I came across some further information that was mentioned by BRP executives in a
transcript of a conference call with investors and analysts that gives more information about BRP's reasons for this unusual and unanticipated decision. Here are some excerpts: first from the CEO of BRP Jose Boisjoli:
Jose Boisjoli wrote:[Referencing actions being taken as result of the pandemic] ...we expect that these different initiatives will allow us to navigate through the uncertain times while allowing us to continue investing for the long-term growth of the company. However, these measures do not come without sacrifice and one of the toughest decisions we had to make, as we announced yesterday evening, is the discontinuation of outboard engine production.
As you have witnessed over the last few years, despite its innovative technology, our outboard engine line-up has been losing share in a market that was already difficult. Our strength was in the early power segment while the industry growth was driven by the package sector, which led to continued share erosion. Given this trend, our outboard engine had fallen behind in terms of profitability and cash generation potential.
As the current situation forces us to reduce our investment plan and reviews downward our growth expectations for the business, the path to profitability improvement for outboard engine was too long. It became apparent that we had to discontinue production. For Evinrude employees, let me say that I am very proud of the part they have played over the past years, and in particular their efforts over the past 18 months. Although we have made progress, the impact of the COVID-19 has left us no choice. I wish to thank them for their dedication and commitment in helping us create the Marine Group.
Next are comments from the CFO, Sebastien Martel:
Sebastien Martel wrote:... on the OE [Outboard Engine] business, there's actually two components; there's the unit business and there's the parts business. And the parts business is a business that we're going to be continuing. Obviously, we're going to be servicing our dealers for warranty but also for our consumers that are no longer under warranty but need service, so that business is going to keep going on.
As Jose mentioned, the unit business, so the actual engine, was a business that we were sub-scale. We've been losing market share over the last few years. And from a margin perspective, it's a business that was almost breakeven. And from a profitability, it was a business that was actually at a loss position, and that's why we took the decision to discontinue it.
I think we have the bottom line cause for the end of E-TEC and Evinrude outboards--literally it was the bottom line: losing money in that business segment. And this is from the corporate CFO.