So good morning, everyone. Thank you for joining us for 2016 Analyst and Investor Day live from Juarez, Mexico. This morning, we will have presentation from our management team. We will have Jose Boisjedi presenting our strategic priorities update Anne Bellelet presenting a marketing and pack update. Alain de Leneur will present the marine propulsion system.
Then we will have a 10 minute break around 11:0:5 local time followed by a presentation from Sven Discogione and GSP overview and international update and followed by Bernal who our VP of South North America will present a North American market trend update. Finally, Sebastien will present a quick presentation about some finance topics. And finally, Jorge will come back for closing remarks. As usual, this presentation will include a forward looking statement. Those are subject to a number of risks and uncertainties and you can find a full description of those in our MD and A.
With that, I'll leave the place and closes. And good morning, everyone. Thanks for the one here on the room and the people on the phone. First, welcome in Uarez. We're quite happy with our 3 manufacturing operation in Mexico and we're very happy that you took the commitment of taking 3 days of your schedule to come here in ULS.
As I said, we're very proud of our manufacturing operation here in Mexico. We started the URS 1 that you visited this morning in 2005, KV10 in 2012 and now we have URS 2 that was opened last fall then very, very happy. Also last time we met for a full analyst and investor meeting was in Austria in the spring 2015. Then we're quite happy to give you an update on the business plan and to give you also the status of the progress that we've done. The first award on our fiscal year 2017 year end.
In terms of H1, there is always plus and minus for the industry for us, but we are on track. Overall, we are on track versus our expectation for H1. We're happy with our retail in the first half of the year versus the industry to have grown the retail by 8% in H1. Despite that some industry are struggling, we're quite happy with this. Overall, for the year end, we know that this year is again loaded second half.
But while we confident to deliver on our guidance, I would like to remind you that we have order on hand for snowmobile. We have order on hand for watercraft. And maybe some people don't know, but at club in Orlando, we took order on hand for the X3. Typically on asphalt, we take quarter every month for the next 60 days. But because we're setting up the pipeline and we knew that everyone was asking for more than we took order for the next 6 months, then we have order on hand for all those product lines.
And like we do in H2, we're filling up the pipeline with new EPVs, new other side by side. And that's why we're comfortable with our guidance for the end of the year despite that the fall will be busy. As I said on the call and some of you in the last few since yesterday I met Sandy, but we reorganized the Global Sales and Consumer Experience division with Sandy who has 20 years experience with us. I took the leadership and we're very happy. Sandeep is very they understand extremely well the dealers, the dynamic of the product, the dynamic in the industry And I'm very happy that Sandy accepted this new role.
Now going back to what we shared with you in Austria. Maybe you will find it boring, but the plan is working and it's a continuity. Then basically we maintaining our key strategic priorities. I would like to read it again. Growth accelerate Can Am Growth define the next wave of growth.
I will search more about that. But I think today you will understand a lot more what we met 18 months ago about agility and lean enterprise. And agility is an element of 1 piece flow, a more modular approach and a more flexible supply chain to better serve our consumer and dealers, Niel Enterprise implement new core technology and drive margin improvement on new product launches. And I will give you quite a lot of detail this morning about the 3 pillar, but you will understand better what we have done in the last 15 months on Agility and Enterprise. And one thing that I can assure you the team is very well aligned to deliver the plan and this is worldwide.
This is our scorecard versus growth industry and BRP. And if I comment on ATV, we had planned at the time the industry to flattish. It was down low single digits. But we've done better than our plan with the Outlander Mid CC category and that's worldwide. On the side by side vehicle, the growth has slowed down.
There is a lot of competition, a lot of inventory, but we are on plan despite that downside in the industry. Spider as you will see in a few minutes disappointed by the slowdown of the high priced motorcycles and we're disappointed with our performance since the introduction of the F3. And definitely we need to readjust going forward. Snowmobile, the last two seasons was so so in terms of snow. Then the industry didn't do as well.
On the other hand, we're very happy. Highest market share ever last season with Ski Doo. And the introduction of the new RevGen brand new platform will be there for many years very well received by the consumer worldwide. Personal watercraft, incredible momentum. And Bernard and Sandeep will give you more colors about where the industry is growing.
But basically in North America, the industry grow again high single digits this summer. And on top of it in some countries by 20% then the industry is very healthy. On top of it, we've been able to grow in both the Spark category and the traditional watercraft. Been very, very happy with the momentum there. As Gordon said, we had planned at the time a 2%, three percent growth in the industry.
The industry is doing better than that. We're doing a bit better than what's the plan on the G2. We've been able to sign a lot of OEM and boat builder sorry OEM and dealers since the introduction of G2, a bit behind in G1 and would rate all of this like on plan. Then again, you see that despite some industries that have done worse than planned, because of our product diversification and our geographic diversification, basically overall we're delivering on our plan. In the growth pillar, obviously the product is there, but you'd have we have ongoing many initiatives to support the building of the awareness, to support the digital exposure, to support the dealer network expansion.
Then right now a lot of things are going on. We are on plan and Anne, Bernal and Sandy will give you a lot more detail about this in their own presentation, but the plan is quite exciting to be honest. And you can see even going at the 2nd higher pace in the coming years. Now why we are strong on our potential on the ORV business. If you look at the mid PC or the mid CC category, this is North America.
But if you remember when we launched the Outlander L 2 years ago, we said our goal is to double our market share. We achieved this. And when you look where we are season 16, there is more room to go by to grow the mix PC category, our share in the mix PC category. We're still a small player in that big segment. The Defender what you have in season 16 here is the market share we had in July.
It's not year to date. It's in July because it took 6 months to fill up the pipeline and to have some momentum. But you can see that we are very confident with the product that we have that we can grow our market share in the utility segment, the biggest into the industry. And on the sport category, the market share that we see there is what we had with the existing Maverick. We do not include yet the X3.
But when you look at our proportion in the sport category, we believe we're well positioned with the X3 to grow our market share. Then basically on the off road vehicle business, there is 3 things that we need to make sure we continue the momentum. The first one is continue the lineup extension. The second one is the awareness of the Can Am brand. And the third one is the dealer network engagement and momentum.
And you will learn enough more today about what we're doing to try to engage particularly the multiline dealers. Spider, a different story. And here you have the U. S. Motorcycle industry in the last 3 years.
In black is the motorcycle over $18,000 and in yellow it's under $18,000 And as you can see, you see that the growth in the high end motorcycle industry has slowed down and was negative in 2016, which was a surprise for us. And we see that the entry level or the net price for the cycle is doing better than the high end. Then there was that shift that was not planned when we've done our planning 18 months ago. On top of it and that's why we wanted to give you some colors on the mix. You see in 2014, it was RS and ST in light gray, RT in dark.
The F3 was introduced in 2015. And in this perspective, we probably made a mistake in season 15. In season 15, because we knew that the RF and ST was handing and we would have more F3, we came out in June, July with 2 aggressive programs, which pulled some customers probably and devaluated the trade. And it created frustration for the consumer, frustration for the dealers. And that's why in 2016 even if in June, July the trend was not doing well, we decided not to do those programs, because we want to reestablish the level of inventory out there at the level where everyone will be able to make money.
Then this is a bit what happened our performance in season 16. We're not happy about Then the learning of this season. There is definitely a need for price point F3 and that's why we have introduced the base F3 at 16,999. And also one learning, the marketing campaign in season 16 was talking to a broader audience. But those customers who have no idea about the motorcycle industry, never ride a motorsport are more difficult to bring or to convert.
Then for them when you talk about a motorcycle license, it's like a mountain. It's like a very, very big obstacle. Then we need to do on the other hand, the campaign was successful because it drew a lot of interest, a lot of need, but we need to do a better job to convert those people who have interest to buy the product. One thing that we've done beginning of the year, we didn't talk about it, but we had a small team of 4 people in California and 4 people in Florida doing things. We said to the dealers that those people just do regional stuff, try things to see what we can do not do.
We need to crack the code in the U. S. And I'll give you an example. We discovered that in Florida where we have 26 dealers, only 3 would facilitate the motorcycle license for the consumer. The other 23 just go there and no assistance.
Then at the end of the season, we had like 22
of the
26 who were well organized to help the customers to pass this motorcycle license. And that's the type of thing we need to do more regional help for the dealers to convert those customers that have interest, but there is too many obstacles in the process to buy the product. Then we're not here today to present our plan for season 17. We're still learning, wrapping up the season 16. But definitely you can expect from us a more regional approach in season 17.
There was too much good learning from what we've done in California and what we've done in Florida. On the growth pillar, we have defining the next wave of growth and we have in the last few months defined our framework. We always been monitoring the option in the market, But now we have a team in place with this framework who is looking how we what do we do next. And here the 3 pillar and I give you some examples. Then the framework is we could do something 3 and 4 before.
Then it's innovative growth opportunities that are part of BRP's current core business. Then for me the Spark would fit that pillar. Expand the core, growth of opportunities that are not part of BRP's core business, but are a natural expansion to BRP existing activity, the side by side business with Fit by Pillar And new growth territories that are feasible and accretive, the Spire would fit that category. Then that's the 3 pillars that we're looking on. And there is 3 ways of doing it.
We could do it in house. We could do it in partnership with some other company or we could do a potential acquisition. And that's the framework that we have. And we are very active right now to make things happen because we know that we're filling up right now the white space in our 6 product line. And at one point, we need to define what's next.
But I can assure you the framework is there and the team is in place to accelerate things. Now going to GDP and Mean Enterprise. There is 14 that we have discussed with you or launched in the last few months. First, the watercraft transfer to Queretaro was completed and on plan. The URS 2 startup of production and production rollout is on track and I will talk about it in a few seconds.
The Grand Fusion 2020 plan that you saw last year or 18 months ago in Austria is on track. And the Valcom 2020 is on track and I will give you more color about this in a few minutes. Then we have those initiatives that are improving our GDP and lean enterprise and we expect to drive margin going forward. And in fact, at constant FX, we have improved our margin between 2014 and 2016 and we believe that things could accelerate going forward and Sebastian will give you some colors at the end of the morning. Then let's talk about Constriction and their plans over there.
