Good morning and welcome to BRP's 2025 Analyst and Investor Day. Today our senior management team will provide an update on the business and present our M28 plan and its key strategic initiative. Before moving to the presentation, please note that today's presentation will include some forward-looking statements and future results may differ from those implied in these statements. The forward-looking information is based on certain assumptions and is subject to risks and uncertainties and I invite you to read BRP's MD&A for more details. Now moving to the agenda. In the first portion of the presentation you will first hear from José Boisjoli, our President and CEO, Josee Perreault, our CMO , Sandy Scullion, our President of Powersports, David Baker, our VPGM North America, and Steve Pelletier, our VPGM International.
After this we'll have a short break and then we'll come back with Thomas Uhr, our CTO, Patrick Dussault, our EVP Global Manufacturing, and Sébastien Martel, our CFO. Then José will come back for the conclusion and the Q&A session. Also note that all the management team. Is in the room. Stéphane Bilodeau, our CIO, Martin Langelier, our CLO, Anne Le Breton, our EVP People and Culture, and Minh Thanh Tran, our EVP Global Corporate and Product Strategy, are all in the room and will be available to answer questions at the end of the presentation. With this, I'll turn the mic over to José.
Hello again for the people on the line. Good morning. Very happy to share with you the new strategic plan M28 and I know we are overdue and to be honest, we've been ready for a few months and in March, obviously with the tariff, we felt that it was not right to launch a new business plan. There was too much uncertainty. Now the business is more predictable and we are happy to share with you our new plan. Sorry. I would say if the macroeconomic and geopolitical situation stay like this, we are confident to deliver on this plan. You know us, most of you, you know us. Who we are today, we are obviously diversified product portfolio, industry leader in innovation, established global distribution network, a global and modern manufacturing footprint and proven management team. We will cover all this between this morning presentation.
Now just to give you a sense versus the fiscal year 2020, the pre-COVID and where we stand. Basically with the COVID bubble and everything, our revenue increased by 36% and our normalized EBITDA by 32%. Despite all the volatility that we've been through, we have a solid foundation to continue to grow in our space, the industry. We are here this morning to explain to you our plan. I hope by the end of the morning you will believe that what we do is achievable. Now, a look back at M25. I cannot talk about M28 without looking to what we have achieved in M25. We introduced M25 in October 2019 and the definition was setting the course for BRP 2.0. After being 10 years from private, it was the next wave. We had four pillars at the time.
We had four pillars: Growth, Customer X, Employee X and Lean. We had six different priorities and goal for fiscal year 2025. The financial target was to reach revenue of $9.5 billion and EPS of $7.5. That was in October 2019. Obviously COVID hit in the beginning of 2020 and we end up with EBITDA over $12. We reach EBITDA in the range of $12. In fiscal year 2023 when we had $10 billion in revenue and $12 in EPS, we needed to do something. This is what we've done in June 2022, we restate basically the financial target. We adjusted some strategy very lightly, but we restate the financial target to $12 billion and $13.5 of normalized EPS.
Less obviously, in fiscal year 2024 and 2023 it was similar revenue in those range and the business started to deteriorate or the market started to deteriorate in H2 fiscal year 2024 and fiscal year 2025. If we look back to M25, it was a five year plan and it was marked by, I would see, multiple important disruption. Many of them was a first in the world, I think. The COVID obviously hit in March 2020, creating a huge bubble, a blitz in demand followed by supply chain issue. We were all happy how our industry was popular at the time, but it created a lot of disruption and we'll talk about it this morning. After that, we were hit by cyberattack. This is a BRP thing. The only thing I can say to you, we managed well. We restarted our factory a few weeks after.
To finalize all the recovery, it took us 6- 12 months depending on the area. Because cyberattack is difficult and you need to live it once to understand what it mean. The interest rate had the highest increase and fastest increase in the last 35 years. That's affected obviously our customers, that's affected our dealers and obviously that's affected us. Our cost of interest did go high. Finally is the geopolitical and macroeconomic. We all know that there is more conflict in the world right now than what we've been through in the last 50 years. Also, the tariff situation was something that was not expected at one point. As you see, we've been in the M25, in the five year of the M25, to a lot of the very important disruption and this challenging environment. This is why here we're showing to you the North America market.
Later on, Sandy will show you international. Basically, you see in the last 10 years and before COVID, from fiscal year 2016 to let's say beginning of 2021 fiscal year, the market was slightly increasing. Powersports North America, we had the COVID demand surge. After that, like many company or industry, we had the supply chain issue, we had the industry stabilization. Since, I would say, H2 fiscal year 2024, the macroeconomic pressure impacting the industry interest rate created some disappointment into the industry. Obviously, it's affected our result. In this context, and I remember in March 2024, we decided to, and we announced in March 2024, but we decided to reduce dealer inventory. We felt that it was not sustainable for the dealers and it was affecting the brand and deliver profitability. Basically, in March 24th, we announced to you it was not fun that we would deplete inventory.
The goal was to deplete it by 10%- 15% over the next 12 months. After that, we restate 15%- 20%. It took us 18 months to reduce inventory. Today, and you have it on the left side today, if we compare the end of fiscal year 2024 to our inventory in Q2 in this year, our inventory for Powersports in North America is down by 31%. If you look on the right side of the slide, Powersports, not ORV, all the other products except ORV, you see our inventory is up 2% but our retail is up 19%. If you take ORV by itself, our inventory is down 5% versus 18 months ago and the retail is up 50%. The dealer right now have a very good level of inventory. We believe that we are at a good place.
In some product lines, we'll readjust our plan going forward. The point I want to make is we are where we wanted to be in the inventory depletion. Obviously, the inventory depletion affected our result in fiscal year 2025-2026 because we retail more units than we ship to the dealers and it affected our revenue, but also our normalized EPS as you know. Basically, if we had to summarize what happened during the five years of the M25, this is basically what we have done over the last five years. It was the highlight. There were many important factors that disrupted our business. Despite all this, we continue to position our business for success. This is what I want to highlight to you first and during my experience at BRP. When you're going through a tough time, the name to recover quickly is to refocus.
When we saw in fiscal year 2024-2025 that it was more difficult, we took key decisions. Not easy decisions, but we took key decisions. The first one, we decided to exit marine. We felt that it would be longer to recover. We were in a situation where we're small. We decided to exit the marine industry. Now it's done. We reduced investment in electrification. We have said openly in the last few months, basically we have developed a 9 kWh power pack that we're using on snowmobile, two wheel, and ATV. We had planned to develop a smaller power pack and a bigger water pack. We put all this on hold and we've decided with the management committee to limit our investment in EV to $25 million a year. It's an investment. We need to understand who is that customer.
We need to better understand the technology, how we can reduce costs. You saw yesterday, for the one who's tried the ATV, it's a very good product. We believe it will grow, but it will take some time. We reduce or put on pause our investment in urban mobility program. For the one that are in the room today, you saw some product that we were investigating. For the time being we put that on pause. The key benefit of all this is the focus. All the team around the world are focused right now on powersports and the M28. Basically it's a two year and a half plan. We are halfway in fiscal year 2016. We will announce our Q3 result at the end of November, beginning of December. We are halfway during fiscal year 2026. Here M28 is covering fiscal year 2027 and 2028.
We'll come back on this. The focus is winning on powersports. Everyone is focused on winning on powersports. We'll tell you this morning how we intend to do this. One thing also I want to highlight, during COVID we invested to chase the demand and basically our factory has been modernized, more efficient than ever before. We have also extra capacity and today our factory is running at about 60% of their capacity. When the market regains volume we have all the tools to be able to meet demand with minimum costs, minimum overhead. We need some time to crank up the suppliers but we're ready to respond to the demand when it will come. Also in this I want to take a few minutes because it's something maybe we didn't talk much, but made a big difference in our efficiency.
We've done four key strategic acquisitions and one will be new for you. Basically we increase our capability for end sourcing in key activity. In 2022 we acquired BRP Megatech. BRP Megatech is the old division of Kongsberg. It's based in Quebec here. This is a company we acquired in 2022. Basically they do the manufacturing PC design and manufacturing PC board, and electronic and mechatronic component and what it is in real life. The [Komodo] that we have on our vehicle is done by Megatech. The power steering on our vehicle is done by Megatech design and production and the IPR on the watercraft is done by Megatech. 80% of their sales was BRP and now it's part of us, better integrated within the company. The other one is Rotax Taiwan and Rotax Vienna.
We hire a group of people in Taiwan that were doing part time work for us. Working. We created BRP Taiwan or BRP Rotax Taiwan in Vienna. We acquired a company that was existing in Vienna. Basically, those people are expert in software design for EV but also combustion engine. They are really increasing our capability to do in-house design of software. The last one, BRP Vietnam. This is an announcement this morning. We signed a few months ago an agreement for a manufacturing joint venture in Vietnam. BRP Vietnam is located in a city that is called Dong [Hới]. It's an hour from Ho Chi Minh. Basically, it's a joint venture with our long-term partners VPIC. VPIC is a supplier for us and we've been doing business with them for 15 years.
We are one of their big customers and we've sat down with them and established that joint venture. The first product that will be manufactured in the joint venture will be the Ryker that will move from Mexico to Vietnam. That is planned for Q4 next year. Obviously, today Vietnam is lower cost than Mexico. Labor costs and all this, longer to transportation. There is tariff involved. You will see in the presentation of Steve Pelletier in a few minutes. One of the big reasons for establishing a joint venture in Vietnam is for avoiding tariff in South Asia. We'll come back on this in a few minutes in the presentation of Steve Pelletier. This is for acquisition that we've done that is not, I would say, as visible as when you acquired a company with product. This has increased significantly our capabilities.
Also, during those five years we increased our market position significantly. We've gained 6 points between fiscal year 2020 and 2025 and 4 points between 2022 and 2025 when we restated our financial target. This is giving the benefit that BRP today is the company in North America that is selling the most unit per dealers. You see here in gray all our competitor line, you see our yellow line and basically we pass from number four to number one in terms of number of unit by dealers. The effect of this is today BRP is very important for dealers. We are the company where they buy the most unit for the OEM. We know and we'll talk about this, we're bringing the best margin in the industry. This is something that we intend to continue to grow.
