The tough economic climate is putting a damper on plans by Bombardier Recreational Products Inc. to go public.
After being spun off by Bombardier Inc. in 2003, the goal was to take BRP public within a five-year time span, but the slowdown has put that idea on hold, says president and chief executive officer José Boisjoli.
Instead, the company is taking aim at its rivals by developing new products to move more aggressively into the high-end, value-added power-sports category, said Mr. Boisjoli, who on Wednesday unveiled a sprawling new design and innovation centre in Valcourt, Que.
“Over the next two years, we're going to concentrate on product innovation, winning snowmobile market share in North America and expanding into Russia and Scandinavia and completing our Spyder portfolio,” he said, referring to the lineup of three-wheeler on-road products the company introduced in 2007.
To address sluggish consumer spending, “we're reducing certain [product]programs and tightening our belt,” but that won't be at the expense of developing new products, he said in an interview. “That's at the core of our strategy to stand out from the pack, especially with globalization and the rise of cheap imports from China and India.”
The key for BRP, as it seeks to distinguish itself from the lower-end imported products, is to penetrate further into the higher-end, power-sports segment of the market. To build on its successful Spyder launch, the company is preparing to launch a vehicle in the hot new “side-by-side” segment that is aimed at the power-sports audience, Mr. Boisjoli said.
Also known as UTVs – or Utility Type Vehicles – the off-road vehicles allow the driver and passenger to sit side by side and are larger versions of all-terrain vehicles (ATVs).
BRP's U.S. rivals Yamaha Motor Co. Ltd. and Polaris Industries Inc. have shaken up the market with their respective entrants in the UTV field – the Rhino and the RZR.
Once the legacy unit of aerospace and rail giant Bombardier, BRP has been working hard since being spun off to remake itself in the face of competition from not only established rivals such as Yamaha, Polaris and Arctic Cat Inc. but also the lower-cost upstarts from Asia.
The company is developing new products in its other categories – BRP also makes snowmobiles, personal watercraft and outboard motors – but Mr. Boisjoli said he isn't prepared to provide details just yet.
BRP is 50-per-cent owned by Bain Capital LLC; the founding Beaudoin family has 35 per cent and the pension fund portfolio manager Caisse de dépôt et placement du Québec holds the remaining 15 per cent.
Edward Aaron, an analyst with RBC Dominion Securities Inc. in Denver, says there's no doubt the economic slump is having a “significant impact” on consumer spending on relatively expensive leisure goods like ATVs and snowmobiles.
But not losing sight of the importance of continuously differentiating yourself from the competition is key right now, he added.
“Even in a bad environment, something new and differentiated still sells,” he said.