May 12, 2008 – Hot News
May 12, 2008
Filed under News
Lawsuit Over Credit Standards Could Exceed $75 Million
Polaris Industries has filed a lawsuit in U.S. federal court against HSBC Bank Nevada, saying the finance company threatened to drastically tighten its retail credit standards at Polaris dealerships and in so doing, jeopardized hundreds of millions of dollars in retail sales.
Polaris has asked a federal court to find HSBC violated terms of an exclusive contract between the two companies and to award the Minnesota manufacturer damages. Although Polaris has not asked for a specific sum, the lawsuit filed in the Northern Illinois district court says “the amount in controversy exceeds $75 million.”
HSBC said it does not comment on legal matters and at press time had yet to file a response to the Polaris lawsuit.
In a conference call with analysts, Polaris officials said the company suffered more than a 40 percent drop in its financial services in its first quarter because of the change in the HSBC revolving credit program agreement.
According to the lawsuit, HSBC told Polaris it would have to stop taking its financial service fees agreed to in the contract or HSBC would tighten customer credit ratings that would be needed to approve loans. The latter action, according to the lawsuit, could cause “the sudden and drastic collapse of Polaris’ retail sales volume.”
At issue in the lawsuit is what Polaris described as a change in HSBC policy, one that relied on a “forward-looking model” and not on the historical performance of the manufacturer’s loan portfolio.
Polaris has begun encouraging dealers to increase the other credit option available to consumers, GE Money’s installment loan, Mike Malone, Polaris’ chief financial officer, said in the conference call. Malone said the increased use of the installment plan “will not replace the fee income from HSBC but will certainly soften the impact of the change.” Malone noted Polaris’ financial services fees revenue could fall from $28 million in 2007 to $5 million-$10 million this year.
Besides encouraging dealers to use the GE installment option more, Polaris also is investigating possible alternatives to the HSBC revolving credit program, Malone said. “But in this challenging retail credit environment that we’re operating in, our options are limited in the short term to secure a favorable long-term contract,” he said.
Online Interest in Bikes, Scooters Spikes
Motorcycle buying interest at NADAguides.com increased 48 percent in March compared to the previous year period, the company said in a recent press release.
The company, a vehicle pricing and information Web site, says it believes this growth in interest is an indicator consumers are increasingly considering motorcycles as “daily drivers” vs. luxury purchases as concern grows over soaring fuel prices.
The company defines an increase in motorcycle buying interest as the number of new motorcycle prices provided to consumers at its Web site.
“We believe the current state of the economy, coupled with recent summer fuel price predictions, has caused consumer mindset about motorcycles to shift,” said Lenny Sims, motorcycle editor and vice president of operations at NADAguides.com. “In our opinion, motorcycles have become attractive options as primary vehicles for daily drivers — due to their fuel efficiency — and are no longer considered just a luxury, secondary-vehicle purchase.”
MC Advantages to Distribute Baker
MC Advantages, Grimes, Iowa, distributor of high-performance V-twin parts, announced all its dealers will carry Baker Drivetrain products, according to a company press release.
MC Advantages General Manager Kent Reed says Baker is a strong company in the V-twin market. “Baker represents innovation and determination in the V-twin market,” said Reed.
The company currently distributes numerous brands, including S&S Cycle, Martin Bros., Spyke, Stampede, Prowler, Bulletprüf, D&M Custom Cycle, Jims, Dynatek, Compu-Fire, Crane Cams and Hooker.
Canadian Dealerships to Offer Membership
The Motorcycle and Moped Industry Council (MMIC) and the Motorcyclists Confederation of Canada (MCC), a not-for-profit organization that ensures the future of motorcycling in Canada, entered a joint venture to allow dealerships across Canada to provide a free, one-year MCC membership with the purchase of a new street-legal motorcycle or scooter, according to a MCC press release.
Consumers must fill out their information and VIN number on the MCC Web site, www.motorcycle.ca, to receive the membership. Once registered, members will receive discount packages, such as a 15 percent reduction on motorcycle insurance.
Peter Jacobs of the MCC said the partnership will provide “riders with immediate, tangible benefits, and exposes them to the power of rider advocacy. psb