The benefit of all this is we are very important for the dealers. We want to take advantage of this going forward. R&D, and Thomas alluded to it, basically over the years we invested 4% of our revenue in R&D. In fiscal year 2025-2026, we're closer to 5% because our revenue declined, but we did not reduce our R&D spending. As you see on the chart, we almost double it, and the intent is to keep it at that level. Basically, the strategy that we have is there is more competition, there is competition coming from all around the world, and we want to continue to push technology and innovation to the next level.
For the ones who had the chance to join us yesterday and today, you saw the product, you saw this morning our design capabilities, you saw this morning our engineering capabilities, you saw also how we do product planning, and we hope that we convince you that it's money well invested. We know what we do. As you can see, we set solid foundation to build on as we enter our next wave of growth. Here, basically, is what we plan for the new plan. Internally, we have a 10-year vision, and the vision is to create the unbeatable experience of moving you in every way. This 10-year vision is built in three stages. Stage one is M28, and we won't talk about stage two and stage three this morning. Internally, what we want to build is unbeatable experience.
Obviously, it's experience with the product, but it's also experience with the dealers, experience with the service, experience during the whole cycle of ownership, which I think we can do better. Moving you in every way, obviously, it's on snow, water, on land, but also satisfaction with the experience when you own a BRP product. I just want you to know that internally we have a 10-year vision. What we will focus on this morning is M28, and M28 is after the key decision that we've took, is capture our full powersports potential. In all this, to start with, we kept three pillars identical to what we had in M25. We kept growth, same pillars, we kept employee X that are at the center of what we do, we kept customer X, and I think we've done not the best job in M25.
Sandy will tell you how we can do better in M28. We kept lean, but we have had agility because we realize in the last five years that in this new environment where things change overnight, you need to be very agile. This is why we reinforce the fourth pillar of lean by now being lean and agility. You can say it's a continuity of what we were doing in those four pillars. Now here, M28, for the people in the room, I will build a slide. Then it's capture the full potential of powersport. Then the strategy and the target for fiscal year 2028. I will go over each of them briefly. The first one is to go full throttle to become number one in ORV. Full throttle to be number one in ORV.
It won't happen in 2028, but in 2028 we want to return our market share to 30%+ in side-by-side and reach 25% in ATV. We've lost some share in the last 18 months because of our inventory depletion. The first step is to go to 30%+ market share side-by-side and 25%+ in ATV. The second one is to gear up International. You will see. Steve will explain what we do to grow International to the next level. It won't happen in the next two years and a half, but in the next two years we want to bring International to $2.5 billion in revenue and build for the future. The third one is Upshift. The dealer and customer experience. Customer X. Sandy will talk about it. Fuel the BRP heartbeat, drive value through speed and efficiency.
Basically, we intend to reduce our time to market by 20% and also to deliver $350 million of lean value. Thomas and Patrick Dussault will explain to you how we intend to do this. A new one, boost defense and specialized vehicle. I'm coming back on this in a few minutes. Rev up our product competitive edge. Minh Thanh, Thomas, and Denys explain this to you this morning. The target is revenue of $9.5 billion and normalized EPS of $8. This is basically M25. We had a debate internally and the board is working on it. I want to say a few words on the CEO transition. The board is working on it and we are still on plan to have a transition at the end of the year. I've been CEO for 22 years and the board can count on me to ensure a good transmission.
I'm not plus or minus one month if there would be some delay. Some of you told Philippe and Sébastien lately not sure we expecting a target at the investor meeting. We felt, to be honest, that presenting a new plan without a financial target was incomplete. We know you, you will all do your model anyway and you will ask us to give you input to do this. After some discussion with the management committee and the board, we decided to give you the guidance, the financial guidance. Here is why. First is M28. It's 30 months, it's not long term. Second is the strategy and its focus on powersport. The strategy is defined. The next two years in terms of new product are not totally frozen, but are well aligned. There is not much risk.
The focus for the next two years, two years and a half, will be to deliver on powersports. It will give a chance to the new CEO to take place, to understand the business, to adjust maybe some element in the next two years, but it won't be, we believe, drastic, but adjust the future. This is why we decided to give you the target. Maybe you don't agree, but this is what we've decided. We believe that it was the right thing to do to give you a complete picture of the M28. The financial target obviously will be, and this is from fiscal year 2016, our midpoint of the guidance and fiscal year 2016, midpoint of the EPS. Basically, it will be a growth in revenue of 7% CAGR and a growth in EPS of 33% CAGR.
We would go back by the end of fiscal year 2028 to $8. Basically, this is the planning and what we will present to you in the next few minutes is how we'll achieve this. This is our time to convince you that it's realistic. Obviously, always if the macroeconomic stay like this and it's not perfect, but if there is no big conflict that is stopping something or crazy thing that is happening, we believe that this plan is very achievable. This morning, out of the key priorities, three will not be covered. I will say a few words about it. The first one is fuel the BRP heartbeat. Obviously, the employee is at the heart of everything we do. We'll continue to improve our health and safety journey. Today we are about 0.5 in terms of event or accident coming in our plan.
We all know that below one is very good and we're very happy to be below that. We're improving every year and we will continue to basically hire the best people, give them a career growth plan, and develop them. This has been our success at BRP. The second one is both defense and specialized vehicle. On this one, it might surprise you, but we've been selling snowmobile and ATV and outboard engine, MFE outboard engine, to army for the last 15 years. Basically, we develop our snowmobile and ATV for NATO standard in Finland. We've been selling a few units every year, a few 500,000 unit. We never really talk about it. In outboard engine, we've kept that technology. We are producing from time to time MFE engine, multi fuel engine, outboard engine for the U.S. Army.
They can put jet fuel, diesel, gasoline, maybe vodka to power the engine. It's working. It's working. We've been basically supplying or in contact with some countries and army around the world. It was not a big business for us obviously with what's happening in the world. Many countries want to invest significantly in this venue to defend their country. We've been approached by many, many companies, many countries in the last few months because we are considered. Our products are considered light mobility. Right now we decided to put a small team together under the leadership of Thomas Uhr because those countries are coming out with the basic products stay the same but some particularity that needs some R&D adaptation. This is why we put this small group. We'll beef up the group. This small group will be on the leadership of Thomas .
Today I cannot, and this is why we cannot talk about, we cannot quantify what it could look like at BRP . We're just starting but you can definitely and you will hear about it more and more in the next few weeks, months because it's something that we are more and more involved in. The other one is specialized vehicle. A lot of our dealers around the world are taking a Defender, Defender 6x6 with the long box or the Defender PRO and they're doing specialized vehicle for Red Cross. I visit dealers in Germany who were doing, they were taking a Defender PRO. They put in additional equipment for the Red Cross selling it for EUR 70,000. This is growing big time right now. We want to better support our dealers and maybe do from the factory product for specialized vehicle.
This is basically these priorities: boost defense and specialized vehicle. The third one is rev up our product competitiveness. You will see this morning we have big objective for ORV but we don't want to slow down in the rest either. You saw again for the ones who are here yesterday and today you saw you try our ATV and side-by-side. I hope we convince you that we have the best product in the industry and you saw this morning our design, engineering and global product strategy, the way we manage our portfolio. I hope we convince you that we can continue even if we have high market share in snowmobile and watercraft, we can continue to do well in those business. This concludes my introduction and I will pass it over to Josee Perreault who is Chief Marketing Officer.
Good morning. Let's talk a bit about our customers. In recent years we've been really busy at building our customer base. Case in point, we've built a BRP business experience unit and year to date, or year to date since the inception in 2021, we've been adding about 2 million people, or butts on seat, that have experience. These people are mostly new entrants. We've also introduced new product introduction, new platforms as you know, and if you trusted yesterday. We've also added a direct-to-consumer platform to meet the needs of our customers who want to acquire parts, accessories, and apparel online. Today we feel that we are really well positioned to gain our fair market share in an addressable market of the powersports industry that we feel is today at 70 million riders. Since 2021, we've been adding 230,000 new customers every year.
Since that date we've added 1 million unique customers that have acquired BRP vehicles globally. We feel that with those million unique owners we've built a good fan base that we continue engaging. Today we have close to 8 million BRP followers. They're following us on all our social media platforms for all our brands. As you know, this has grown also substantially over the last few years at the same growth level as our ownership as well. Since 2021 we've added about 1 million followers and it's engaged followers as well. In our industry, passion runs really and we have the most engaged followers than our competitors. As you can see here, our Sea-Doo followers are very much engaged as well as our off-road followers. When I say they are engaged, that means they answer to our posts, they emoji our posts, they share, they repost and whatnot.
This shows the fan engagement for BRP. I want us to meet our riders right now. We're pretty well balanced in terms of customer mix. Close to half of our customers we conquested from other brands. We have 32% repurchasers and our level of new entrants is at 21%. Obviously we all know that COVID was a peak in the powersports industry of new people coming in for BRP. In 2021 as well as 2022, we had high levels of new entrants in all our categories. Today the level of new entrants has gone back to pre-COVID levels. We also know that our new entrants are more vulnerable to the economic conditions right now. We attest that with our softer retail sales of our entry-level products such as Ryker and Sea-Doo. In spite of having lower level of new entrants, we're compensating elsewhere.
Since 2021 we've added more conquesting, we're conquesting more from other brands. Notably, we also have a huge leap in terms of repurchaser since the last five years. If you look at the customer, we had an influence of new entrants in 2021. That's changed the demography of our customers. Reversely, as we go back to pre-COVID trends in terms of new entrants, our customer has aged a bit since 2021. Our customer has gained about three years. It stands at 52 years old. Our customer continues to be completely male dominated. The majority of our customers come from rural and suburban areas. The good news is our customer is wealthier than it was in 2021 and that's important. In fact, our customer right now is probably twice as wealthy as the median of an average wage in America. One in two of our customer earns $150,000 right now.
That ratio was one in three back in 2021. We're getting a bit wealthier since that time. It's also notable on the graph on the right side that our customers are less impacted with the economic condition. When you speak to our customer, they all feel and all see the crunch in the economy right now. Since they're wealthier, they feel much less vulnerable than the customers out there. We've spoken about the overall BRP customers. José said just earlier that ORV was one of our focus. Let's start to focus or zooming on ORV right now. In terms of brand awareness for Can-Am or ORV brand, we're gaining momentum and we're closely bridging the gap with our main competition in terms of brand awareness. Also, 1 in 2 of our ORV customers we've conquested from another brand.