We have 2 mature sites Constriction and Valco and we needed to find a way because that's the know how. We needed to find a way to protect the know how, but make sure that they had value to our business. Then in construction, what we've done is implanting new technology to create customer value and improve margin. Then the first thing that you saw last year is we have invested in plasma coating. And the plasma coating, it's a bit technical, but due to releasing the steel sleeve in the engine by coating, It's more efficient and that gave us the opportunity to design a 300 horsepower engine with 1.6 liter.
Now the 860, the new engine with automobiles in South Sopact Smart Boateng. Then it's giving us the opportunity to design more efficient and performance engine for the same CC. One thing that I would delegate this morning, we decided 4 years ago to design our own servo. Just to give you a sense, there was last year in 2015, 52,000,000 servo produced in the world and 3 company owned 80% of this market. Then when you're going to knock on their door, you're asking for a turbo for 20,000 units.
They say, okay, we have those models, pick the one that fits your need. And when we ask for a delivery to say in which day you want us to deliver the turbo. Then this is what's very difficult. Then the turbo that you have in the picture there is the X3 servo and is the 1st BRP product with our own servo. Again an idea to create value.
We can produce those turbo for less than half of the cost than what we had before. That's why our Maverick or Extrutivo is well priced versus some of the competition. And on top of it, we have in the process to improve our assembly line. In the 1990s, we had 14 assembly lines. Today in 2016, we have 5 assembly lines and we're going to 2 assembly lines going forward then more efficient into the factory then.
But roll tax at the end of the day and for the one of you who were there in 2015, roll tax is a key differentiator of BRP. And we found a way to create customer value and improve margin even if we are in a higher cost country. Now ULI's 2020 plan. The tagline is implementing the most efficient manufacturing system in the industry. And here what it does here.
It's not a factory. It's not a product. It's a manufacturing system. And here my story. I'm a BB Boomer.
Then a few years ago, if you go back 15 years ago, RV, there was like the A 4, the A6 and the A8. BMW they had the Series 3, the Series 5 and the Series 7. And I could not understand why in the last few years you have the 2, the 3, the 4, the 5, the 6, the 7, the 8 Coupe Convertible and Sedan and we're launching this at a pace that we cannot follow. Then I had the chance in the summer 2010 with a group of people to go in a car company in Europe. I want to deliver the name and understand how they do it.
It took us 2 years to adapt the principle. And it's about adapting what they do in European car company to be so flexible, so agile and go very, very fast to our product line. And it's about establishing product design rule. And the Defender is the 1st product that follows the design rule followed by the Ski Doo Rev Gen 4 followed by the X3 And all new product at BRT that will be designed will be following that architecture. Then it's about designing the product, but at the same time designing a factory very efficient to be able to assemble this product and change the product all the time and be able to implement the model.
Then because here in ULS-two it's a greenfield application as Sylvain will explain to you the factory is extremely efficient and we have a very, very good assembly line. Then this manufacturing system not the design of the product not only the factory, this manufacturing system permit us to introduce a new side by side every 6 months for the next 4 years, a bit like some European car company has done in the last few years. Now Vanco 2020. The tagline is rightsizing our mattress site to improve efficiency. Then in Vanco, we outsource the EPV.
We outsource the watercraft. We were due to do something. Then we have committed to invest €118,000,000 over the next 5 years. We are in our 2nd year. We are in our 1st year.
We ended the we started November last year. But basically the plan is we're going from 2 assembly lines to 1. Spider will start on that new line in the fall 2017 followed by a snowmobile in spring 2018 and this is to improve our efficiency and reduce our overhead. Because we're freeing up one building, we will in source the logistics center that was about 30 miles away from Belcourt and this will improve efficiency, reduce overhead and reduce transportation costs. And the last is not least, The our policy was outdated in Zancro.
It's an old site. And basically, we sat down with our employee and we said, we're ready to invest, refresh the manufacturing system, but we need to adapt our salary. We need to adapt our way to work. Then right now, we have negotiated with the employee and we've gone from 42 policy to with 230 page to 12 policy 60 page. And that's why in some employee category, we have now the salary freeze to 3 to 5 years depending on which category to bring Vanco competitive to what we pay into the market.
Then the idea here is to bring Vanco expertise center to the next level. Then at the end of the day and I think we it's something that we believe our diversification is a key differentiator in the industry. We have a diversified product portfolio. We don't depend on ORV business on motorcycle than some of our competitor. We are the industry leader in snowmobile, in watercraft and we have a good momentum in all our product lines.
We have global sales diversification selling half in the U. S, 20% in Canada and 30% international. And the other thing and Dana will give you more color about this, but we started about 3, 4 years ago in the program to improve dealer profitability. We won't we found a way we believe to engage the multiline dealer to sell more BRT product and we launched 4 years ago a program to differentiate ourselves from the competition to improve profitability and engage the dealer. And we have 7 manufacturing sites manufacturing sites in high cost countries Canada, United States and Austria, but who bring value and manufacturing capacity in lower cost countries.
Then our diversification is allowing us to keep growing despite a volatile environment. In my last slide, which Waco presented to you in Austria 18 months ago, our objective is to grow our sales by 10% and our EPS by 15%. And basically because of all those Agile all of those priorities that are supporting Agile and Lean, we believe that we can grow our EPS faster than our revenue. Then that's in a nutshell my update on the overall situation about our business plan. Any questions?
Any questions? Yes? What is the broad view of your macro
I'm sorry.
What is the macro
assumption behind your
I would say that if the overall industry and the big one, If United States, Canada, Western Europe, I would say the impact is a little like this. We believe that this plan is very achievable. And there is always the Brazil that is going down and Russia that is going down, but we can maneuver with all this. If the big economies where we have big industries are stable like are today, we believe we can deliver that plan because again we're penetrating white space.
Thank you. You mentioned you're looking at financial acquisitions. What's the criteria for those acquisitions? What would we need to bring to the company? What kind of valuation multiple we'll be looking at and how comfortable we're feeling to go in terms of
But in terms of business, it's following those 2 pillars. This is in terms of business. Now we believe that with the refinancing that we've done, we have the capacity to do an acquisition if we need. You want to add something? Yes.
Obviously, Tony, we aren't looking at growing the top line. The priority is growing top line, yes, but also needs to be accretive to the bottom line and overall bring shareholder value. We've got different metrics we look at overall return on invested capital. Today, we're at the range of about 22% for BRP. So obviously, we don't want to dilute this if we were to do an acquisition.
Synergies is something we're looking at as well and also leveraging assets we have. We have a strong supplier base. We have a strong distribution network as well. We have manufacturing capacity and know how. All that together are factors that we're considering when we're looking at various acquisition scenarios.
We don't want to do an acquisition only for the financial aspect. We need to bring value to the business and that's why it was important for us to define those 3 pillars. Mark?
Yes. Could you take it? In terms of those 3 pillars, maybe just give
a bit more color or some goalposts around what you mean when you say natural expansion or feasible?
Just to sort of help us get a
potential possibility? I mean, I try in my presentation to give you a sense for what it means. But for us, when we say if you just find my page sorry about that. When we see reinforced the core, the core is reinforcing it's like a spark. The spark did grow the industry, did grow the traditional underwater craft.
And for us, it's reinforcing the core. I mean I have the question all the time. When can you do a spark with spider? When can you do a spark with ATV? Then that's the type of thing you could do to reinforce the core.
Expand the core is something that's a bit like Sebastien said, you leverage your supplier network, you leverage your dealer network, you leverage our manufacturing expertise like having a product line like the side by side front, the side by side same brand, same supplier network, same dealer network. It was a big benefit to have the side by side business and this is what we call expanding the core. The third one is retail returns, which is a bit different than the rest. We want to create a new industry like we've done with Spider. We're stretching a bit more the envelope here because we could have the base about the theater network.
But we're stretching more of the envelope here than the first pillar that's more natural for us. So the 3rd pillar could include something that doesn't necessarily leverage or go through the dealer now? Yes. It could. Yes.
Okay.
Just one last question.
I now have a full section on this later on, but I can tell you that what the team has done is quite impressive And because North America is our biggest market that drives the show for implementing those philosophy in other country and tools in other countries. But basically 4 years ago, we said to ourselves we need to find a way to attract the multiline dealer. It's clear in our book a single line BRP dealer is way better than multiline dealer, but the multi line dealer in the United States is a reality that we will not change. And we said, let's find let's put together an ecosystem that will force in a certain way the multiline dealers to come our way. The base is the product.
We need the product. This is if you don't have the product, you can have all the rest. It won't work. But if you have the product and I believe we have good lineup, how could we turn the momentum in our favor with multi line year? And Dan now will give you a lot of detail about this.
I'm trading expectation Benoit for now. Thank you very much.
Great. Well, good morning. Today, I'm going to touch upon some of our marketing initiatives and PAC in support of our 2020 challenge. So first on the marketing front, we have developed a specific marketing mission to align our global marketing teams around the world and provide a retail orientation focus for the organization. So we have 3 key pillars as part of our mission.
The first is consumer insights. And it's all about elevating our knowledge and understanding of the consumer. Because the market is changing. New generations of consumers are behaving differently. They're consuming differently and we have to be on top of it.
The second pillar is digitally driven. And here we want to own the digital space. That is that we want to be seamless as we try to target where our consumers are and we want to leverage fully the technology that's available. And finally, we wanted to break through the clutter in the powersports market with bold and differentiating approaches that distinguishes us, our brands in the seat of sameness, just like we do with our product. To execute our marketing mission, we have adopted 3 key principles.
The first is expertise. So we seek to learn from the best organizations that are out there whether it be Facebook or Google, AMA Associations or other automotive examples, so that we can get the latest. And we've also formed centers of excellence within our marketing team. And these centers of excellence revolve around CRM, digital strategy, shows and events and that we want that knowledge to be deployed across the globe. So we really can focus our efforts around there.
The second is focus. So we deliberately make choices by focusing on where there is most value for our marketing investment. Whether it be which geographies, what product line or what marketing initiatives are we going to choose, we're looking for a return on that. And we have shifted 30% of our non working dollars into consumer driven and consumer facing working dollars in the past year. So that's an investment that's completely consumer facing.
