Arctic Cat Restructures, Intros 1000cc ATV

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Things have been hectic at Arctic Cat. The company in June announced a plan to split into three separate reporting units based on the snowmobile, ATV and parts businesses, and move portions of its operation from extreme northern Minnesota to Minneapolis.

Arctic Cat chairman and CEO Chris Twomey says changing the company from a functional organization, with engineering, sales, marketing, finance and operations, into a company run via three distinct business units should allow each unit to focus more on growth and profitability.

"We'll divide into the three units and get general managers for each of those," he says. "Then those general managers, along with our sales and marketing groups, [CFO] Tim Densmore and I, will move to the new location, but our human resources, operations and engineering groups will remain in Thief River Falls."

The OEM had spent the last 48 years in northern Minnesota. "All of our business partners are located [in the Twin Cities], so it really just makes sense," says Twomey. "We want to have a quick trip to the airport, but we're also dealing with accountants and lawyers and public relations groups who are downtown, so we're just looking for some nice, functional office space that'll allow us to be ready to roll in the next three to six months."

Only about 15 employees will be affected by the move this year, he says.

Arctic Cat had sales of $782 million last year, most of which came from the company's ATV and, to a far lesser extent, snowmobile business.

"People can look at the numbers and say, 'In 2007 the entire snowmobile industry sold only as many sleds as they did in 1990.' And that's not a good statistic," Twomey says. "However, our surveys of retail customers are telling us that the snowmobile enthusiast is out there, just not buying as often.

"In a survey of customers who've bought a sled during the past 10 years, only 4 percent of the customers surveyed said they had left the sport. They're going to the websites and the shows, but they're not going to the dealerships."

Arctic Cat's ATV business, however, seems to be capturing market share.

"The ATV industry saw a slight decline last year, and we for the first time saw a slight decline, but only at half the rate of the industry, which means we saw a slight gain in share," Twomey says. "Of course, I'd rather gain share in a growing market through the number of units I sold, but frankly, I'll take it."

Twomey says Arctic's ATV business has been benefiting from Prowler and youth quad sales, as well as international sales.

"We increased our market share in the sport-utility and youth models last year ..., and we're really just getting started internationally after buying our European distributor two years ago and going dealer-direct there as of December '06," he says.

At last month's dealer meeting, Cat revealed six new vehicles, including the largest quad ever to roll off of a production line: the Thundercat 1000. The Thundercat 1000 is motivated by Arctic's H2 engine.

Because of the unit's shear power, the quad also features a newly designed 52.5-inch extended chassis to keep it planted to the ground and a beefed up rear differential, reportedly to better transfer power and protect the driveline.

Arctic designed the Thundercat with "ride-in" calibration; as a rider climbs aboard the quad, the unit squats roughly 2 inches without affecting the 11-inch ground clearance. The Thundercat 1000 will retail for $10,499.

Other newly introduced offerings include the Prowler XTX 700 EFI (MSRP $10,999), 700 EFI TRV Plus LE ($8,999), 700 Diesel ($9,299), 366 Automatic ($5,369) and updated 90 DVX ($2,299). — Guido Ebert