That means that ORV owners of other brands have switched to Can-Am in the recent years. That's mostly enlarged by the enthusiasts of our Can-Am owners. We know that right now we're bridging the gap also in terms of NPS score for the SSV owner. We're close to our main competitor. We're surpassing a lot of our competition. We're not the leader yet in terms of SNPS score, but we're soon bridging that gap. We've asked our owners, all ORV owners, all brands combined, what do they associate BRP? What are we known for? It was resounding effect that BRP in ORV space is known for quality and power. Not surprising considering our reputation in performance. As you can see in the lower left quadrant, we're much less known in terms of utility and farming and ranching. For us this is a great, great opportunity.
Every year we do a brand association survey. Same principle. We go ask the overall ORV owners out there what they associated us with. At that point in time last year, 29% of ORV owners associated Can-Am to ranching and farming. Same survey done a few months ago, that level rose to 42%, which is a huge improvement in leap of perception. That means we really nailed down a vector of growth for ORV in general. In the ORV band, 1 in 3 of our ORV customers are repurchasers. What does that mean? That means a Can-Am ATV owner will repurchase another ATV or a side-by-side in the Can-Am brand. What it also means is that we have repurchasing within the portfolio of brand right now. Case in point, 22% of our Ski-Doo owners own the Can-Am brand.
We feel that this is an important opportunity for BRP given that we cover all playgrounds and we cover all seasons. Probably one of the first OEMs that can pretend or say that we cover all of that. If you look at the space of the cross brand purchasing of our customers, it grew 28% in the last four years. We feel that we're only scratching the surface. 29% growth of cross brand purchasing and that's organic growth. That's us doing barely anything. Obviously, if we push slightly that measure, we feel that it should be a good focus in the next coming years. As I bring you back to what I said at the beginning, our aim is to build a huge customer base, to build fans and engage in our fans. To do that we have an important marketing machine. We have over 150 ambassadors.
We are present in more than 300 events with our customers. We launched last August a new brand platform for Can-Am showing that our brand is unstoppable. That's the platform we are pushing for the next few years. Also, our brands are engaging. We're seeing a lot of traffic to all our websites for the brand. Traffic to our websites increased 28% this year alone. Obviously, we're going to continue pushing on that machine. It's really important for us to continue building our fans and continue engaging our fans because our ultimate goal is to build for BRP a great BRP fandom. On that note, I'll pass it to Sandy. Go ahead, Sandy.
Thank you, Josee. Let's kick it off. Let's kick off the strategic initiatives. I brought with me obviously David Baker and Steve Pelletier and David responsible for the North American market and Steve for the international markets. Before we get into the specifics of the strategic initiatives, let me just remind you that we are operating in more than 130 countries worldwide through 2,700 dealers. Just a note, what you see on the left side of the screen is our diversification. More than a quarter of our revenues come from international markets, so outside of North America. That speaks obviously to diversity, diversification, but also it speaks resilience. Diving into the North American industry, what you see on this graph, the line is actually the industry, powersports industry, and the bars are actually our wholesales.
I won't repeat what Josee said, but it was obviously quite a ride going through the different crises that we had to go through, starting with the pandemic with the undersupply, then obviously the supply chain issues and then the oversupply as we replenished inventories in the network, combined with somewhat of a slowdown of the industries in fiscal 2024. At the spring of last year, we had to make a tough decision and reduce significantly our shipments to protect our dealers. I'm saying this because the whole plan was to be in the position we're in today in fiscal 2026, where except for snowmobile, wholesale will equal retail in our planning. That's the value we're bringing, not only for our dealers, but also for our investors and for BRP . When you look at international, it's a similar pattern that we've seen within the recent years.
This, while absorbing the exit of Russia, we tend to forget this. In terms of wholesale equals retail, it's pretty much in the same range, but you see less variation from international, not by country, as an aggregate international, because we see right now countries that are struggling more, but there's China, there's Brazil, and there's Mexico that are doing really well. Just a note, Mexico is now the second biggest ORV business outside of North America, so growing really fast. Very interesting. Back to spring of 2024, a little bit of a reality check. With the inventories growing faster than expected, we had to take or put a timeout to the shipments. What we had in mind, obviously, was to protect our dealers. The dealer value proposition for us is key.
This is what we believe was the key ingredient of the growth of the last 10 years. The intention was to reboost the dealer economics, make sure that they make money with our products, and we differentiate ourselves by OEM profitability. That was, for us, key. As we also grew very fast in the last years, we became a little bit more complex. We made sure that we eased the way of doing business with our dealers, introducing new ways, simpler ways for the dealers to actually deal with us. Despite the slowdown, the latest slowdown in the last 18 months of the industries, we did invest in additional resources directly supporting our dealers, both on the sales support, but also on the technical support. As our business not only got more complex, but our vehicles have become more complex as well.
The dealers needed the training, needed that attention to get back on track. This is what was done in the last 15 months. The whole point here is how we set ourselves for the, you know, for the rebound. This is why I say BRP at an inflection point. For those of you that were at the club in Boston where we launched the Defender HD 11, the 6x6, the 300 hp on the Switch, and many other product news, by far, we are recognized by our dealers to be the most aggressive OEM in terms of product news. Nobody else came even close to the number of product news that we launched in Boston. This is certainly engaging the dealers big time. Like I said, in North America, except for snowmobile, we're on track in terms of wholesale equals retail. Inventory wise, we're in a good position.
Josee talked about it, especially on ORV, and we're actually rebuilding some inventory as we speak. Thirdly, is this dealer sentiment. When you make this tough call and when we decide to care about the dealers and caring about dealer profitability, protecting the dealers, but also our brands, this is the reward we're getting from the dealers. Sentiment from the dealer side, this is something, by the way, we do measure on a quarterly basis as we saw that sentiment going up significantly in the last 12 months. I would say now tackling the different strategic priorities, as Josee mentioned, full throttle to number one in ORV. I think I'll repeat it again, we are going for the number one position, but for the next 30 months, our target is 30% market share for side-by-side and 25% market share in ATV. That's for North America.
As far as gearing up for international, this is preparing the grounds for the next wave of growth. As you understand, there's a lot of wealth going far East. Middle class is exploding in many regions of South Asia, but also in China. Although we're well positioned today, we have a strong network. We can do more. Steve will explain exactly how he's going to prepare the grounds to be able to hit the ground running when we're ready to do this. This is about preparing the grounds for the next 30 months. I'll be covering upshift, the dealer and customer experience, and I'll jump into that right now. David and Steve will follow through right after. In terms of this importance, remember the M25, it was all about CX, but the dealer dynamic and how we manage CX is super important.
This is why we have a target for our dealers. This is to be the undeniable OEM of choice for dealers. If the dealers win, we win and increase our customer NPS. This is how we create ambassadors by 20% +. This is our target in the next 30 months. Strategic initiatives again, a lot around the dealer. Deploy our revamped network value proposition. This is around profitability, ease of doing business, and trust. These are the three key attributes that the dealers are telling us. If you guys do this, you will win the business. Secondly, raise service excellence and after sales operations to become the industry benchmark. I'll cover that a little bit later, more in detail. With our premium brands, now it's time that we get to the premium experience and service.
Thirdly, enhance the ownership experience with relentless focus on converting detractors into brand promoters or ambassadors. Not to forget, we will continuously improve on the purchasing experience across all touchpoints. On that specifically, and this is internally, we say DX as a driver of CX. There's a reason why we're saying this. It's because they hold 80% of the customer interactions. To be honest, as an OEM, we've been focusing in the last 10 years on the purchasing experience, especially in the context of digitalization. This is where we've put the most focus in the last 10 years. As far as the ownership experience, which is actually measured in years and this is how you build lifelong relationships with the brands, this was mostly in the hands of our dealers.
This is the shift that we're going to be making and the importance of what the dealer has a role to play in making that transformation. How we're going to do this, and this is stepping back and understanding what we need to do with our network so that they can provide a consistent customer experience. First off is about elevating our brands. This is what we always do, invest in our brands, but also in the franchise value. This is not about our profitability, it's also about the dealers' profitability. If they are successful and they're profitable, obviously they'll be able to invest in our brands. Secondly, in exchange we'll be asking for more. José talked about the fact that now we are the OEMs that sells the most unit per dealer.
We are in a position to ask for more, making sure that we transform our dealers into much better retailers. That has to do with how we control the retail environment and how we control the service environment and so on and so forth. When we do this, we believe we can become the most attractive OEM for dealers. By the same token, this is attracting the best operators and the best investors in the field to carry our brands and to carry our brands obviously in the future for growth. Last but not least, this is probably the most important pillar of our dealer value proposition, how that translates into bringing this premium customer experience. Again, the overall objective, remember DX is a driver of CX. We start with the dealers, we make sure that they're set up to be able to provide that premium customer experience.
Now why is this important? What you see on the left is the quadrant and we understand BRP. I think this is undeniable. We're playing in the premium product segment. Our brands are premium. In terms of premium experience, as Josee said, I don't think we are doing a super job. Industry wide I think we can raise the bar as well. This top right quadrant is about this white space that exists today in powersports. Nobody's there but we believe we have the right to capture this and make sure we continue growing while obviously providing that premium experience. The drivers for this are speed and responsiveness for services of doing business. Obviously, service profitability and scalability at the dealership is very important. At the end of the day, what drives customer lifetime value is buy more, refer more, stay longer in the category.
At the end of the day, it's going to cost less for customer acquisitions going forward. On this, I'll pass the mic to Mr. Baker.
Thank you, Sandy. Good morning everyone. First of all, I'll introduce myself. I guess I'm a new face for this crowd, but not new at BRP. I've been at BRP for 17 years, 14 of which I spent in the North American division. Prior to this role I spent three years based out of Sydney, Australia where I was General Manager for Asia- Pacific division. I've joined North America back as the Vice President and General Manager for North America at the beginning of fiscal 2025. Before we start, allow me to give you some perspective on our past performance. What you see on the chart is the North American off-road industry per OEM. Obviously, the white, the yellow line is Can-Am and all the other lines are players in the industry.
From fiscal 2019 to fiscal 2025, and fiscal 2019 being the index point, at the end of the day, Can-Am retail grew over 60% from fiscal 2019 to fiscal 2025. When we sum up the competitors to understand the industry average, without Can-Am, Can-Am significantly outpaced the other OEM in the industry. If we take a further step back and we look at a horizon of 10 years, from fiscal 2016 to fiscal 2025 our market share went from sub 10% to 25%. We went from being a third player in the industry to a solid second in the industry in fiscal 2022. All of this in that period that we delivered double-digit annual retail growth over those 10 years. If we zoom in from fiscal 2020 to fiscal 2025, Can-Am has closed the gap with the number one position by 46%.