And then finally scale. With our new digital tools, more sophisticated media analytics. It gives us the ability to test and rapidly adjust our campaigns before we do follow out with large scale investments. And our assets of course are developed centrally and shared across the globe. And now that we have a common digital platform that we can all share, we can deploy globally much, much more rapidly.
So let's delve a little bit more deeply into the 3 pillars, starting with consumer insights. So the consumer experience and insights are at the core of our BRT product and good market strategies. Information comes from various sources internally and externally and we cross reference these pieces of information to develop insights. And we use tools. Obviously, we leverage our CRM database.
We do market research and needs based segmentation like these are the traditional tools. But we've also been able to evolve our analytics to be able to analyze media profiles that come through our web and develop look alike profiles that we can then match across all of our leads and our databases internally. And we've leveraged partnerships like Mossy Oak for example, where as we entered the Defender utility market, we could beef up our knowledge of that market by leveraging the knowledge that our partners have. Finally, the results of these efforts have led really to tangible opportunities such as for example in off road, we developed a mud package. We were the 1st OEM to offer such a package.
And our most recent example is the Maverick X3, which caters to a very specific and passionate group of consumers. So it was really critical for us to have a deep understanding of their motivations and needs. So we haven't been afraid to leverage our partnerships such as BJ Auckland and Ken Block to really get a really deep sense of what these customers are all about and what makes them tick. Then moving on to the digital platform. BRP is rapidly building its expertise in digital to efficiently reach its target customers.
We've built a solid platform over the last couple of years by installing Adobe CQ web platform with responsive design and that we have been able to deploy globally by now. It provides us agile digital model to test and adapt on an ongoing basis. And it also comes with a solid analytics software. And that means that we have the ability to measure our performance per media type, whether it's on TV or digital or social. We can test which creative works best.
And that way we can see what works and adapt as we go. And the focus is paying off. Our global web traffic is up more than 50% over the past 2 years. Our volume of hot leads generated has more than doubled in the last 2 years and our North American cost per lead reduced by 300% in the last year alone. So that's efficiency.
Finally, the 3rd pillar is our bold and breakthrough. BRT launched a bold comprehensive campaign to support the launch of the Maverick X3. And what's so bold and breakthrough about that is really the layering of several initiatives starting with our teaming up with high profile product ambassadors like 10 Block and BJ Baldwin. Together combined, they have 12,000,000 followers on Facebook and Instagram. We also focused on the U.
S. Southwest. And there we really wanted to have a disruptive presence at the dealership. And you can see from the picture up here that we've completely wrapped the dealership. These are multi line dealerships and we've just completely taken over.
And of course, we bring in other elements like technology, virtual reality, so that consumers can experience what it's like to ride a Maverick with some blocks. We entered M1, the famous Vegas renewal rate and this was just 4 days after we launched the Maverick X3. So that was a big win with instant credibility for the vehicle. Impressive results in just 1 month of 2,100,000 video views, 800,000 unique visits to X3 website and 84,000 views on the Facebook Live that we did the night of the launch. So we were one of the first companies to utilize Facebook's capabilities with Facebook Live, so it's paying us.
Our NASCAR platform has been great to build awareness for Pan Am, engage with consumers and engage our dealers in the process. And frankly, we're pleasantly surprised by the level of interest that Pan Am has generated with NASCAR and we want to continue to capitalize on that with 75,000,000 fans. It's a very good, very efficient platform. So we renewed our sponsorship for another 2 years and we already have a few place planned to be in Phoenix in November. We've had plenty of opportunities also on-site to do lead generation activities and other activations.
So we're quite happy with our NASCAR program. Moving on to PAC. PAC revenues have increased 11% per year since fiscal year 'twenty, due to mainly to the growth in accessories, which has also contributed to a more balanced portfolio impact, not relying as much on snowmobile as it has had in the past. PAC is a highly strategic component of VRP's overall business. It's the highest gross profit margin across all of VRP's product categories.
It contributes through the consumer riding experience and we have customization opportunities and it provides opportunities for consumers to extend the brand experience beyond the vehicle and beyond the time of purchase. So we think this is a strategic advantage. And we've evolved our approach to accessory development over the last few years. This has been a major component of the growth. We've gone from a traditional approach where the pack accessories were developed after a vehicle was pretty much developed.
So that has some drawbacks in terms of turn to market and fit and integration in the vehicle. Then we moved to an in house parallel development where of course we had much better opportunity for good fit and integration in the product because we're developing alongside the vehicle project and of course more accessories available at launch. But recently in the last year, we've done more full development and cool branding with external partners. That allows us to leverage their brand reputation, the speed to market and it's also allowing us to do more regional approaches so that we can address specific markets of the Southwest with these partnerships. And best example, most recent example is what we have done with the Maverick X3.
We were able to double the number of accessories that we would typically bring to market. 40% of those were co created with our external partners and with very short development for all parties involved. So this is one of the ways that we've increased the agility in our Packet plus redevelopment. But accessories are great. However, it has to also result into sales.
So we have added a lot more focus to our go to market initiatives and making sure that we support our dealer in merchandising efforts in the pack sales process. How we've done that? Well, we've added a dedicated pack North American sales team. These folks are just concentrated on pack activity. It's been done over the course of the last couple of years.
And we've in the last year integrated the pack marketing team with the vehicle marketing team, so to leverage the expertise and all of the different marketing communication platforms to promote the PAC offering. And then we've also added online accessorization feature to all our vehicle websites. And then on the dealer support standpoint, we have focused dealers that we are working with. We provide them with more training, more merchandising assistance program, tools, how to videos, etcetera, etcetera and retail focus promotions to encourage a higher dollar per unit there. So finally, I think our marketing impact priorities are aligned with our long term corporate objectives.
From the marketing side, we continue to generate and deepen our consumer insights. We leverage our investments in a global digital continue to challenge ourselves to develop bold and breakthrough campaigns to wow the customer and engage dealers. And then on the pack side, we're going to obviously continue this rapid pace of new accessory development for our off road and spider with more co development and co branding partners. We're going to continue to develop accessories alongside vehicle project teams, the best fit in integration. And we're going to continue to push the envelope on our go to market efforts.
So with that, I will be happy to take some questions.
Has evolved over the last 5 years in terms of brand awareness? And also, if you could tell us where those that cannot run down rents in the powersports industry in terms of brand awareness?
The brand awareness has grown over the past the last 5 years definitely. And certainly over the last couple of years with the big platforms like NASCAR and so on, it's been gaining in visibility. We haven't done a brand comparative assessment recently to see how it's progressed now in terms of comparison to the competition. So I can't tell you what it is, but we know within our own numbers that it's been gaining.
So can you share some numbers with us?
Yes. I'll have to get back to you on that with the right time frame comparison.
Where we've put the focus in the last few years would be introduction of more utility vehicles. So the utilized on ATV and the Defender, obviously, that was a market where we were not necessarily heavily promoting in the past. And so our efforts have been also focused on those consumers who knew about ATEs, but not necessarily those 10M as a brand for them. And so we still have more dollars there to come start from a base of 0 increase awareness in those consumers. And Yes, absolutely.
Especially on the overall side, I mean, we've done now using the Tanami and APB for 10 years. So it is well known, especially among enthusiasts. We have a number one market share position in the high CC segment. And therefore, from the consumers who are enthusiastic about the product and to take in the top 3 easily where efforts are being deployed is really the utility segment.
In the powersports world, we're definitely in the top 3. So the question is what have you been doing on the spider front in terms of awareness? At the beginning of season 16, we modified our target consumer to focus more on the open road enthusiasts. So technically more the people who are not as familiar, not coming from a motorcycle or a powersports experience. We have modified our messaging to be much more on the lifestyle and the emotional connection to consumers.
And we've seen that type of messaging has resonated much better with this target consumer. We've seen our web traffic and particularly our engagement once they come to see us within the funnel has exponentially increased. So it's been good. But with spiders and having such a broad consumer target, awareness is still relatively low, because you're talking to so many different people as opposed to another vehicle that's much more defined in the power store business. Great.
I'd like to invite our main team now.
Thank
you,
Glenn. So good morning. I'm here to talk about the MPS business, Marine Propulsion Systems business. And this is made of outboard engine systems and also the Jet Propulsion system. And just so we have that in mind.
I'm going to talk about during the update of the systematic approach that we have to turnaround our business. What I mean turnaround our business is more from a market share standpoint. Sorry about that. It's the business is a profitable business that allows us to invest, but we've been quite stable in terms of market share over the years and we're doing a lot of activities to make sure that we can turn on that situation. So that's going to be the essence of the presentation.
So if we look at the industry globally, you see that it's an healthy industry with a 5% CAGR growth. It's more so of a factor in North America as you see there. So the industry in North America has been very good. You see from a market share standpoint in both markets that we're pretty much stable there. And as Jody mentioned, we're gaining on G2, but we're being challenged with our older platforms at the same time.
So if we look a bit deeper in terms of the market share situation, 2 elements. I mentioned last time the proportion of the industry which is packaged and repower. Package, the more where the engine is sold or part of the boat package and the repowering just repowering the boat that you own. So there was a switch in the last few years where the package proportion has increased at the expense of the repower. We're stronger on the repower historically as you know.
So that affected us definitely. And that's why it's important for us to get more builders and also the new dealers on board so we can be successful in the package side of the business. Do you see on that chart the G2 impact? We have quite a significant impact on the repower side of things, but not as much on the package side of the business at this point. And if you see the other factor is a lot of the growth in the industry, especially in the high horsepower segment comes from the South Atlantic or the saltwater market in the U.
S. And you can see from 2010 to 2015 that that was quite significant. And the partners alignment at this time in that specific market is not the greatest. That's something that we've been working on. We've made some progress, but we have some more progress to do on that side to really enjoy that growth on our side as well.
Interesting enough, the industry is going up, but also the horsepower distribution as you can see in terms of units. So if we take the 150 horsepower and up, you see the yellow portion. So it has been increasing. And 2 phenomenon there, again the saltwater where you get more of the large boats, standard onshore boats with high horsepower engine and also the pontoon lineup, where pontoon horsepower hybrid horsepower even with twin engine has gone up significantly in the last few years. And our product entry in that specific segment, we've launched the 200 plus, the 200 HO and the 300 in June 2014.
