OPINION – BRP’s Scandinavian operations fill several niches
April 3, 2006
Filed under Columns
Rovaniemi, Finland — Up here, only a few kilometers short of the Arctic Circle, people like snowmobiles and they use them as a primary means of transportation in many areas. The Laplanders use BRP’s Lynx machines to herd their reindeer, and the region’s military forces have developed a fondness for snowmobiles because of their speed and maneuverability. Remember those white-clad ski patrols you used to see skimming across Scandinavian slopes in World War II movies? Today, in many cases, those troops are driving BRP snowmobiles.
During my recent trip here, I had the opportunity to visit a major dealership, tour the BRP facility and discuss powersports products and trends with Stig Matar, vice president and general manager of the BRP operation here.
We discussed snow, of course, but we also talked about the growth of ATVs and the extreme popularity of outboard marine motors.
BRP produces Lynx and Ski-Doo snowmobiles here, but it’s basically a Lynx market. The trails are not the same as those in North America, points out Matar. They’re bumpy and take some riding skill on a machine that has suspension designed for the ride. “In North America, trail riding isn’t sport, it’s like riding a car on a highway,” says Matar. “What’s the point?” Riding is so different here that all Ski-Doos have to be reconfigured for the Scandinavian trails and for deep snow, as well. “Here, we make European snowmobiles for Europeans,” says Matar proudly. “That’s what Lynx is all about.”
BRP operates its snowmobile, ATV and outboard engine businesses out of a 50,000 sq. ft. office/manufacturing facility and a 100,000 sq. ft. distribution facility on the other side of town.
The company produces 14 different snowmobile models in the plant, each geared to a specific market need. “That’s why we have good market share.” One of those specific niches is NATO — BRP is its exclusive snowmobile supplier. Three or four hundred units is a big run for the plant.
Scandinavian riding is very much about using sleds for work — herding, logging, ice fishing, power company operations. Even though the bulk of snowmobiles are used for work, Lynx still has been successful on the racetrack, according to Matar, regularly winning every major championship Europe offers.
But power generally isn’t as important to Europeans, as much as is good riding capability, says Matar. “Sport riding is more about family riding,” he says, “and in Scandinavia and Europe it’s more of a white collar sport, unlike North America where it’s more blue collar.”
There are about 110,000 registered snowmobiles in Finland, according to BRP calculations, another 190,000 in Sweden and about 80,000 in Norway. Lynx and Ski-Doo hold about 50 percent market share in Scandinavia, says Matar, with Lynx holding the top spot and Ski-Doo coming in second. Yamaha is growing quickly, he says, and is about even with Polaris for the third spot. Arctic Cat is last, according to BRP figures. Annual new sled sales in Scandinavia are about 19,000 units.
When BRP built its 100,000th snowmobile here, it tried to give the sled to a well-known local resident — Santa Claus lives here — but government bureaucrats wouldn’t let the company register a sled to a so-called “myth.” “How can he be a myth, when 500,000 people visit him here every winter?” asks Matar with a sly smile. The population of Rovaniemi is only about 60,000.
Unfortunately, from a marketing standpoint, those 400,000 or so Scandinavian sleds last a long time. The average age is 15 years, and so snowmobile manufacturers are looking about for new markets. The biggest one on the horizon is Russia, a country that has the largest snow covered populated area on earth.
While the Russian economy continues to struggle under a sluggish bureaucracy, there is a growing entrepreneurial middle class that has an increasing desire for mechanical toys — read that to mean automobiles and powersports equipment.
And BRP has its eyes on the Russian target.
The small ATV business in Scandinavia is growing at about 30 percent annually, says Matar, most of it for utility use since ATV trails really don’t exist. BRP estimates the Scandinavian ATV market is about 10,000 units today, but will be about as large as the snowmobile market within a few years. One difference between the North American and Scandinavian ATV markets is ATVs are street legal here and in most of the rest of Europe.
Polaris is the market leader here with an estimated 30 percent of the market. “They’re successful because they’ve been here since the start,” points out Matar. “We’re newcomers and, like in North America, we’re in seventh position.”
Scandinavia is a huge market for small outboard motors; about one in seven people in Finland and Sweden owns a boat and about 60,000 outboard engines are sold here annually.
Even though there are a lot of engines sold, it’s not a huge revenue generator because the engines are basically small displacement units. The average engine size is only about 25 hp, but it’s growing, says Matar.
Snowmobiles, outboard engines and ATVs — three nice businesses to have in a region that has some of the last remaining undeveloped lands in Europe and where people use these machines daily to earn a living.
Joe Delmont is founding editor of Powersports Business magazine