What I mean by that is that when you look at fiscal 2020 and you calculate the quantity of units that was required for us to be number one, and then we look at where we finish fiscal 2025 and looked at how many units is now required to be number one, the delta between fiscal 2025 and fiscal 2020 has shrunk by 46%. Obviously, all this is also because of the expansion of our lineup. It has been a key driver of our success. We've introduced game-changing products across different segments of the category in full transparency. Products that have shaped who we are as an organization. Over the last 10 years we've gained valuable knowledge of the off-road industry, but also products that have shaped the industry itself, setting new standards in terms of performance, handling, build quality, design, and fit and finish.
Meanwhile, we've achieved this with limited edition of dealers. If you look at the left hand side of the screen, from fiscal 2014 to fiscal 2019, this was the initial phase of the dealer network expansion and it was tied toward lineup expansion. From fiscal 2020 till fiscal 2025, we've gained 10 points of market share with limited addition of dealers. Today there is a white space in the industry for us to fill a gap given our market share position. When we sum all of this up, over the last decade we've built an industry-leading portfolio of products, we've built an engaged and performing dealer network. Above all, we've built some momentum and today we're ready for a next wave of growth. As José and Sandy said, that next wave of growth for us is to reach the number one position in the off-road industry.
Let me walk you through this and why off-road. The off-road industry is three times the size of the other industries in which we play. When you look at the left, the other products of the portfolio and in their industries we come in on average 50% market share. When you look at the off-road industry at 25% market share, we see plenty of runway ahead of us. Today, as I said, over the last 10 years we've gained knowledge in the off-road industry. We have the capabilities but also the resources to reach that number one position in the off-road industry. Full throttle to number one. José mentioned the target for side-by-sides is for us to regain that 30% market share. We've been there before in fiscal year 2025.
We made the tough decision to cut production to reduce inventory at the dealers to protect their profitability, to protect their long-term engagement with BRP. Now that inventories are level set, we're not going to be standing on our back foot, and on ATV o ur target is set a new milestone for Can-Am Outlander with 25% market share and we have three key pillars. Number one, it's about optimizing our network coverage in the U.S. by adding 100 dealers in the U.S. Secondly, it's about gaining share of wallet in underperforming markets. Lastly, it's about winning in key underperforming segments with a competitive value proposition. In terms of dealer network expansion, we're targeting to grow our North American network by 100 dealers and more specifically this will be in the U.S. by the end of fiscal 2028.
30 dealers this year, 40 dealers next year, and 30 dealers in the last year of the plan. This should grow our U.S. dealer network by roughly 10%, and we're going to add those dealers focusing on the region where we're underserved by Can-Am. The reason I'm saying this is that we want to improve our industry coverage while limiting dealer oversaturation. Sandy mentioned it. We want to make sure our dealers are profitable and viable. Therefore, we will limit dealer oversaturation in terms of industry coverage. Adding 100 dealers is expected to bring our industry coverage in line with the rest of the industry. In terms of dealer count, we're still expecting to maintain a dealer count despite the fact that we'll add 100 dealers below the rest of the competitors. Therefore, we'll be thoughtfully managing our network expansion to protect that dealer profitability.
Therefore, we will not open points at any given cost. Our second key pillar is about winning in underperforming markets. Let me share with you what we've done in the past. We've successfully deployed grow plays initiative in multiple regions over the years. The first growth play we had was in Texas. If you look at the left side of the screen, yellow bar, our Texas market share, black bar is the U.S. without Texas in terms of market share. You see the evolution from fiscal 2016 to fiscal 2025. At the end of fiscal 2025, our off-road market share in Texas was 9 points higher than the rest of the U.S., and thereafter we've launched two other initiatives, one in 2022 and one in 2023. In both of these markets, our market share outperformed the rest of the U.S.
We understand how to win in key markets, and we have a proven recipe to drive tangible results. If you look at the top of the slide, it's Can-Am Off-Road, fiscal year 2025 market share performance. We've divided the market in three categories: underperforming markets, so this is our bottom 20%; then completely to the right, our best performing markets, our top 20%. What I want us to remember here is that in our top 20% of our markets, or our best performing markets, Can-Am market share commands 40% + of market share, whilst at the same time, when we look at our underperforming markets, we have less than 20% market share. Looking at the lower part of the screen, where we see the industry size per market, in our underperforming markets, the industry size of those markets is 50% larger.
In our best performing markets, we see a substantial opportunity for us to grow by addressing our underperforming markets with our own recipe, which we call growthplace. We are also going to focus on improving underperforming categories. In the portfolio on side-by-side and on ATV, we have products which we call our best performing segments that deliver today a market share well above our M28 target. However, at the same time, we have an important volume opportunity by addressing those underperforming segments and the average segments, and we will be focusing energy on that portion of the portfolio. At our recent dealer event, we've done just that by reinventing the best selling side-by-side with the launch of the Defender HD11. Brand new platform, brand new engine.
We brought value for money for our customers with the introduction of the Maverick X3, and we've introduced rock climbing capabilities to our flagship Maverick R. On ATV, the Outlander Backcountry has everything for the outdoor enthusiasts. We've overhauled our workhorse, the Outlander MAX 6x6. Last but not least, we've introduced the first EV ATV of the industry with the Outlander EV. Product strategy is one thing, but we're also implementing commercial strategies. One of the major news that we did at our dealer event was the following. If you look at the left of the slide, which we call the [Rexport] Mid HP segment, this is our Maverick X3, 135 hp. We've reduced the price of that vehicle by $2,000. The MSRP today in the U.S. is $19,999, and we've priced that vehicle on purpose head on with the category leader of that segment.
The same can be said for the other segments. I'll touch briefly on the [Utrecht] Mid HP. This is the Defender HD9, which saw a price reduction so that we are priced head on with the category leader. The Utrecht Mid HP CAB, this is the Defender HD9 CAB, now priced at $29,999, making it the most affordable full size cab of the industry. We're optimizing our model year 2026 pricing to unlock volume opportunities. To sum everything up, full throttle to number one in Off-Road , a three pillar approach. Number one, we're going to increase our dealer count and improve our network coverage, so + 100 dealers in the U.S., more or less + 10%.
We're going to expand our growth play strategies so that we address those underperforming markets, and we're going to bolster our lineup not just from a product strategy standpoint, but also from commercial tactics to improve those underperforming categories. The target is clear: on side-by-sides, it's to return to that market share of 30%, and on ATV, it's to set a new benchmark at 25%. We're setting a solid foundation today to rapidly grow our market share by fiscal year 2028. Most importantly, it's to sustain that momentum well beyond that point so that we become number one in the off-road industry, and Can-Am is known as the best-selling off-road brand in North America. On this, I'll pass it on to Steve.
Good morning everyone. Pleasure to be with you. First of all, let me introduce myself, Steve Pelletier. I'm the General Manager for the International business at BRP. I've been with BRP for over 21 years. My first 12 years at BRP were in finance and then I evolved into the sales side at becoming the General Manager of Europe, Middle East and Africa. Four years later I become the General Manager at International. It's a pleasure for me to be here. Let me start by highlighting a bit the strength of our international model, our network and our network coverage outside North America. BRP operates through two complementary business channels. The dealer direct model like we have in North America, but also a distributor model that allows us to penetrate markets that have less volume in certain parts of the world, are more complex to penetrate and require less investment.
Together they gave us a very good presence in more than 130 countries with 1,100 points of sale. This level of coverage very few in the powersports industry can match. It gives us a true competitive advantage, combining global reach with global expertise. It's a foundation that supports growth and resilience, like Sandy mentioned earlier on. Building on that network strength, our geographical and product diversity is another major differentiator. We now operate across three main regions: Europe, Middle East, Africa, Latin America and Asia- Pacific. We offer the full range of our product portfolio in each one of them. This balanced footprint pretty much means that if one region struggles with either economic downturns or climate headwinds, the other can actually offset it. You'll see that later on in the presentation. It gives us stability, flexibility and a global growth engine that very few competitors can replicate rapidly.
Dealing at International brings its sets of challenges in a global footprint like that. This is what makes my job actually very, very interesting. We operate across two hemispheres under the pressure of regulatory frameworks that actually can affect the playground in which we operate and the product that we can offer in some of these playgrounds. This is why you see programs like Responsible Rider being important. The launch of Maverick Sport with ABS. Our ORV products in Europe have ABS brakes to bypass some of these regulations. That is an important part. However, when you look at it then, despite these challenges, our international business remains a tremendous source of opportunities in many of our markets. It's not just about gaining market share. It's actually developing the powersports industry as a whole.
With the teams that we have and the ability to maneuver and adapt in this environment, it positions us very, very well to capture these future opportunities. What I've described is actually the backdrop of M28 for us. Sandy alluded to that. M28 is our roadmap to build capabilities required to capture growth beyond fiscal year 2028. Our strategy will focus on accelerating our growth in Asia, maintaining our very strong momentum in Latin America. Like Sandy talked earlier, establishing a manufacturing .
The first region to be faced with the economic challenges that we have, but also we combine this with weather conditions that were not optimal for our seasonal product. Even through this, we're holding a very strong market leadership position in seasonal product, and we're actively developing the untapped potential in the utility ORV market. EMEA is the more mature region that we have, but it's one that is poised for rebound, especially in the seasonal product, and our increasing focus on customer experience, like Sandy alluded to. The utilities segment will be a key differentiator in what's already a competitive segment. Moving on to Latin America, I've mentioned that EMEA is a more mature market, but Latin America right now is our growth engine internationally.
It's our fastest growing region, fueled by very strong performance in Mexico and Brazil, which is backed by a solid team, local team, and a high quality dealer network in both of these countries. Actually, when you look at Mexico, and Sandy talked about it earlier, has quickly developed a very robust ORV business, while Brazil is excelling in developing the seasonal market through [PwC], and by sharing the knowledge and sharing best practices between the two countries, we're able to accelerate the growth in both countries and in both categories. The opportunity that lies ahead for us is still very promising as we continue to expand our network and develop regional initiatives to continue to develop the industry or the powersports industry. When you look at our network here, you see some of our dealerships in Mexico and Brazil.