That was our first G2 launch. And in June last June, we launched 150 to 200 horsepower. So we're well positioned to cater to that increase in the marketplace. I mentioned last time 18 months ago, we had 3 strategic priorities. So I'll update you on that.
So we have the 2 existing priorities, which is create the market for with the C2 deployment, highly differentiated product and also develop the Jet Propulsion System business. I'm adding a 3rd component to our priorities there, which is margin improvement through the deployment of the Etech's G2 modularity. We were not necessarily in a position to talk about that much. Now as we opened a bit more about the modularity approach at BRT, it also touches the outboard engine side of our business, where the G2 is really the head allowance or the main element of it, as you know, where we're going to deploy that G2 technology and cascading down the horsepower. So that's going to bring a lot of benefit that we're going to talk about.
So if we provide a quick update on the G2 achievements in the last 18 months, there's obviously the performance of G2 first G2 400 plus but we've launched the 150 to 200. And it brings the similar and even more in some cases in terms of torque 30% more towards than what existed before the best in class engine, but also the functionality that we have included on the G2. So it's the first 150 horsepower with digital ship and throttle. The first engine with standard I trim. So we're really going into the consumer experience and really making it up.
Those things are seen as for people that can afford, but those are functionalities that customer needs. And if you look at the type of features we get on your car nowadays, that's really something that we need to evolve quickly as the marine industry. So we're going to be strong on that. On the network front, we've added 91 dealers in the last 18 months and all of these 2 versus the plant that we committed back then. And on the product side, we get a lot of customers in the marketplace using the G2 and talk about it and we recover some of those testimonials.
So if you look in terms of benefit, you're familiar with that, right? I presented that last time. We're now up to 30% of torque difference with the testing class engines there with the 150 to 200, the 15% fuel economy and the 75% emission reduction. We have the color matching that really starts to be seen in the marketplace. You see the G2 and there's one because it's matching so well with the colors, matching so well with both.
And we've put quite a lot of emphasis with G2 and we can cascade that now with the consumer experience with the fully integrated Itrend, the digital ship and throttle and the dynamic power steering. If you look at the adoption of dynamic power steering, 85% of our sales on the G200 plus were power steering. This is really a departure from the industry. Even in high horsepower, you don't see that much penetration. It's probably more in the 40% range.
So that's really something that customers want, but it needs to be affordable. It needs to be something that we can pay for. And we've launched a club something very interesting a concept called the AIM system. You're aware of the joystick approach with 2 all gold engines on larger boats. You can actually grab the boat and really become a very good captain all of a sudden.
And we all want to look like a good captain, especially the new entrants in the marketplace. So but the system sells for $15,000 to $22,000 So it's not affordable for everybody. So we've launched a concept that we intend to sell for $3,000 And we feel that if we're 10% of the value of the boat, we'll increase the penetration dramatically. So we don't see that only for high horsepower engines. We see that even in lower horsepower engines.
So that's something that you'll hear more about in the future. So those are our main key points that you've known for the G2. Just the testimonial, I won't read that, but the motor is a monster. Performance numbers are amazing. What's amazing is you can keep higher speed at fuel or consumption level that is much less than what you were having experiencing before.
Overwhelming majority of the reports were positive. We see that more and more. So it's really building up in the marketplace. In the club, last June, JOSE made the commitment that we would launch 3 new G2 platforms in the next 3 to 6 months and that was including the 15,200 that we've launched at that time. So we're very, very aggressive in our approach and we see how important G2 will be and turning around our situation there from a market standpoint.
And what's interesting also the modularity. Jovi talked about the speed. Why are we going much faster than we were in the past? It took us basically 10 years to implement the TTEC technology on all our engines in the past. We're going to be much faster this time around because of the modularity approach.
If we look at the 150, 200 and drill down a bit more, you see that the yellow column, it's quite a significant segment, which will allow us to cater and please more dealers and more consumers. So that's a big impact. And now with the all the G2 family, we're covering 30% of the industry. So we're starting to be quite significant with the G2 penetration now. I told you about the dealer number of dealers update.
When I met with you 18 months ago, we talked about adding 150 to 200 dealers by the end of fiscal year 2019 and we're at 91 at this point. We have 17 new OEMs that we've added in the last 18 months. That's more since the launch of G2. So we're well on track to add the number of theaters that we've committed at that point. Now in that industry, it's a 2 step distribution.
So it's not like you're adding a dealer and you're going to get full benefit at day 1 or at least benefit at day 1. It's still a lot of work, the education that needs to come. So there will be time. And we have to be patient from that standpoint, but we see very positive sign of those dealers that we've signed. I want to touch on the international side of the business on with our boat engine.
Major deals that happened that you heard about in Australia where we are now appointed to Telwater, which is the largest aluminum boat builder in Australia, they're in excess of 10,000 boats. So they have 50% market share. And they're going to be or they are now the distributor for Evinrude engine. So we combine the 2 networks that we had. We had a fairly good network with Elmore and John there.
And we combined that with their own network. There's crossover, but there's a lot of new dealers. So we feel very positive. And the reason why they decided to move with us is exactly because of consumer experience. We see that the innovation we're bringing is really bring the technology level and the outboard to a new place, where everything else is basically a seamless.
So they were very eager to be able to benefit and have their customers to benefit with that. Western Europe, 2 major rib manufacturer, the inflated boat manufacturer with Zodiac that you know, I guess. And BWA also that is the new boat builder that we have working with us. On the Jet Propulsion Systems side of things, you see that the jet propulsion industry has gained at the expense of the strength line. That's a trend that we've seen for many years now.
It's 20% growth. And you see that we've gained about 50% of that growth. So our partners are successful now at taking more and more of that market year after year. In fact, we're close to 20% of the market share in terms of the jet propulsion with our partners Chaparral and Scarab and the Glassron there. Very interesting also is we've launched the 903A as part of the Spark program that offers us the possibility to offer new jet fire packs that are not available in the marketplace.
And one very good example is the Williams Mini Jet. Williams is the 1 meter jet tender boat and the Mini Jet is a new venture for them. It's offering a smaller tender for smaller yaks. So that's white space as Jody was talking for them and for us also. So we're very excited and they've launched that product last summer with our beauty network and the reception has been very, very good.
And now people can afford and you see that some yacht manufacturers are trying to modify their boats to make room for that little tender. And so our relation with Williams is increasing over time. And the 8th power pack also offers us to cater to new needs, different segments in the marketplace. So we have we're in discussion with other boat builders at this point, leveraging the 1503 engine that we have, but also the 903 to offer the jet propulsion system benefit to other segments. Now the last element of our priorities is the margin improvement through the deployment of the Etech GC modularity.
They all give very succinct error, but talk about a concrete example. You see on the left that's the situation with our gear case. That's the bottom part that has the propeller at the end. And you see that to cover the 150 to 300 horsepower segments for us, we needed 21 assemblies, 5 live testings, 9 gear ratios. So you see it was quite complex.
With G2, once we're done in 2017 with the implementation and eliminating the older platforms, we're going to be facing 4 assemblies, 1 diecasting, 2 gear ratios. So it's a completely different setup, which allows us to optimize our assembly, allows us to build more volume with our suppliers on less part, less changeovers for the suppliers, less CapEx investment, less time to market. So you can see the reasons why we can come up with the 150 to 200 in such a short time versus what we've done and versus what the competition is doing also. So the modularity is something big that will bring a lot of benefit to the French market and also improving margin going forward. So as a conclusion, I would say that we're midway in our turnaround with the outboard engine portion of our business.
We're very aggressive with our release of products for the future with 2 new platforms in the next 3 to 6 months. We're still very active in the expansion of our network, but it's also optimized our network. Although we optimize the leaders that we've added, the gold vendors that we've added, So there will be much more effort from a sales standpoint, business development now to make sure that we can capture the market with those people. And the GPS with the ACE 903 allows us to cater to new segments. So we're going to be also active and we'll be able to talk about that in our future meetings.
And to conclude that there on the modularity, it applies to G2. It applies to outboard engine and that's going to be a big element of transformation also for our facility. And hopefully soon we'll be able to bring you to visit the plant. So I'm not making the commitment for you guys, but that's going to be a fairly sustainable people to do. So that concludes my part.
Any questions for
Arun? Yes. Could you provide maybe more color about the margin improvement that will come from the modular approach? What you could see if it's a big lever? And also what about the margin improvement that could come from volume increase over time as
you build those strong relationships with the dealers and the owners? Yes. That's a good question. What I can say is every new platform at BRT and that's an objective that Jose is in spite of non negotiable objective that we have. So we need to improve by a certain number of points of margins at every new platforms.
And I don't think that we mentioned that strategy will be Jose presented the time to get the €6,000,000,000 and increasing EPS as well by 15%. Obviously, that means profitability growth coming from margins. So I don't know little slide that we'll share with you guys. But you're right also the other side of the margin improvement is volume, because we have the infrastructure, we have capacity, we're operating on one ship right now. So we have plenty of capacity.
So every new unit that we sell is something that will help us to absorb some of that overhead that we have. So that's the other lever. So we're going to see that those two components play in half of the year in the next few years. Thank
you.
So we're going to take a quick break. We'll be back in 10 minutes. Okay. So we're back and we will start off with open this podium with an overview of GFT and International division. Thank you, Philippe.
Good morning, everyone. The idea this morning is to give you a really small snapshot of the GSE overall. But the main goal is to get into a little bit more details on the international market, because Bernard will come with an alternate market. So some highlights. We're active in more than 100 countries, 3,000 dealers with winning 3 dealers of our distributors as well and about 500 employees.
The core responsibilities would be worldwide go to market strategy, sales, network development and asset The GSP division is responsible for 75% of BRP's revenues. Just a quick note on my background. Started actually 20 3 years ago as a district sales Manager in Connect was involved in multiple functions, mainly in sales, marketing, product development and dealer support. And headed also the pack local business for 9 years. And 2 years ago also headed the Western Europe, mainly in the Africa division.
And now in this role of been managing days here is the mandate for this year. Not a surprise to see a deliver of Can Am growth given the size of the industry we're going after like we just said a little bit earlier. 2nd point, even though we're in a leadership position for both snow deal and watercraft, there are some segments within these two industries that show significant potential and we're going to go after that as well. Geographically, there's still some actually some significant pockets of opportunities in certain countries like China, like the U. K.
