launched in Australia in February, the FTR 1200 price has already been discounted $3000.

While other recent discounts were planned before the independent dealership announcement, the FTR range discount is a new initiative.

One former staffer admitted it looked like a desperate move to get rid of floor stock before closing its company-owned stores.

“It’s not what I would have done,” says one source.

“FTR sales were fine, but market conditions had changed. I suppose it’s moving-metal time.”

Customers have expressed concern in online forums that the discounts on top of the shock independent dealership announcement could not only affect strategic brand values but also the resale value of their bikes.

One long-time customer says Polaris will have to “manage and resurrect the brand name actively” to continue selling at a better rate than the current road bike market trend.

“Will they do that? Time will tell,” he says.

Servicing

As for customer concerns about the expertise of techs, Indian Motorcycle already trains servicing staff at independent dealers, so there should be no change.

Vintage Chief rider Chris Keeble who is organising an Indian riders rally in Silverton on May 9 says she’ll “miss the signature dealerships — they were great to visit — and now I need to find someone to service my bike”.

Indian Motorcycle says it will have a totally independent network by the end of 2020.

“We plan to expand our independent network the right way, with the right people, who will represent the values of Indian Motorcycle and provide you with the service you need and deserve,” their email said.

Customers are invited to call their Indian Motorcycle Australia Customer Service Centre on 0460775949 “for a chat” or contact them via email.