They are modern, professional, and fully aligned with our brand image. These partners are a cornerstone of our success. They bring BRP experience to life and are a major reason why we continue to outperform year after year in these regions. Now if we move to the other side of the world with Asia- Pacific, the growth in that region has actually been tempered by a slower economic situation in Australia and New Zealand. Australia and New Zealand were probably the first two countries to start slowing down a few years ago. Even so, in that region we have built a solid and established network that gives us a leadership position in seasonal product and a strong position in ORV.
Australia and New Zealand will continue to focus on the PwC market, but also the utility ORV segment where our products are perfectly matching the local usage and terrain over there. At the same time, in Asia- Pacific we need to continue to develop the potential in emerging across Asia and ensuring that APAC remains a key contributor. To BRP 's future growth.
If we look at Asia specifically, excluding Australia and New Zealand from the previous page, you see that the growth story becomes even stronger. With a growth rate of 11%, we're actually building a strong foundation by developing a premium network and service levels that deliver a high-end consumer experience aligned with our brand standard. At the same time, we're creating the industry itself by democratizing the access to our product by developing new playgrounds, introducing new business models with partners such as rental operators or white glove services experience that help new customers actually discover our products. When you look at the overall macroeconomic or micro environment that Sandy alluded to earlier on, it supports that growth trajectory. Government in some countries are actually investing in domestic tourism and leisure, which is perfectly aligned with the portfolio of product that we offer.
With a rapid expansion of the middle class, where the number of households able to afford our products will keep increasing for years to come, it provides significant opportunities for us to continue to grow over there. Our strategy to Asia is really focused and clear. First, we'll develop a high-quality network of dealers or representatives that will represent our brands. Second, we need to drive awareness of BRP, our products, and also the powersports industry. Third, we'll be partnering with local authorities and stakeholders to develop sustainable playgrounds but also a supportive framework around it so that it's sustainable for many years to come. Finally, by deepening our understanding of consumers to create products and experiences that truly match their needs. Together, these pillars define how we will lead the premium powersports industry in markets such as Asia.
On the next page, you actually see examples and here tangible proof of what we're doing in China, our newly opened dealerships in that country. They actually showcase the professionalism, consistency, and brand experience. To us, they're more than just points of sale in that country. They're actually ambassadors of BRP's premium positioning and a key part of gaining the customer's confidence. If we move on to what José talked about earlier on, about the manufacturing footprint in Asia, specifically in Vietnam, this is a key enabler of our growth strategy in Asia. This will help us overcome some key structural challenges that we face with long lead time, high transportation costs, and AI duties. In certain countries, import duties can represent up to 50% of the value of the product. We needed to find a way to reduce that, and the manufacturing footprint in Vietnam will help us.
This is why we actually chose Vietnam strategically. Vietnam is at the center of many free trade agreements in Asia and beyond Asia. It's going to give us a tremendous asset that we'll be able to leverage, continue to grow, and give us a significant competitive advantage from a cost perspective, speed to market, and market access. This is a chart that I like because it shows the diversity of what we've been doing over the years at International. You see there that our approach has allowed us to double the international business despite various headwinds. You see Russia there, where we lost the business in Russia almost twice with everything that has happened over the years. We were able, by developing new markets and strengthening market position where we are, to alleviate some of these bumps or headwinds that we face.
This track record actually proves that our model works, and it gives us the confidence to continue scaling across all regions that we're doing business at International. In conclusion, we've talked about the numbers, but BRP International actually stands on very solid foundation, an experienced and agile team, a powerful global network, and a clear mission to build capabilities that will carry us far beyond fiscal year 2028. We've shown we can grow, adapt, and lead in complex environments, and with Mission 28 we're now positioned not just to grow faster, but to shape the future of the powersports industry worldwide. Thank you everyone, and I'll pass it on to Sandy to conclude.
Merci. All right, so I think what you just saw is that the power of the refocus on powersports and the depth of the plan going forward speaks to the investments and so on. Just want to make sure that we go back to the three strategic initiatives. ORV by far the biggest opportunity. I hope David convinced you that not only do we have a vision with this plan, but we are actually hitting the ground running with proven approaches on the commercial side and on the Europe international. This is probably the best kept secret of BRP. Obviously, in the next 30 months we will grow that business.
The better is to come post fiscal 2028, and all of this around this focus on the customer, creating this lifetime value but focusing on the dealer because they own 80% of the touch points with our customer, I believe is the right thing. All in all, this we believe is a very solid plan. On this, I believe we'll take a 10 minute break. Thank you everyone.
Patrick, have a seat. Good morning everybody. I try to get you refocused after the break and we do this with speed and efficiency. Patrick and myself want to use the next couple of minutes to show you what we are intending to do at BRP in order to drive value through speed and efficiency. Our target in this initiative for fiscal year for our M28 strategic plan is accelerate time to market by more than 20% and deliver more than $350 million of lean value. For this we have four strategic initiatives that we are following. As you can see, we want to accelerate our time to market and to reduce development costs with our new new product development process. We want to optimize the utilization of assets and our networking capital captured.
We want to achieve consistent results on our key productivity and cost KPIs and we want to strengthen our culture of continuous improvement for all of us at BRP going forward. For this we prepared a couple of examples and as we are under the lean and agility pillar, I want to be very lean and I reuse the slide that I showed to you three years ago, because the metrics of cost is not really changing. What we changed and what we refined big time is the initiatives that you see in yellow below. We want to show you, Patrick and myself, we want to show you some examples for modularity, product design material cost savings and for labor cost efficiency.
I start with one very important thing that already starts in design and in the conceptual design of a vehicle, of a product, which is the modularity, the family or platform fit of a new product. What you see here is our new ATV that we introduced two years ago. We started to introduce it in the mid CC platform. A year ago, we introduced the big high CC platform. There is more to come. All this is within one platform. Between all of these products we have a modularity of single parts that is bigger than 70%, which makes it for us very easy to do cost effectively. Different variants of this platform. The most expensive portion in our products is still the powertrain. The whole propulsion system in these units is also extremely modular setup.
Just between the two engines that we are using in this platform, and it's a modularity from more than 80%, which is quite unusual when you see that these are completely different engines with a wide spread of power and displacement. 80% gives us an opportunity to react on different market developments in the future. Very flexible. All what I'm showing here is also true for our electric ATV. On the electric ATV, the same level of modularity on the propulsion system side and on the vehicle side. Another example that I have here is the, we call it internally XCU. It's a flexible computer that controls engine, gearboxes, and vehicles. This system, it's electronic hardware. The most expensive piece of it is the software. Software and electronic development becomes more and more important and is a big portion in development time, in quality, but also in cost.
Therefore, we started years ago to standardize this in standardized modules. This is such a standardized module. In the past, you buy this from a supplier, the supplier delivers you the hardware and you get the software, so developed by a proven supplier. Today we are doing the software portion in house. All the specific software that we need for the different product lines is done in house. We are using the same standardized hardware that we can buy to a very fair price on the market. You can see on the table on the right side, we are in the process of rolling this out. More than 90% of our vehicles will have this controller, which is a huge saving potential and makes it only possible to have this electronic and software features on our vehicles that we would not be able to develop for each vehicle individually.
The next one is a relatively simple example. It's a material change that we did. We changed, it's called the rear knuckles or the piece that holds the wheel, and we changed it from forged aluminum to forged steel. This is an annual saving of $3 million. You could say $3 million is not that thriving. If you have 10 of such activities, you already have $30 million. This comes without customer disadvantage. It's actually the opposite. We are also improving our carbon footprint with this decision. Another example is the lighting. When you look at the front of our vehicles, our vehicles looking, first of all, they're beautiful, of course, but they are looking different. Each vehicle looks very different. We are using one standardized LED module for all of this lighting. With this, we are getting in completely different levels of volume for this lighting element.
First of all, we get a very good quality. Secondly, we get it at a very good price because for our supplier we are interesting with this volume that we created with this modularity. In this case, it's a saving in a range of $5 million per year. This is a complicated example. Let me explain this a little bit. In each product, if it is electric steering, if it is the iBR brake on our Sea-Doo , if it is an electric product there, it's obvious we have electric motors or we have parts in there that require magnets. Magnets are built—the standard magnet today, the high efficiency magnets—they are built with rare earth, which is mainly controlled, 80%+ is controlled worldwide by China. Actually, there was an update yesterday, it's getting worse. China is using this instrument also for controlling who gets what in this market.
It's a huge lever. What are we doing here and what is the advantage of having a flexible, agile organization? We are capable of sourcing magnets from different suppliers as the ones that we originally have in our plan. We are able to adapt our own internal designs so that these new magnets are fitting, which gives us the opportunity to react very fast on supply problems that we see due to some changes in the legal environment. Long term, this is the short-term reaction on the right side. Long term, all these little black pieces that you see on the inner circle, these are the magnets in an electric engine here as an example. There are techniques available and we are working on them to either reduce the magnets, to use magnets without rare earth content, or to get completely rid of magnets in electric machines.
These are the mid-term to long-term solutions that we are working on to reduce our dependability from this. This is an example of how to react to supply chain limitations. I already talked about time to market. One main element in the time to market is the time that we need for our new development process. This time we did some intensive benchmarking and we developed our process, we streamlined our process so that we are targeting a reduction of more than 20% from decision of a new product until it hits the market.
Until we have start of production, which is quite significant and makes us more agile in the future, and as a secondary outcome, we are also reducing our cost and we are able to reduce also product cost with this because we are much closer, we are much closer to production and time wise much closer in what we are doing in the development work. With this example, I am handing over to Patrick who gives us some examples from the operations side, please.
Thank you, Thomas. Good morning, everyone. First time we meet, so just introducing myself quickly. Twenty-nine years with BRP, always in the field of different field of manufacturing. Core of my career has been in designing and implementing the current manufacturing footprint. Today in charge of global manufacturing since the last three years and part of the management committee since January last year. Let's then have a look on how manufacturing is going to contribute on creating this linked value. Our plan is based on three pillars. First one is about strengthening our culture of continuous improvement. Then boosting our performance through focus on operational excellence and cost reduction. Thirdly, strengthening our position on digital and AI-driven optimization. If we start with culture in manufacturing, you know, continuous improvement always been part of what we do.