Or even like Mexico, which we need to double our effort and go after. And the 4th point about the dealer network, probably one of the greatest assets we have within our brands, we need to continue being and offering the best value proposition. And this is a real enabler for our dealers to become even better retailers. And then lastly, empower our teams for fast decision making, but also being more competitive in the market through Italy. So going to the international regions, as you know, we've combined European activities together, making one region called EMEA, which leaves the other two regions Latin America and Asia Pacific.
So these three regions are about a little bit over $1,000,000,000 in revenue. Okay? In terms of sales evolution, you see that EME now with over 63% of our sales, stable in the last few years for EMEA. But the growth story here is about APAC and I'll get into a bit more numbers on that. But what's hidden in these numbers is that challenging conditions both in Brazil and Russia, we're able to grow the international business 7% over the last 6 months.
So this shows the resilience of our portfolio and the geographic locations of where we're at. Just a little bit of a background in terms of our recent or the evolution of the international division. All started in 2,001 focusing on countries like Brazil, Japan, Scandinavia, Australia and New Zealand. And with UMC's acquisition, expanded distribution to distributors in a lot of countries, which by 2,005 we started to convert these distributors into dealer direct activities, opening offices in the countries you see on the slide. And at the end or in 2015, opening our 1st sales office in Shanghai and also forming a joint venture with our local distributor, which I'll also talk about a little bit later.
Well positioned to grow the powersports industry now in international markets that we have the infrastructure and the teams. And like I said a little bit earlier, the merger of all the European activities now under one roof called EMU. In terms of priorities, the international division of priorities, which are closely related to the GSE and the corporate priorities. First one, expand the ORV utility markets with Defender and Outlander utility being relatively new for our teams and for our dealers, but opening a lot of doors into for growth for us in a lot of countries. Doubling down on China, you'll see the momentum we have right now still not significant in volume, but at the rate that it's going right now, we believe that this could be done a big play in a couple of years from now.
PAG being front and center of our priorities, making sure that the dealers promote and are engaged in selling the accessories and the customization, like Anne mentioned a little bit earlier. And 4thly, piggybacking on the success of the enormous American play for the international markets, transforming the network and improving customer experience is also a priority for the international markets. And lastly, for Evinrude, our focus is mainly on developing the relationships with EOM bold builders. Now a little bit more deep dive in EMEA. As you can recognize, flat sales in the last 3 years, but absorbing with a Nissan Europe, there would be Russia in there, absorbing the downfall of Russia.
But looking at Scandinavia at plus 9% and Western Europe at plus 11% sales in the last 2 years, despite momentum. E and E being probably one of our most mature markets outside of North America, One of the players that we have to pay well is how we support our dealer network to develop into better retailers. If you look 5 years ago, EME was mostly driven by the snowmobile sale. And now you can recognize that the diversification of our portfolio made it extremely resilient in the context, especially with Russia. Some of the market characteristics that are different from North America.
We have a much stronger presence of the low cost brands, mainly in the ORV business. Our dealerships are much smaller, little bit less sophisticated, obviously less volume and less means, less investments in our own dealership. So we need to deal with that compared to North America. And some barriers that are absent or basically absent here in North America about homologation for on road driving for our ATVs and side by side and also the equid ground access that is constantly being challenged by local authorities. But overall, complete team in place with very good dynamics in especially in Scandinavia and Western Europe and ready for the rebound of Russia to capitalize on it.
A little bit more numbers in terms of industry size ORV being the biggest for EMEA. Now position number 2 and number 3 respectively for ACV and side by side, but that's coming from number 5 and number or number 4 and number 5 not too many years ago. So there's a very, very interesting momentum going on right now. Main countries would be Scandinavia, the Scandinavian country, but France and Germany as well. And the what we see as the biggest top HP right now is definitely the utility segments now that we have the Defender, but also the Maverick X3 and the Sports segment for the Middle East, which is quite a big market for us.
Snowmobile, number one position, little bit smaller industry size than ORV. So main countries, obviously, are Sweden, Switzerland and Norway. Still opportunities specifically with the new G4 platform being introduced this year and we are monitoring Russia. And personal watercraft still number 1 position. One thing one of the highlights as well would be that Scandinavia as a whole is now 6 times over 6 times more than what it was in fiscal year 'fourteen in terms of volume.
So there's obviously something going on in the Skimagin market and we're capturing it as we speak. And the other markets for watercraft, which are main markets for us would be France and Spain. As far as APAC is concerned, that's the growth story definitely at APAC, Australia, New Zealand at plus 11% and obviously Japan and the rest of Asia Pacific plus 27% plus 22% and China plus 22% year over year. So 16% CAGR in the last 3 years. In terms of the dynamics, our stronghold products are definitely watercraft and now more and more off road for Australian refueling.
And China as well is very promising specifically with the watercraft business. And also doing really well with the Defender and I'll show you the slide in a second. In terms of the industry size, which is still growing, our VIP's position is number 2 for APV and number 3 for side by side. And like probably it happened in the U. S.
5, 6, 7 years ago, there's a migration from ATV to side by side that is happening right now in the expansion. So and like I said, very strong momentum in the Defender. First of all, watercraft number 1 position. Obviously, there's still some opportunities everywhere, but mostly China, but also South Eastern Asian nations are showing some very good potential volume for us in watercraft. This is just an example of the Defender, how it's doing in Australia, New Zealand.
This is H1 of last year versus H1 of this year. It's basically doubling the volume for Defender. So, great momentum for the Can Am brand and the utility segments we're going after. Some of the trends, as you can see, this is the last 6 years of China, 55% CAGR. And there was also as you know the middle class population that's going to grow significantly in the next years.
But we need to be ready to capture this. The one of the barriers we have in China is the lack of developed playgrounds for our products. So the industry needs to be built. So it requires a completely different set of skills. It's not about only opening deals.
It's about promoting the industry and obviously this takes a little bit more time. Lastly for LATAM, flat in terms of revenues. Brazil being showing much more difficult contact at minus 16%. But the true story here is about Mexico and Argentina of 30% 48%. So again, the story is about resilience.
And hopefully, these countries, whether they're Brazil or Russia they're going to come back and we'll be able to capture a windy rebound. Industry position for DRP, we're number 1 and number 2 for ATV and side by side respectively. Mexico is showing and we're adopting the Canon brand at a fast rate. Our digital strategies are going extremely well. So it's looking really good for Mexico.
And in terms of for our ORV, in terms of first of all, watercraft, again, it's still number 1. So we have a solid market position in that America and we're very well positioned to take advantage of the rebound. Same story here. So some closing remarks. Obviously, Tanan is on fire in many markets and we'll capture that opportunity as we speak.
And secondly, our leader in distributor value proposition that's from center of our Goldie Mark strategy and that's how we're going to win the game. And thirdly, despite the economic turn down in certain countries, as I said before, the team is ready to exercise these opportunities when we come back. Questions?
And you're talking about a lot of freight will be drawn for your products in Asia. Can you give us some kind of an example of what you could do or what you've done to change that?
The playground for many of us just don't exist, right? And it's the powersports culture that is still not present. So it's not about just showing the leaders and training the leaders to organize their showrooms, but it's going to be about how they build the communities and how they promote the riding and how they bring more people into the sport. So it's a different approach, but it will involve both ERP and the gears. So it's much more training that's going to come out from our teams to get these years up and running and with the right teams and the right strategies for technical or tactics within our own market.
So it's about giving our community that passionate bunch of customers that would buy our products.
It is. Asian market to really
biggest opportunity short term for China is watercraft. We had a lot of 1,000,000, 2,000,000, 3000000 city underwater And there is more and more dealers that are trying to land to store the vehicle for the customers. And that's an area where I believe it's easier than our front to develop the industry, because the water is there and people enjoy more and more riding watercraft and that's the area where we have a pretty good growth. So would you say that which segment would be
the highest growth potential of region?
Would you say China to
be able to circle to 5 years or Yes.
Definitely, China is on an aggressive curve right now. And I believe that with the population and with the investment we're making in the team and with the investment we're making in the dealer network that has to be one of the biggest opportunities.
Okay. And where do you think the product offering needs to evolve over time? Make sure you have those growth reports in China. You think there's some tweaks to be made in the product offering?
At this point, especially the watercraft is the main business for China and we're extremely well positioned with the spot lineup. So I don't think it's a lineup take. Again, it's more of a power sports culture thing that we need to put in place. Eastern Europe excluding Russia has the pretty much the same growth rate which we have what we have in Western Europe. It's a good balance between Snowdrill and Hafsl and ATV.
That's his question.
Russia right now is probably at 30% of what it used to be. So we believe that if it's not at the bottom, it's very close to the bottom. But on the other hand, we don't see a quick ramp up from Russia either. Ruble is still low in value compared to what it was 4, 5 years ago. Until that turns around, pricing is a barrier for the Russian market.
So you won't typically turn around.
And the market for oil is the fact that commodities like
Well, maybe I'll take that one. And the question was more in the oil and ag markets whether or not we face the bottom. For us, obviously, we're entering into new segments with the Defender, with the X3 and the brand new products for those markets. And so we do not feel that for us we are at a bottom. We feel there's growth potential even though the market is weak in those areas.
Other area all other OEMs are seeing a different color in those markets. But for us, there's still a good growth opportunity because of the new products we've just recently launched. And John, do you compete with the local manufacturers that kind of is that here? Is the competitive landscape that compares to China? It's no different from the rest of Europe.
It is different from the U. S. Or Canada. Being positioned as a premium brand for Canada as an example when you're competing with products that are significantly lower in price, you really need to sell the added value of the TVA from what our products offer. So it's more challenging that's for sure.
Just maybe to complement, Asian brands are quite present in Europe because of the scooter market. They enter the European market with their scooter. And when they started to do copy of ATVs and off road vehicles, they just go into the same channel. They don't have that opportunity in North America. Thank you.
Can have
Bernard.
Hello, everyone. My name is Bernard Gui. I'm the Regional General Manager for North America. I'm going to provide you today with a brief overview of the North America region, which represents about 69% of DRP revenues and about 65% of the worldwide power port industry. Over the last several years, it's shown a very interesting CAGR of 16% in revenues and appreciation of market share of about 200 basis points since 2012 fiscal year.
So I would like to provide my presentation in 3 blocks talking about our key strategic priorities, the first one being to significantly increase our presence in the year round products and market as well as maintaining our market leadership and fees growth opportunities in seasonal products and market. And the last one, optimizing our network coverage and win dealer engagement by offering the best dealer value proposition. So let's look at year round products first, starting with off road. In the off road business in North America, you see here in black the ATV industry and in gray the side by side industry. You can appreciate that the side by side industry has been growing and taking bigger and bigger share of this off road vehicle business, now even surpassing ATV in the last season 2016.
And you see that while this proportion of a side by side business was increasing, our market share growth has a bit stabilized, while we were increasing our line up in side by side. But now that our line up is more complete in side by side, we see the growth of market share going back up. If we start with ATV in North America, the ATV industry has been fairly stable, however, down mid single digits in season 2016 with demand shifting from ICC to mid CC segment. For Pan Am, however, our retail grew high single digits in season 2016, the highest retail and market share growth of any OEMs in North America and finished the season 3rd in adult ATE for season 16.
Can Am Retail in
the mid CC segment more than doubled since the introduction of the Outlander GPL platform and the momentum actually is continuing. We're number 1 in ICC recutility with the Outlander and we're number 1 in Rexport with the Renegade. So for ATV, our Canon market share has reached a record high in season 16 and the key message here is that the momentum is really considerable. In side by side, the industry has been steadily growing in the last 5 seasons fueled mostly by the sports and utility segment. However, the growth has been slowing down in season 2016 to mid single digits.
K and M in season 16 has had some strong retail growth and actually accelerating in the last 6 months outpacing the industry. We're number 1 in rec utility with the Commander. We have strong growth in utilities with the Defender. Number 2 in sport with the Maverick, except in the less than 60 inches wide where Can Am is currently not competing. And we are tapping in the largest industry segments, which what I believe is best in class vehicles.
So we have the Defender in the Utility segment, which is now about 60% of the industry. This represents our largest opportunity. The Defender availability ramped up in the second half of season 16 and our sales are tracking on plan. And actually the Defender is actually is already our biggest Can Am seller. With full deployment in season 20 15 with the Defender Max, the Defender HP8 XT cab and the Defender Masseo condensation, we believe that the momentum is going to further accelerate with the Defender in season 17.
The other one is obviously the K and N Maverick X3. The sports segment is now about 30% of the industry with almost 60% of that being 60 inches wide vehicles. And we've had very strong positive dealer and consumer reaction to the Maverick X3, which I believe also is a superior product that is starting at an MSRP $2,000 less than the competition. So we believe that we're well positioned to grow in the largest industry segment in side by side in North America.
Spider update.
As Jossy mentioned, the motorcycle industry has been declining in season 2016. It's a little bit up from its season 2011 floor level, but season 16 was definitely disappointing with the industry declining mid single digit in season 2016. But sales of motorcycles in the U. S. With a price above $18,000 have been down double digits.
In that context, our spider season, the retail has been disappointing. And for us, reducing dealer inventory level next season will be our strong focus. So that's the number one priority is making sure that business stays healthy for the dealer network. Customer interest is very high. We've been growing website traffic and record number of leads.
So really what we need to tackle is the conversion to retail. That's a challenge that we need to address next season and Anne alluded to that in her presentation. One of the elements is obviously making Spider more affordable. And for 2017, we've introduced a Spider F3 F3 at US15999 dollars or US19299 dollars which is a reduction of more than US2 $700 in the US and up to $3,000 in Canada. So it's a meaningful move in that direction.
Now moving on to seasonal products where the idea is to maintain our market leadership, but I want to show you that even as being market leaders, there's still growth opportunity within these interior markets. So with snowmobile. Snowmobile, season 2016 early in winter, the snowdeal industry declined, but Q2 broke a EUR46 market share record. And you can see on the chart that's pretty impressive market share growth that we've been steadily growing for quite some years. The industry growth in recent years has been mostly driven by cross country and crossover.
As I just mentioned, the warm winter was difficult on the industry in 2016. But for SKU, we've had the best retail performance of any OEM in season 2016, which resulted in dealer inventory that was cleaner than the competition overall. So couple that with the fact that we are holding the number one position in North America overall and in every single industry segment. Within that, Mountain still represents a sizable growth opportunity. So with this, the launch of the REV Gen 4 platform with the 850 E Tech in the 3 main segments of the industry led to strong model year 2017 dealer orders.
In the context also, our 2017 Summit X850 E Tech is the most successful Kibu Spring Sled. Those are the sleds that we pre sell during at retail during the spring to consumer. It's our most successful spring sled in nearly a decade. So you see there that even in a mature market in a tough after a tough winter, Ski Doo is tackling very effectively a sub segment where there's probably interesting growth for the brand. Moving on to TWC.
TWC, I'd say that the Seadou Spark successfully restarted the personal watercraft industry as you can see on this chart with black being traditional watercraft and gray being the spark. In 2016, Sidu sorry, in 2015, Sea Doo shattered a 24 year old market share record. And we are on our way to beat that record in 2016. So very good momentum for the CB brand. And what's interesting is while the recent industry increase has been primarily attributable to Spark, In season 2016, as you can see on the chart, the industry growth also came from traditional watercraft, which was the intent.
So what we're seeing right now is not only Spark is contributing to the growth, but also traditional watercraft. We've been the industry leader for over 10 years, but we still have room to grow in recreation and performance. So for 2017, the Cboo GTI with the 900 ACE engine, which is the most affordable, most fuel efficient full pipe personal watercraft will tackle this growth potential in recreation for Seebo. And the next one is the 2017 Seebo G TRX performance watercraft with the new 230 horsepower Rotax 1500 H08, which will tackle the growth opportunity in the performance segment. So beyond Spark for personal watercraft, there is room to grow for Seabee.
Last, I would like to talk about our network coverage optimization and also what I call the winning the dealer engagement by offering the best dealer value proposition. It's the market in the United States is overwhelmingly addressed with the dealer network that is multiyear region. And when you take a step back to how do you win the in dealership battle in such an environment? Yes, you may have the best product, but a lot of the conversion is done inside the dealership. How do you get these dealers to want to push and promote your brand more than others?
Through that reflection, we came to the realization that our own growth and profitability is tied to our ability to generate growth and profitability for our dealers. And we believe that if we offer the best dealer value proposition, the general managers, the dealer owners, mail Sway customers to where they make more money, where they have more growth potential, where profitability is. So what we did in the last 3 years, we developed a system centered around growth and profitability from the dealer standpoint. And in that system, there's 5 components. There's absolutely no rocket science in any of these, but the importance to be successful is that you have this core belief that there is no growth in profitability for VRP as there is no growth in profitability for our dealer network.
So let me speak a bit about each component. 1st of this, it starts with strong brands and products. But viewed from the standpoint that it has to provide growth and profitability potential to dealers. A great example of that is providing products to dealers with strong customer appeal that will command a price that yields superior dealer front end retail margins. What's that is the retained margins at the retail of the vehicle.
So that's the customer money coming in, how much margin the dealer is able to retain at that sale. Strong brand and products will make that front end margin higher. Dealers will be able to retain a price that is closer to MSRP. That's the first element. Those strong branded products are key for dealers to retain more margins on the front end and that is at the sale of the dealer of the product.
The second one is respecting our dealers' primary market area or PMAs while optimizing our network coverage. So what are PMAs? Dealer PMA is a territory drawn to include most of this customer. Based on drive time habits, historical drive time habits, we're able to make a territory around the dealer that includes most of the dealer customer. In other words, if a customer is inside that territory, all things being equal, that customer should want to shop at that dealer because it's the closest to his home, okay?
Now we've opened more than 240 new dealers in North America in the past 3 years, while being very respectful of our existing dealers' Q and A. In order to avoid dealers being piled up one over another, being too close to one another, okay? We want to put dealers in empty spaces, but not to interfere with existing dealers' PMA as much as possible, because over concentration would make dealers compete for the same customers. And again, in dealer growth and possibility, that's reduced dealers' profitability with our brand when they start competing each other for the same customer. For 2017, we're still in line to achieve our fiscal 2017 and projection of new dealers signed between 45 to 55 new dealers, which would bring the total number of new dealers signed by fiscal year 2017 end to about 2.70 new dealers, thereby increasing the coverage for NN brand to by about 31% in the last 4 years by the end of fiscal 2017.
So with this, we are approaching the optimal number of dealers based on the 2016 industry sizes and now we're focusing more and more in helping these new dealers achieving their full potential. The third element of the system is the VRP order management system, which helps dealers optimize their inventory level. Let's take the Off Road OMS, which proposes a monthly recommended order based on a dealer's inventory and future retail plan with the objective of maintaining a targeted forward days of inventory. That way, it adjusts wholesale down if retail did not materialize and inventory starts accumulating, but it also raises the recommended order if retail grew faster than planned. It's not a set number.
It fluctuates with retail. Also it will adjust down before a low season because it maintains a forward pace of inventory. So before a low season it will reduce the dealer inventory and ramp up inventory prior to the high season. So all of that ensures dealers never have too little inventory and missed opportunity, but or too much inventory having to heavily discount and pay high carrying costs again focusing on dealer growth and profitability. So that's the 3rd element.
The 4th one is our certification program. And it basically proposes best business practices towards customer satisfaction. It recognizes dealer that implements these best practices in 4th cornerstone, operational excellence, knowledge and competency, customer focus and brand representation. Dealers implement these best practices and the certification program recognize those 2. The dealer choose at which level they want to certify.
We have 3 levels silver, gold or platinum. But the dealers who go beyond the essential are rewarded with more back end money. So now I was talking earlier on about retained front end margin. Now I'm talking about back end money that we're giving the dealers after the retail sale of the unit. And this certification program influences the amount of back end money that we are giving based on their certification status.
So it's providing basically our best dealer with more back end money potential. The last piece of the puzzle is Performax. And proformax rewards retail achievement. It starts from the core principle that when dealers achieve or exceed retail targets BRP will achieve or overachieve in future wholesale. So it's basically sharing future products future profit with our dealer in the form of a retail bonus paid on the back end.