In the last decade a lot of our focus was around growth and managing capacity. Starting in 2024 we saw that we needed to quickly change from a mindset of growth to a mindset of lean. The only way to win when you focus on lean is to make sure that you find your way to bring all of the employees, starting from shop floor to leadership, being part of those value creation and waste elimination program. This is what we've did and we had quite a lot of success in the recent years. This is based on this that we were able to deliver on M25 and it's going to be the foundation on which we're going to build to work on the M28 value creation program.
The way we did it is we gave teams real visibility and ownership on cost driver so the way we attack it is we took the cost per unit of every product being produced in every factory and we broke it down to hundreds of granular elements. Then what we did is we identified the cost driver which impact all of those sub granular elements. We sit with all the leadership, production supervisor, manager, again, all side functions across, you know, the global footprint. We train them on how, you know, to define better those cost driver and what are the levers that they do have in their daily job that they could trigger in order to influence those drivers and generate cost reduction. We started that a year and a half ago and the momentum is very interesting and somewhat exceeding my own expectations.
We're having a lot of IDs coming from every level of the organization, thousands of IDs, and I just took three of them to have a little bit of a representation of what's going on. Obviously, we need to classify them because we have thousands of them coming from the shop floor, some of them coming from the office, and some of them which are more transformational. Just using one example of this employee forklift driver in our Mexican plant, his job is to pack some welded part to be sent to Canada in a warehouse for a parts and accessory. He raised the hand as his supervisor, knowing better a little bit of what he controls in terms of cost.
Why am I using brand new boxes to ship parts to a distribution center for which they're going to be repacked anyway, instead of using the ones that I'm throwing away on the compactor, right? Seems very simple as an idea. We did some testing, then we did the go ahead, implemented this, and we saved $15,000 per year. Now this same employee is working on recycling pallets to do the same thing. Just one example, one employee, think about what could happen when you have thousands of them and you scale it o n a global scale.
Professional employee, engineer working on the laser cutting process, understanding his cost driver. Nitrogen is one of the main cost drivers he's having in the process. He manages, went on the Internet, talked to the manufacturer of the equipment, came out with the idea to say, hey, why don't we move from nitrogen to dry compressed air in order to run the process? Did the business case, we implemented the solution. $700,000 of saving per year, three plants times three plants, you know, for just a little investment. Again, just not impacting the cost driver, just improving or reducing the level of gas, but just, you know, canceling, you know, or not avoiding the use of gas, you know, completely. Last example, manager in transportation.
Understanding his budget and his driver realize that we're paying a premium cost when we ship containers to international market because our product are classified as [hazzard] material. Why is because we're having some residual gas remaining in the tank, right. Can we remove it? No. Paradigm.
Start with engineering, with method engineering inside our factory. Find ways to remove residual gas. We save $5 million per year. When people and the whole workforce at every level understand that lean is not about working harder, it's about working smarter. You scale it up to thousands of employees across the globe, it not only generates millions of saving, but it'll help us to shape our culture. Having ideas is one thing, but sustaining them is the challenge. The way we do it is to make sure that once the employees are having the full accountability on finding the solution and implementing them, we make sure that we do take the time and the quality time to recognize them. Is it via the daily walks or the weekly or monthly meeting or quarterly celebration, we do take time for them to understand that what they do matters.
It's having a lot of impact. If you look at the net promoter score, today we're having a net promoter score result which is two times higher than the average manufacturing industry in North America. This contributes to create a purpose for the employees coming to work and engaging themselves into continuous improvement. We're not stopping there. We're trying to amplify this using some of the AI tools that are available nowadays. We started to define how we should tackle this big old world of AI into manufacturing. What we wanted to do is to make sure that we're extremely pragmatic in the way that we attack it to start with. We just identify some areas where we could do some proof of concept on making sure that we do solve concrete issues that we're having on the plan.
Using one example you see in the middle, going back to those tube cutting, it's a pretty interesting process because you're having more than 700 part numbers coming from more than 32 profiles. We're feeding three plants in a one piece flowpole system with more than 14 million cuts per year. At the end, every tube length you scrap a portion of the tube that goes to scrap. With the amount of tube we're consuming, we're generating more than $3 million of scrap per year. To try to define the best cut pattern with an engineer and Excel spreadsheet, it's extremely complicated. Sitting with Stefan's team and the data team and the AI team, they supported us to build this application and now we're just using it and we're able to reduce our scrap rate by $700,000 per year with a very minimal investment.
We're learning how to use those tools to generate saving in a simple matter. We're progressing pretty well now. We're having a project going on. We're using AI to optimize our mix pattern on the assembly line of the snowmobile line. More than 100 workstations with more than 400 SKUs to find a perfect mix. It's super difficult. With the AI, we're able to generate a visualization of what's the best mix and we're implementing it and we're going to have more than $100 million of saving in the next few years. Now we're working on load optimization for finished product distribution and we're just starting. The point is we're scratching the surface at this point, but we're moving in the right direction and it's pretty much promising for us going forward.
This works not only in delivering cost saving, but also on helping us to deliver a pretty good level of KPI result in terms of operational excellence. If you look on the chart starting with safety, to quality, to productivity, to people, today we're at the strongest operational momentum we had in the last decade. Another proof of when the culture is there and the focus is there that we're being able, we are able to generate a lot of great momentum on the manufacturing front. If I then step back and look at the global picture, coming back to Thomas' introduction, the whole value creation pillar at the corporate level, the good thing is we're having a lot of momentum.
If you just look at where we are as of now, today in fiscal year 2026, we're on the path to deliver more than $150 million of saving only this year. This is already a good step forward into this mandate of delivering $350 million. We're on it. You know, 50% of the year, like José said, is behind us, but we're already having a good, you know, a good portion of the objective which is already met. In conclusion, the goal is pretty straightforward for all of us. It's to deliver sustainable, substantial margin improvement b y fiscal year 2028.
How we're going to do this, we're having $1 billion of growth coming to us, we're having asset capacity which is available, and we're having quite a lot of different strategic incentives both on engineering, procurement, supply chain, and production. If we bring all this together, we're very confident we're going to be able to meet on expectations. That concludes my presentation. Thank you.
Thank you very much. Thomas, Patrick. Congratulations to both of you. Congratulations to your teams. I am sure everyone can appreciate the huge impact that the focus you have on continuous improvement lean has on our profitability and the financial performance of the organization. What I like about this is it's not finance pushing on the teams to drive lean and efficiency. It comes from within. Even the operations teams are pulling on finance to support them. I'll cover a few slides on financials, but before I go into the M28 objective, I do want to cover a bit of the history. Obviously since IPO we grew our business significantly and this came from solid execution on many fronts. Product manufacturing, marketing, commercialization. Really when we look at what we've accomplished, obviously we're extremely proud.
We've also been agile in some of the periods that we faced and you will remember the COVID period where we've had to find creative ways to get products much quicker to the consumers, to the dealership. This obviously allowed us to deliver, I would say, industry leading profitability and financial performance. During the COVID years and 18 months ago, with the experience we have in the business and the knowledge we have of how to manage an operation like ours, we were the first OEM to pivot and decide to reduce deliveries in the network. One, obviously we're doing it for the dealer value proposition because they were facing high interest charges which with more inventory, higher MSRPs. Also because we know that the quicker we react, the quicker we adjust the operations and right size the business.
When the industry stabilizes, it makes our performance much easier and when the industry grows as well, we're also able to grow and not focus on managing older inventory in the network. Yes, our industries were hit harder in the last few years. When you look at this graph it compares industry for each product category pre-COVID and also during the peak of COVID. We do see our industries down flattish to high double digits. Personal watercraft, three wheel impacted as well with high interest rates because we have entry level products. Yes, our profitability was impacted, lower wholesale, more discounting and certainly some margin erosion coming from less efficient use of our assets. When I look at our EBITDA margin, we've maintained a margin above pre-COVID levels and again focus on how we run this business. Yes, our mix is stronger.
Purposefully we're able to drive rich mix in all of our product categories. We grew our side-by-side business over the years, which certainly helps as a side-by-side is a very profitable business from a margin point of view. Sandy Scullion talked about unlocking efficiencies in the business and that remains a priority. We've obviously delivered some efficiencies over the last few years and you saw this year we already have $150 million. The other element, and José Boisjoli covered it earlier this morning, is refocusing on the powersports business. It is a more profitable business than the traditional marine business and therefore by us refocusing on the core powersports business it certainly helps in driving better EBITDA margin.
As we operate in an environment where our production volumes are lower than the capacity we have, you can appreciate that when volume goes up, the overall profitability margin as well will follow. Cash generation, for those of you who've been following us over the last several years, is also very much who we are. Even in a period where the industry is softer, deliveries are softer as well. On our side we're able to generate solid free cash flow last year above $300 million for the first six months of the year, almost $250 million. Since fiscal year 2020, we've returned over $2.5 billion of capital to our shareholders. We've reduced share count by over 30% and obviously providing strong returns to the whole investor base. Our framework for managing the balance sheet has not changed.
It's been in place now for over 15 years since the great financial crisis. We are prudent managers of our balance sheet. It also allows us to focus on the business. Management attention is directed to managing the business and not managing the balance sheet. When we hit a softer market or softer industry, managing maturities is very much part of our framework. You all saw our press release last week where, as customary, we've extended the maturity on $265 million of our term loan B debt. We also took advantage of good market conditions and dovetailed the reimbursement of $200 million U.S. debt with more leverage to negotiate repricing on $1.5 billion U.S. that is going to help this year by $0.10. If we were to issue guidance today, we'd increase the guidance by $0.10 and a $0.30 impact for next year.
This is quite meaningful as we look ahead. Now coming to M28, you've seen the slide before this morning. Getting to $9.5 billion of revenue and also $8 of EPS. How do we get there? We'll cover the revenue items first. What I like about this plan, and again for those of you who have covered BRP over the last several years, this is a bottom up plan. People in this room are accountable to deliver this plan. Not just people in this room, but people in the whole organization are accountable to deliver this plan. It's a bottom up exercise and the first big pillar is just retail equal wholesale. We've been under shipping versus retail in the last two years and now our inventory is stabilized. We've reduced inventory by 20% year- over- year at the end of Q2.
Just having wholesale equal retail is certainly a big tailwind. Executing on the ORV plan, we're not looking to grow market share by 10% in the next three years. It's a 3% increase in market share for side-by-sides. Coming back to where we were during COVID, I think you saw and you can appreciate the building blocks that we have behind this plan. It's not fluff, it's real tangible elements that we are tackling from DVP, from network expansion and also improving the overall consumer experience. International. Steve gave us a good overview of the international business. Some of it is already happening this year, bringing international business to $2.5 billion. We have obviously a secret sauce. We have the know-how, the competencies. We've been in the international market for a long time.