So Performax payments can be very significant for dealers and they are a strong monetization for them to grow with BRT. And for us, if the dealer overachieve, we will overachieve. We're more than happy to share. So that's pretty much in a nutshell the whole system to win in leadership by building the industry's best value proposition. With the whole system focused on dealer growth and profitability, which will result in DRP growth and profitability.
And it works. To start with average dealer margins just to illustrate with products and brands commanding a price premium, with less inter dealer competition and with reduced discounting to clear excess inventory, the dealers have a front end margin improvement. With certification at gold or platinum level, there's more money. With proformax, the retail bonus for achievement or overachievement on retail, the dealers are improving their back end margins. 4 improved dealer margins in the end.
Dealer return margins are higher with BRT and dealers have started to notice, which leads to dealer engagement. And if you talk to some of our dealers, you may have heard that they have noticed and they have started to increase their engagement behind the brand because they've noticed that they're making money selling VIP products. So with this, our 3 strategic priorities, I think, are very well supported to increase our presence in year round products and capture growth potential there, maintaining our market leadership and skimming growth opportunity that remain in mature market in seasonal products with a system to always continue to improve our dealer value proposition. Chris, any questions?
At
the end of that cycle? If you could just share with us any numbers, if you can give us what does it look like over the last 5 years now after the margins have either resolved?
That's a very good question. So the question is about when did we start and how much have we is it recent improvement of dealer margin? And about numbers, how much are we talking about in terms of improvement of dealer margin? For those on the line, I wanted to repeat the question. We started 3 years ago implementing the pieces and we've been refining these pieces since the past 3 years.
And it's a work that will always be in progress. We're working with our dealers actually. It takes a level of trust between the network and the OEMs to build that together. At first, they were receptive. But right now, we're seeing that dealers are really appreciating and getting in it.
And so we're continuing to improve this system. In terms of numbers for competitive reasons, I really cannot share, but I can tell you that they are meaningful enough to be noticed by the dealers and for Can Am to gain momentum due to dealer engagement. Yes? The 2 70 new deals through the end of fiscal 2017, kind of the upper end of that range was provided? How do you think about the network for 3 years from now?
What do you think is a reasonable growth target? Do you feel like the network at the end of the 2020 is raising each? The optimal size of the network is mostly dependent on 2 variables, the industry size and your market share. So we will continue to grow market share, obviously, that's our intent. But industries are what they will be.
And that's why there's not a perfect number for anyone. Every OEM has to have their number based on those factors. We are approaching right now the optimal level. That's what I mentioned. Now if we continue gaining market share, maybe we will need to add some dealers.
But quite frankly, we are really approaching the optimal number. And now our focus is turning into helping the new dealers achieve their full potential, which takes a while. They need to get them on. Yes.
Is there a tactical plan to be able to take advantage of the
I think the only tactical plan is for us to continue focusing on execution with the plan that we have in place. There's we were already targeting to go after the sports segment with the Mavericks 2. And for us what really matters is focusing on delivering the strategic the strong go to market plan that Anne Delac talked about earlier on. That's the tactical plan was to grow in that segment. And whatever happens to a competitor is part of the hand that you're dealt, but we think that we're well positioned with the time we are.
Yes? I mean, the service margins compare with the 5th of the other Interesting question about service margins. While we are able to evaluate through beautifully grouped and beetle DMS aggregate DMS data, Dealer management system data for the sale of units, it's actually very difficult to appreciate the portion per brand of the service margins of the dealer. So we're not in a position to yet be able to improve on that, but that's something that we hope this industry will focus on in the future. Short term, what we've seen is that it did not impact our momentum.
Now if it lasts for long, medium to long term, it would eventually affect the resale value of the used units. And as soon as they start doing that, then dealers will be more cautious about taking units in. And therefore, it might affect the overall industry profitability that's available for everyone to share. So it is concerning, but it really depends how long it lasts and how intense it gets. So for the moment, we have not seen any immediate impact, but it's something to be cautious about.
Yes? Yes. You need some time. So the question is about the health in the recent months of the side by side industry and what do we think our market share could be in sport. So since July, the side by side industry has been down low single digits.
It's so it's it definitely slowed down. Some factors could be behind that. We're in an election year. There's always all sorts of things that are happening in an election year. Some uncertainty brewing.
But this is what we see right now. And again, what's important for DRP is that even if the industry growth is not what some competitors would like it to be, there's still plenty of growth potential for BRP with this brand in the segments. As to the market share of the Maverick X3, we're ramping up production. We're starting deliveries. It's very early to assess what related reduction if you want.
But our intent has always been to become a strong number 2 in all segments and side by side. And definitely that would mean for us doubling our current market share over the next years with the Maverick X3 in the coming years. That is correct.
Yes. And just coming back about the SSD industry market, Meta Questo, we gave good color for July since July also for the season, but you can talk about the uncertainty around the election year, uncertainties overall. But do you think what about the view of being more about the FSRU industry getting more mature? And what should we expect going forward given there's more units new market and stuff like that. Is this something we foresee a correction like we saw in the SSC industry in the past, some
of the deals in the past also? Is it a
kind of typical curve in our business?
That's a very good question about the product life cycle or industry life cycle that Hi BiSci might have. I personally certainly not anticipate the life cycle occurs to look anything like ATV or snowmobile I experienced. I think that that industry has been growing in a more mature way. So I do not expect a sharp decline that would happen due to market saturation. I think that if you see a slowdown, it's going my personal opinion, a gradual slowdown and not necessarily anything that would be you.
If I can add, Benoit. If you take snowmobile which is a pure recreational product and watercraft, so they had very, very sharp decline in the 2017, some of them because of the oil crisis and watercraft because of the bad publicity. What is interesting is the side by side. It's an industry that is 60% liquidity, 40% increase in oil. We believe that if something happens, it will not be a sharp decline like we saw in pure recreational activity.
That would be Yes, for sure. And again, I want to emphasize that for BRT and for Can Am that truly does not hurt our growth potential in these industries.
And aside Polaris, obviously, we would be consider as strong competitors in the excess industry over time series competitors that you should be watching? I mean, aside from Larry, I mean, there are so many brands right now.
We like strong competitors. They make us have to do our very best. And we have strong competitors in the side by side industry. Honda and Yamahas are strong competitors and all the brands that are participating in the side by side side industry are strong competitors. And that's fine with us.
That just gets the best of us. So the situation side by side. So hopefully, it will be as exciting as Bernard with the Internet work. But so what I want to cover with you actually there's three things I'd like to cover with you. The path to the 2020 objective, which Jules alluded to.
So I'll give you a bit more color how we're going to achieve our revenue and our profitability objectives, talk a bit about our capital allocation priorities and also cover the media and the year end guidance for the year. So as Jose mentioned and as you all know, we've been presenting this slide to you for the past 18 months. We're looking at 10% revenue growth and 15% EPS growth with 3 very strong pillars, which we hopefully give you better appreciation today of what they are and how we're working at each of these pillars of growth, agility and lean enterprise. And as part of these pillars, whilst when we look at the revenue growth last year, we finished $3,800,000,000 We're looking at a $6,000,000,000 revenue in fiscal year 2021. Basically comes from 5 key elements.
The first one is the ORV business. I think we've talked a bit a lot about the ORV business today. We've talked about the introduction of new models. And Bernard gave you a good feeling as to how we are addressing the challenges of a multi brand dealer network, especially in North America, allowing us to get a bigger mind share of the dealer network and having them focus on the SSV product line. So innovation will be key, but also our go to market efforts will be fundamental.
The spider business, yes, it's been disappointing this year. However, we do have some very good learnings from the initiatives, the regional initiatives we did in Florida and California. And there are some key learnings that we will be applying going forward. We will be making announcements as well on the Spider business. So stay tuned for that.
But the Arch related to this business, we believe there is a good potential and it will be an important driver of our revenue growth going forward. You've known BRP now for several years. We've been public since 2013. We've talked a lot about innovation. You got to meet Jose and you probably figured out about Jose and his product guy as well and loves the product and that's something we are going to continue to do.
You've seen how successful we've been in growing our market share in our seasonal business, in the ATV business. And innovation is something that we are committed to bringing to market, but not just innovation for the sake of innovation, but innovations which are meaningful and which are going to be driving market share increases in seasonal products and as well in the Marine Propulsion Systems business with the G2. Coming with that as volume grows, obviously, the PACS business is going to grow. It is an important business for us, very profitable. But also with what Anne presented this morning on our focus on accessory development and increasing the overall dollar per unit of pack for every unit we retail that will be an important element of our growth plan.
The first time today, we opened up a bit more on other growth opportunities that we are investigating that provide us more lever for ensuring that we do achieve and even exceed the $6,000,000,000 mark for 2021. The framework is in place. The team is working, looking at opportunities. We do have financial objectives associated with that. Obviously, we are going to focus on growth, but growth with a profitable outcome as well.
So that's for the revenue. When we look at the overall profitability focusing on margin because it is the big lever of profitability growth for BRP, we're looking at a 200 basis points to 300 basis point margin improvement over the next several years. Depreciation expense is going to be a headwind in the next year as our CapEx level is higher than what our depreciation expense level is. So that's going to be providing a bit of a downward pressure on margin. But capacity utilization and maximizing the footprints that we have will be the increased volume will be driving margin expansion.
And then the various manufacturing initiatives that we have being the modular approach, which you will some of you will see today would be factory tour, New technologies as well that we're introducing. Again, we opened up today on the turbo charging systems that we're now building in house. We are able to charge the consumers for that value add technology and that is also lowering the overall cost of material and therefore increasing margins. And also with the lean manufacturing and procurement initiatives that we have that's another important driver of margin to as mentioned an overall 200 to 300 basis point increase. So that's the road to the 2020 objective focused on revenue, but also on profitability in order to increase overall shareholder value in the long term.
When we look at overall capital allocation priorities, we are a business which generates a lot of cash on a yearly basis, a lot of free cash flow. And our priorities are 1, ensuring we're able to continue growing this business and fuel the growth, but also return capital to shareholders in the long term and in the short term as well. And so when we talk about fueling the growth, the number one priority for us is continuing investing in the business. That comes in the form of CapEx. On a yearly basis, we invest approximately $200,000,000 of CapEx.