We know how to deal with the various complexities that we face in all of these markets and therefore being able to deliver this is certainly something that is within reach. Growing in the other business. We're not planning for any industry growth other than let's say a 1% increase in the side-by-side business industry. The other industries we're planning for flat industries, minor market share increases obviously as we grow the side-by-side business. I often say this, I'm a huge fan of side-by-side. Why?
Because there's a lot of square inches on a side-by-side and we can attach a lot of accessories, especially our LinQ accessories, and that obviously will drive good top line but also good margin. Lastly, pricing. We have pricing built for 2026. This is the only pricing that we have in the plan. Also, as we operate with leaner inventory and as the whole industry is going to operate with leaner inventories, because that's the message that everyone is transmitting, obviously we'll operate with lower programs to bring us to the $9.50. On the EPS t he first two buckets are covered by the revenue top line elements. We expect that tariffs will be part of the commercial environment as we go forward, and we've built a tariff headwind in our plan. You've had the pleasure, for those of you in the room, of trying our products.
You were able to compare products, previous generation to new generation. Over the last 10 years, we've added a lot of technology in our products. In the next 10 years, we'll be adding a lot of technology as well. We need to invest in order to do so. The good news is we'll be able to offset a lot of that with our lean initiatives. Then we have the customary financing, depreciation, and taxes to bring us to the $8.00 of EPS. This is not the end, obviously. Where could we bring our business toward a mid-cycle industry level? David, Steve covered what we are doing with our network, with the dealer value proposition. We're going to be benefiting from these initiatives down the road. We're going to get the full potential.
Obviously, we want to continue growing on ORV, and what if the powersports industry recovers to what it was in pre-COVID? As I mentioned, we're not planning for any industry growth in the other products except for a modest increase in side-by-side, and that is certainly another tailwind that we could experience. Obviously, as we grow top line, we will also be benefiting from an EPS growth, and we could foresee an EPS number of $10.00 after the M28 target has been delivered. With this, I will turn it over to Jos for closing remarks.
Sébastien, like I said this morning, this meeting was definitely overdue. I'm happy that you could pass some time with the management team and you see that like Sébastien explained, it's a real bottom up plan. I'm very happy that you took the time. I hope over the last two days we convinced you that we have built a solid business that is positioned to deliver growth. Many of you, after we exited Marine and we paused urban mobility, were saying where are you going BRP, how will you grow with your high market share. I hope we convinced you that we have a plan and we intend to optimize our position in the powersports industry. Obviously, one of our strengths is our diversified product portfolio and our brand. Competition can copy our product but they cannot copy a brand.
The idea is to continue to push technology innovation but also to bring the brand to the next level, something that is very difficult to copy. It takes time to do this. Thomas explained to you our R&D capacity and Denys also by visiting the design studio for the ones who were here this morning. I'm very happy about what we have built so far. We have a team that is dedicated, passionate about what they do, and able to continue to push innovation and technology faster than what we were doing in the past. Our dealer network, our established dealer network in North America and in Europe. What is interesting in Asia, by starting from fresh, you start with the whole product portfolio and you have a super nice dealer network and dealer showroom. I'm very happy about where we are in our dealer network expansion and manufacturing footprint.
I mean state of the art, ready to state of the art, and we have capacity to react quickly if the demand is increasing. I'm happy about the JV in Vietnam. I think it's a first step in that direction. I'm convinced that to serve better South Asia that will be key mid to long term. Last, not least, the management team. You had a chance to mingle with everyone. I just want to say that it's a very experienced management team, and without me it's still 19 years of seniority or experience in the company. BRP is in very good hands. That will conclude the presentation and we'll open up for the Q&A. Sébastien and I will be in the front and Philippe will call the management committee if it's for other people. Sorry, I missed two slides. This is the seven priorities well aligned.
I just want to tell you that we met. We've been working on this for more than 18 months. We had discussion with the board, who obviously challenged us. Then we all aligned with the management committee and the board. We met a month ago, all the VP and Director of BRP in Montreal for three days to explain where we go in. We have a webcast tomorrow morning at 9:30 A.M. to download to all manager and app. Before the end of October, every single employee in the company will know about this. When we are focused, typically we deliver.
Thank you, José. We'll take a question from the room. If anyone has a question, please state your name and the firm you're representing and we'll go ahead. Robin, there's a microphone.
Great, thank you. Robin Farley with UBS. Just wanted to go back to your market share. Targets, where do you think? At what point do you cross to being number one in ORV? I know you're saying sort of above 30% and side-by-side above 25% in ATV. Also, your expectation for market growth, I know you said seasonal would recover because it's below normal, not much growth. Did you say something specifically on ORV? I'm sorry if I missed that. Your expectations for the market growth for ORV in the next things.
Being number one, it's not a 50% market share, it's not the one, it's double this. In the industry assumptions for the, we'll call the other side-by-side, our industry assumption is that industry for side-by-side we have no signal to ship.
Yeah, Benoit.
Okay, sorry. Benoit Poirier from Desjardins. Just in terms of EBITDA margin profile, you've reached a peak of 19% during COVID and there was, if 21%, if you exclude marine supply chain issues were impacting negatively by 400 bps. Right now when I look at the $8 of EPS it implies roughly 15%. I'm looking at the utilization rate that is at 60%. Just wondering what we could think longer term about the potential EBITDA margin if there's an opportunity to maybe right size the footprint given the kind of the midterm outlook you provided today.
Obviously, our right sizing the footprint is not something we want to look at currently as we are in the middle of trading ocean. I often see this is not the pulp and paper industry or the cruise line industry where assets need to be running 24/7 in order for us to make money. Even running with, let's say, 70%, 75% capacity utilization, we'd still be able to generate strong returns. I do believe that a 17% EBITDA margin mid cycle is something that we can achieve. You're right. When you look at COVID period excluding marine, we were at the 21% EBITDA margin and we had huge headwinds coming from inefficiencies. The management team is aligned around this number and certainly post 2028 will certainly want to achieve that target.
James.
Thanks. I wanted to dig in on inventories a little bit, specifically ORV, and maybe tie together some of the numbers that you've given us today. If memory serves, inventory turns were in decent shape prior to the pandemic. You guys talked about how, I think, retail for ORV is up 50%+ and inventories are down 5%. Right. Job well done. It seems like inventory turns have gotten a lot better. If we think about going forward, retail is going to be growing. Right.
Typically, you would need to wholesale more than retail to keep that turn number fixed. If I layer on top of that the idea that you're going to be adding 10% to your dealer base, on a per dealer basis, inventory turns are going to go even higher. Maybe help us square that with the idea that wholesale is going to equal retail for this planning period. Is there an opportunity maybe for some channel fill? Obviously, that would be upside to your $8 number, but maybe help us think through that.
Yeah, obviously we look at inventory turn in days internally, and we look at it by region. We need to be careful because the dealer doesn't look at it that way. They look at their interest bill on that slide. You don't forget that the value of the unit has increased significantly, and the mix has improved significantly. For the dealers, even if our days of inventory is significantly better, their inventory in dollars is still high, if not higher. It's probably lower than pre-COVID, but still they feel a bit it's higher than the number of days improvement that we have done. I think it's something that we need to balance. Our goal is wholesale equals retail, and we need to balance it. At the table last night, we had discussion about you supporting the dealer. You want to protect your brand.
What's the fine line between inventory and what we call the crate pressure in the yard for the dealers? We believe that what we have in our plan makes sense. We really believe that wholesale equals retail makes sense. If some dealers are not ready to play, we'll need to find a way to push. This is the fine line that we need to define in the coming months. We know we don't want to be the good guy that is not winning. We want to be the—we invest a lot in the business, we push. We want to have our fair share of every single PME, and that's what we're aiming for. It will be something we will adjust depending how things will evolve.
I apologize. You made the point about the dollar value of that inventory being higher just given interest rates. I'm sure inflation has played a role in that as well. I guess is there an opportunity. Let me ask it this way. What are you assuming in terms of interest rates over this planning period, and if rates come down materially, could that be sort of the thawing point as we think about dealers being more willing to go back to some normalized sort of inventory level.
That's why we're planning for flat industry. We're assuming an interest rate environment that is consistent with what we are experiencing today. If it changes the wallets for the good or for the bad, we'll adapt, hopefully for the good.
One last thing, James. Obviously the goal for fiscal year 2028 is 30%+ side-by-side and 25%+ ATV. We'll not stop there. Our goal is to become number one in Off-Road like we are on snowmobile and watercraft. The team knows that we have no way of, if we don't embark the dealer in our plan, we have no way to win. We'll find ways to win.
Craig?
Yeah, thanks. Craig Kennison from Baird. Thanks for a great event. I wanted to get back to the market share topic. I believe your market share calculations exclude CFMOTO and other brands because they don't disclose the data you would need to calculate that. How do you frame your outlook and your vision of gaining share in the context of all of those players, and then maybe if you would just address how USMCA in those negotiations might play out to impact the competitiveness of those players.
Yeah, I'll take the first part and José can take the other part for us. You're right, industry data does not include CFMOTO, but they are a player in the North American industry. When we look at our financial planning, obviously it's volume based, and if CFMOTO enters the industry and reports the data, it will not change our unit volume plan and it will not change the financial plan. The market share number might move because now the industry is going to be bigger, they're going to be included in it. The market share number is going to move. In terms of overall units that we expect to retail, that should not c hange.
On the USMCA. You know USMCA is working quite well and I was two times in Mexico City in the last month to meet people from the government of Mexico, Canada, United States, but also to meet different industry. Basically, we are the proof that USMCA is working. Many, all our product manufactured in Canada and in Mexico and in U.S. meet obviously USMCA and we are content because the USMCA minimum content is 60% North America. We are buying more from North America, the three countries, and we're buying less from Asia. Less than 10% of our goods are coming from Asia. We are a proof that USMCA is working and we are obviously involved deeply with different industry and the three governments to give our input. Right now, the sentiment of most of the people is USMCA will be reconducted.
It could have some adjustment, positive, maybe some slight adjustment. Right now, the assumption is that USMCA will be reconducted because we don't know more at this point. Again, BRP have been in business for 80 years. We always found ways to adapt our manufacturing footprint, our supply chain quickly. We just need some time to adapt and stability in the rules, which we don't always have in the last few months. We are confident that we'll find our ways when the USMCA is reconducted and with some change that could happen. This is what we have in our plan at this time.
Martin.
Martin Andri from Stifel. Sébastien, in your mid cycle EPS target of $10, what is your assumption for excess cash flows? Have you taken into account share buybacks, and if not, is there a possibility for share buybacks?
In terms of capital deployment strategy, we are not assuming any changes in how we've deployed capital in the future versus how we've done in the past. Obviously, mid cycle getting to $10 of EPS will be generating significant free cash flow that will give us the option to either grow the business through M&A if that's what we decide to do, or continue doing buybacks, which has been very good for our shareholders. Our plan does not factor in any share reduction coming from buybacks. It's at a constant share count.
Okay, thank you.
Joe.
Thanks. Good morning, Joe Altob ello, Raymond James. In terms of the ORV growth strategy, you mentioned improvements in underperforming markets and improvements in underperforming categories. They're obviously underperforming for a reason. I guess first, why is that? Second, how do you turn that around? I mean, it's easier said than done, I think.
Give it to Sandy or David.
Yeah, I'll answer that one. Obviously, when we look at the performance of the market, like the underperforming versus the overperforming, what we're doing right now is really on our approach of our growth plays. We'll go market per market with our proven formula. Obviously, there are some dealers today that are holding the franchise and are underperforming versus their peers, and we'll address these. We need to realize that today we have a complete lineup. The days that when we've appointed some of these dealers, probably they were not at the right location. We'll look at all of these. The entire mix of the focus, adding new dealers, and the complete lineup will help us address the underperforming markets in the off-road industry.
In the presentation you've mentioned that you will lower prices on certain value proposition SKUs. Historically, how effective BRP strategy on cutting prices has been? What's your batting average or t o speak in tougher times to g ain shares while cutting prices.
I can take this one. We've had this situation a couple times even in different markets and we did this in ATV 2014-2016 and obviously it has to do with how we position the product and in certain of these categories we push pricing a little bit too high. Like David said earlier, like on the Maverick X3, this positions us exactly head to head with our competitors. This is about managing. Mostly what you saw is more on the entry level packages. For us these are important volumes we need to get to. With the level of market share we have in these segments there's, I would say, much less to lose, much more to gain. As we have our capacity at 60% utilization right now, it's important that we grow volume for Patrick and the plan.
All of this together we believe is going to be a successful adventure. The feedback, the early feedback we're getting from dealers right now is very positive on that end. Very confident it.
Tristan.
Hello Tristan Thomas from BMO. Kind of a follow-up to Paul's question. How are you thinking about kind of t he promotional strategy in M28, particularly related t o like monthly payment affordability? Could you call out model year 2026 p rice increases, but then also leaner promotions? Are we going to see an i ncrease in kind of the average monthly p ayments of the consumer? Kind of second parts of t hat question, if some of your c ompetitors get more aggressive trying to offset s ome of their own price increases, would you let them do that, or would you try to chase them to kind? f remain in parity?
The benefit that we're seeing from promotions in the plan is going to come from less non-current inventory, which are discounted a lot more. Less from a, let's say, interest rate cost for the retail financing, but much more non-current units require more discounting. Obviously, from a retail financing point of view, we always want to be competitive with the offering there. We have many tools in our box in order to compete. It could be extended warranty, could be retail financing, could be cash offers, and we'll again be nimble and adapt in order to make sure we have a complying offer for the consumers. Make sure dealers also have something to drive traffic in their dealership. If we need to tweak, we'll have that flexibility. Again, our assumption is that we're not counting on reduced interest rates to reduce our promotions.
Mark.
Thank you. Mark Petrie with CIBC. I had a question just with regards t o dealer experience and customer experience, that's for Sandy or David. It would be helpful, I think, just to hear about maybe one or two of the most impactful changes that you're making to your process to sort of drive that, or is it m ore a matter of just bringing those u nderperforming dealers to what the sort of b est performing dealers are doing or do y ou need improvement across the network?
It's a little bit of both, and I mentioned that a little bit in the presentation where, you know, the business has become more complex for our dealers. The technology, what you tried yesterday in terms of technical support, has gotten more complex as well. Combine that with the COVID days where training was limited to webcasts versus physical training for the dealers. There's a big portion of it on the service side where we need to come in physically with the dealers and mechanics and their certified technicians, raise the bar, be more responsive on our end as well, and find the solution. The same applies in terms of product training. We assume because we launched a unit at the club that everybody knows about the technical aspect of the units.
If we're going to be fighting to be number one, we need the salespeople on the floor at the dealers to really understand these products so they can actually feel comfortable selling them as well. It's not only for the, I would say, the underperforming dealers, it's throughout the whole network. Obviously, we have always this 20% of our network that is doing a really good job, but the intention is to raise the bar everywhere.
Yeah, thanks. Cam Doerksen from National Bank. Just a question, I guess for Séban on CapEx expectations over the next number of years. I mean you've got lots of excess capacity in the plants, but presumably you're going to still have new product development, so maybe just talk about the trend that we should expect over the next few years on CapEx.
Thanks. No significant change versus what we have in the guidance this year. This year we're calling for $410 million of CapEx, ballpark that's what we should be seeing. In my presentation I talked about continuing to push innovation, and innovation is costing money and costing CapEx. That's where most of the money will be put to work.
Hi, [Zian Siu] at BNP Paribas. As ORV becomes a bigger part of the business, can you just talk a bit more about what that means for your margins and how that can kind of change the margin profile?
As I mentioned earlier when I talked about our EBITDA margin versus pre-COVID, side-by-side is certainly a driver of this. I don't want to repeat myself too much, but I love the side-by-side industry because there's an opportunity for segmentation, fragmentation, and we're good at this. Minh Thanh gave you examples this morning as to how we came up with creative products that meet specific consumer needs. There's that demand for the side-by-side industry as well. Usually, when you're able to make these specific targeted products for consumers, you're able to price for it because that's what the consumer really wants. Obviously, as we grow side-by-side, that is certainly going to help to drive growth and EBITDA margin.
It's the product line that has one of the best for attachment of accessories, as the dollar of accessories per unit is high. A lot of square inch like you like to see.
Hi. Gerrick Johnson, Seaport Research Partners. Polaris recently came out with the 500. It's about 30% less expensive than your least expensive Defender. Is that a portion of the m arket that you're not going after? What's your outlook on the lower end of the market?
At this point, Gerrick, I mean we're looking at this, but we have better projects with better return on investment on sub-segment, creating new segment, or investing more in the high end than going into the low end. I'm not saying we'll never go there, but it's not part of the next two or three years to go there because we have better estimates and we have better way to continue to grow and improve in higher value segment.
Hi, me again. Just a quick math question, Séb. As we think about 2028 share buybacks and interest, share count and interest, is it where we are today?
Absolutely no change in number of shares outstanding and interest rates as they are today.
Post the transaction.
Post the transaction. Yes, the $0.30. We'll take that one.
Yeah. I've been really impressed with how we've sort of focused on the long term during this meeting, but to throw a bone to our friends in New York, maybe let's talk about near term trends a little bit. Obviously, those of us that do any channel checks have picked up on some nice improvement in August and September, and even, I don't know, be curious to hear about October. I guess, A, have you seen, you know, how would you characterize the strength in terms of retail units, and then, B, should we sort of temper our excitement given the promotional environment and how that could impact dollar sales and/or margins?
I would say obviously we cannot comment on Q3, though we want to be careful on this. We don't have industry numbers, but I would say the trend continues to be good. Basically, that's where we're going in terms of right now with all the new product we introduced. All factories are ramping up on those new products, and basically on Off-Road we are on allocation. We give to the dealer, here you should order for the next three months so many units, and if it's not enough, give us your wish list. With the wish list, we cannot react within two or three months. Basically, we are on plan for the remaining of the year.
We will try to maximize it if we can, though we're still taking orders, but basically retail is doing well with some plus or minus like typical, and on the wholesales, very happy about the booking with the new product, the reception of the new product. Don't expect us to bust the bank by the end of the year because there is a reality in lead time, but doing business is predictable and we're very happy where we are.
As we said during the Q2 call, Q3 retail market share is going to be more gnarly because there's still some non-current inventory from other OEMs that are being flushed out, and Q4 is sequentially improving.
It's Brian Morrison, TD Cowen. When I take a look at your m argin expansion initiatives, the 200 basis points of EBITDA expansion, it looks awfully conservative with respect to your ORV growth and your lean initiatives. You have this big growth initiatives offsetting that, and I'm wondering if it's just simply if you can go a little bit more in depth. Is it just R&D, is i t's the dealer support we've talked about. What are those offsets?
Yes, R&D is part of it. We're going to continue growing the R&D spend. The other element versus fiscal 2025 is variable compensation. There is no variable comp in 2025, and that is obviously factored in our plan. There are other parts of the business. The initiatives we have from a dealer perspective, improving service, improving training for our dealers, that is obviously going to require resources, which we want to do, and that obviously requires investments to do.
We want to elevate our brand, we want to elevate our awareness of the brand. There is some investment there too.
Luke Hannan of Canaccord Genuity, I just wanted to ask about the joint venture that you guys have in Vietnam. It's going to begin in Q4 of fiscal 2027. How big should we expect it to be roughly, either in terms of square footage or u nits coming out of that. If it progresses as planned, what's y our intention as far as you know. How big that that could be?
Then overall, VPIC had an old factory that together we remodel. We're not building a new building, we're just remodeling an existing building. Our products are quite small, and it was easy to fit an efficient layout into those building. Investment in the big picture is very reasonable. We go step by step. Ryker is the first product. We have other plan for other products. Obviously, for competitive reason, we not go there this morning. The agreement has been signed a few months ago. We are on plan for Q4 next year, and we're quite optimistic because, as I said, the main benefit is to avoid tariff in South Asia. If Steve can bring the growth, we'll continue to add product in that factory. That mean Ryker we shifting production from Mexico to Vietnam because we needed space in URS1 for the ATV.
URS1 is our smallest factory. The timing was perfect for this. After that, you could expect to have maybe assembly of other product line in two factories, one for North America USMC and one for Vietnam. That's mid to long term.
Perfect. This concludes our Q and A session and our 2025 Analysis Day. Thank you for your participation and interest. Thank you very much.
Thank you.