We intend to continue investing in the low 200 $1,000,000 of CapEx in the future as we've entered into new product lines, entered into more segments. But in the business we are innovation requires investments in R and D and Tepek and therefore we will ensure that we maintain that focus for the overall business. Financial flexibility is key. We are a product or an industry where sometimes we do face seasonality. And therefore having that flexibility in the long term is fundamental.
And we've just refinanced our balance sheet this summer. So we've reduced overall leverage and that's something we've done over time. And we will continue doing in the future as we increase profitability. But we've also extended the maturity of that debt to 2023. Therefore, it's been pushed back for 3 years versus what we initially had.
And also to give us that financial flexibility, we've increased our revolver by $75,000,000 to $425,000,000 overall reducing sprinkling the balance sheet and reducing leverage for BRP. Return capital to shareholders. Today when we look at where the stock price is trading, the NCIB or share buyback is a program which we believe brings good returns to shareholders at their option. Last year, we purchased just 3,700,000 shares about $96,000,000 This year as of July 31, we had a significant portion of the NCIB done. It's something we will continue to investigate.
And as needed, we will execute on that plan. So that's it for overall capital allocation priorities and a few slides on the year end guidance. This is a guidance that we published with our Q2 results on September 9. As you might be aware, we've adjusted upward the year end products revenue guidance despite a headwind on the Spider business given the strong dealer feedback and orders for the Mavic S3 that called for an increase in year round product revenue guidance. And we've adjusted downward a bit the PAC revenue guidance coming from lower replenishment following the soft winter we had.
We've also adjusted normalized net income upward and EPS metric as well upward coming from the refinancing and as well the share count adjustment. Now for the second half of the year. Historically, you've seen us deliver very strong second half of fiscal year fiscal year 2015 and fiscal year 2016 was also second half skewed fiscal year 2017 as well is the same based on our guidance and the results that we have for the first half of the year. When we look at the Q3 versus Q4, how things are going to pan out, Q4 is going to be significantly better than what it was a year ago. Two things driving that, snowmobile volume is going to be very much so in Q4.
We anticipate that the snowmobile volume will be down in Q3 coming from the fact that more units are going to be on the water being shipped to Scandinavia of the new snowmobile platform, so not yet to market. The Can Am Maverick and Maverick X3 is a big plus for Q4 as we will be delivering these units to the dealer network. And also when I look at the 10M Defender, it is going to be a positive element for Q4. And last year, we only did partial shipments of Defender as we started shipping in January. So when I looked at the year over year impact Q3 versus Q4, we expect Q4 to be significantly higher than last year.
I mean, as Jules Ray mentioned, we are very confident in delivering these numbers. We have orders on hand from the dealers for snowmobiles, for the Maverick, for the watercrafts, for snowmobiles as well in Scandinavia. So the outlook is extremely favorable for the rest of the year for BRT. And so with that, I will take your questions if you have any. Yes or Pina?
You had a
Yes. We're having recurring discussions with the Board on capital allocation priorities. And in the current context, we believe that when we look at the share price in terms of returning capital, it is better to do the NCIB than to look at the dividend. Protecting liquidity for future growth as well is a priority. And so maintaining financial flexibility was the main focus.
And we feel today that it's evident that's something which we need to start thinking about as growth is still a key element for us.
What about the financial flexibility? Obviously, you find that it does things at comfortable levels of the impact you've been kind of pushing for coming bringing down to one time. So, you guys are now more diversified to feel more convertible with C9 or you're still
Yes. We still have an objective of further deleveraging the business. The way I look at it is if my debt structure today have a covenant like debt structure. So again, if we were to hit a down cycle in the midterm, it will reduce my flexibility and my ability to continue investing in the business, because we don't necessarily want to, if the down cycle happens, reduce investments in R and D and CapEx in order to manage our covenants. So the fact that we have a covenant like debt structure that comforts me.
And the fact that the maturity is in 2023, I'm comfortable with a 2 times debt to EBITDA ratio today. And then the as things evolve deleveraging is top of our priorities. Okay.
So does it mean that your CapEx number of €200,000,000 dollars assuming we would hit a recession in years or 1, you would not bring your CapEx downward, but you would take this fortune still investment. So we back from that downturn and then we're going to follow-up with anybody else or
Yes. What I would want to make sure is we continue investing in product innovation. So we might look at some strategic projects where we say, well, you know the payback is a bit longer on these ones, infrastructure investments, etcetera, which we might scale back. But we do want to maintain the ability to continue investing in innovation.
In terms of acquisitions, what's the appetite there? What size are we done? Are we talking about like small, single bolt on or you can be a little bit more aggressive
Well, if we're talking about acquisitions today with you or potential acquisition, that's because the appetite is there. Obviously, we will not do an acquisition just for the sake of growing top line. We want to do acquisitions that are accretive to overall profitability and shareholder value. And that's in that have a strategic advantage. So you might do an acquisition which is small, but strategically has a big impact.
It could be a technology or it could be a certain market where we'll gain significant competitive advantage or it can be a significant acquisition where you become even a stronger player in the powersport industry. So, we're the types of things that we are considering. Yes, very good question. Obviously, when we look at our overall footprint and today you're going to visit our latest facility, we feel we do not need to add any walls in order to get to that $6,000,000,000 mark. And so as we grow volume, the contribution margin coming from these incremental units will be absorbing higher costs more costs and therefore driving Argentina even more.
And so yes, there's some leveraging of assets implied in the overall bridge. And just to come back on that question, to go
to the $6,000,000 so is there there's no M and A in that? And is there you're seeing a new product line?
There is. If you look at if you go back to the pillars that I showed, yes, there's the growth component in there of M and A or other product lines that we could investigate, which will provide us with, let's say, maneuvering room to achieve that €6,000,000,000 So that's an option that we want to have in order to make sure that we deliver on that €6,000,000,000 $1,000,000,000
And how sizable is that piece related to the $2,000,000 gap we need to fill
It's important, but not significant. And so when we look at the overall ORV business today, that business is a $1,000,000,000 business doubling it will bring us to $2,000,000,000 Spider for us we are still very bullish on Spider. How big can Spider be? When we have discussions with Jules and I, we believe that we should be selling more spiders than watercraft because the obstacle for the utilization of that product are much smaller. And so we will continue focusing on the assets that we have to grow.
And if we do an acquisition, well, that's just going to be a plus for us and we'll put that in our numbers. Thank you. And just to confirm, And my closing is quite short because I think you understand where we're going. But basically, as I said in my intro, the plan didn't change since what we presented to you in Austria. It's a continuity.
On the other hand, I hope you can appreciate that things have accelerated in many areas versus what we presented to you in Austria. 2nd thing like I said to Tony, we believe that if the economy stay about like it is right now United States, Canada, Western Europe and we saw the numbers in more detail today. We haven't really been a chance to meet this objective for changes to the premium on the 3.50 by fiscal year 2021. Then obviously, we don't control the worldwide economy, but if it remains like this, we should be very good about our plan. When I talk to the Board, I and when I talk to investor, this is how I hope they see us.
And this is my closing remark. And going away from this meeting today, you know our business now in detail. If there is one thing that I would like you to remember and when I'm talking to investors, this is what I'm saying. All of the ERP employees are rallied around the key strategic partnership to grow Agility and Lean Enterprise. I think you could see during the presentation that everything is well aligned between sales, marketing, manufacturing operation.
Everything is very well aligned. Our initiatives are progressing as planned and we are starting to see the to reap the benefit. The other issue is done. The factory is here. We just need to fill it up.
Construction 2020, there is 12 to 18 months to go. Then we go on the tail end of the revamp of the factory. And Vanco 2020 just started last November and will end at the end of 2018. And by the end of 2018, we'll invest about 70% of the €118,000,000 Then my point is a lot of investment has been done and we can wrap the benefits of those investments going forward. But last not least, you know that new modular approach that we learned from the car industry combined with the manufacturing operation, then the Defender is under that new role.
The X3 is under there. The rev gen 4 is also following this rule. And the Evangou GT is always already following this rule. Then those 4 product lines will continue to grow improving our margin. On top of it, any new platform will reach the market replacing entire watercraft, ATVs, the Commander will come with that new philosophy.
But what I'm very happy with is we've been able to adapt those state of the art to our product line and I think we're quite unique in the industry. 3rd one, the diversification of our product portfolio, geographic sales and manufacturing footprint is allowing us to deliver our plan despite volatile industry. We see watercraft have done better, spite of the worst. And we are always we have more levers than some of our competitors to continue to grow despite things that we don't control. And last and not least, and this is my belief, when I sell the company to a new employee or to an investor that's my belief.
Our capacity to innovate, our ability, our manufacturing expertise and our diversification are putting us in a unique position in the industry. We're not dependent on ORV or motorcycle. We're more diversified. And I think all those things heads up together put BRP in a very unique situation into the industry. And that's my closing remark.
Any closing questions? Yes. Looking at the top line on revenue side, is that geared more towards market share increases or market situation? Situation? Great.
The top line, I mean, if you look and again remember the slide on the ORV where you have the mid CC, the utility and you have the expert or the sport side by side. The yellow bar is very low in those big markets and we are entering more aggressively than ever before those segments. Then for me, it still penetrates any change in white space. But we know that this will not continue for the next 5 years. That's why penetrating wide space plus the addition of the momentum in snowmobile and watercraft and outboard engine and adding up another business in time.
This is the plan right now. And it's a mix of all this, but the good thing is we have more than one lever. We're not forced to do this perfectly to succeed. If we do not have good as what we're planning, we have other lever to reach our objective. Yep.
When you talk about the next generation product
or a new category you could create, are you worried at all that dealers I mean, if you're successful and if they make money with your product, I think they will find space. That's my $0.02 I'm not just I'll give you the example for the one of you are not familiar with Quebec, but the Quebec people here in the room. All the leadership in Quebec has been revamped And it's a beautiful store and who paid the bill? Spider. When you're selling 100 to 150 Spider per season, new and used, they're making a lot of money.
And we've been able to enlarge those dealerships to build new dealerships. And when the dealer makes money, they will find a way to make growth. That's at least my belief.
Thank you very much.
Thank you.