Bombardier Recreational Products: Shifting into High Gear in Latin America
By: Sophia Hao
The Ivey Business Review is a student publication conceived, designed and managed by Honors Business Administration students at the Ivey Business School.
Powering Through: The Business Behind BRP
Bombardier Recreational Products’ dependence on North American markets is proving to be its downfall as that market faces oversaturation and increased competition. Bombardier Recreational Products (BRP) is a North American leader in the design, manufacturing, and distribution of powersports and marine products. BRP generates revenue through products such as snowmobiles, off-road vehicles, engines, and propulsion systems. Their product mix can be divided into three areas: year-round products, seasonal products, and parts, accessories, & apparel. Many BRP powersports vehicles are designed for recreational use, but some models (especially ATVs and SSVs) are also used in utility and work-related settings such as agriculture, construction, and other business operations. BRP mainly engages in B2B sales to powersports dealers and distributors, but sells many parts and accessories directly to consumers.
The powersports industry has constantly been driven by discretionary spending and recreational trends. U.S. discretionary spending has begun to recover, rising approximately four percent since January 2025 as the impact of tariff-related uncertainty eased. BRP noted in its recent disclosures that “all our vehicles and the majority of our PA&A produced in Canada and Mexico are United States-Mexico-Canada Agreement (USMCA) compliant”, minimizing exposure to tariffs. The USMCA enables BRP to move products between Canada, the U.S., and Mexico with reduced tariffs and favourable cross-border regulations. In the next eight years, the U.S. powersports market is projected to grow from USD 11.9 billion in 2024 to USD 17.3 billion by 2033, representing a four percent CAGR, supported by higher disposable income, increased participation in outdoor recreation, and continued product innovation.
No Longer Thrilling: BRP Fails to Ignite Demand in Stagnant Market
Although the overall powersports industry is expected to grow, BRP is not experiencing the same momentum. Industry demand is expanding in areas like used and lower-priced vehicles, but BRP’s strength in new, premium models leaves it underperforming in a market that is otherwise rising. From fiscal year 2024 to 2025, BRP’s sales have fallen by 21 percent. In April 2025, new-unit retail sales fell by almost eight percent, while used sales rose by two percent.
To add to the issue, BRP’s inventory right-sizing efforts have been pushing expensive, current models towards dealers. During a time of slow sales, management has been trying to better align supply with demand and cut down on inventory storage costs. They have been conducting these right-sizing processes by cutting production of non-current models. However, since price point is the most important factor for powersports vehicles, non-current and secondhand powersports vehicles are currently driving sales. By focusing on newer models with higher technological features, BRP’s strategy does not align with what consumers are interested in buying.
Race Against Costs: Margin Pressures From Global Economic Shifts
At the same time, supply chain issues due to tariffs and Asian-Pacific (APAC) entrants squeeze BRP’s margins. Since 75 percent of BRP’s products are manufactured in Mexico and 60 percent of their revenue is generated in the US, most units are subject to the 25 percent tariffs on vehicular non-US content. In terms of raw materials, BRP imports most of their steel from China and the US, racking up costs from the 50 percent steel tariff as well. Given that aluminum, copper, and steel are key inputs for powersports vehicles, tariffs directly raise component and assembly costs. Compared to competitors who manufacture and produce in the US, such as Polaris, BRP must absorb additional tariff expenses, pressuring their bottom line, in order to remain competitive at dealers.
On electrical vehicles, Chinese manufacturers face costs 47 percent lower than those of their North American peers, partially due to stronger regional supply chains and global trade routes. APAC supply chains are much better integrated than North America’s, cutting frequent importing and exporting expenses due to trade agreements such as the Regional Comprehensive Economic Partnership. Since almost all Asian countries are dominant in raw materials and manufacturing, the region offers comprehensive manufacturing services within a few hundred kilometers because of the high connectivity, reducing shipping costs and lead times. In comparison, North America is mainly known for selling or completing final assembly on goods so high volumes of materials and parts must be imported from overseas, stacking up tariffs and long wait times. Core Molding Technologies is BRP’s biggest supplier with nearly 11 percent of exposure. A two-week shutdown could keep around $15 million of BRP projects in its warehouses. APAC’s supply chain advantage allows them to price much lower than BRP because they can keep costs lower.
Although tariffs placed on Asian countries like China are generally higher than those placed on Canada, APAC powersports manufacturers have more free trade partners in the transportation and machinery sectors than Canada. For example, while Canada exports 97 percent of its vehicles (excluding passenger vehicles) to the US, Japan only exports 16 percent to the US. BRP’s high geographical revenue concentration overexposes it to macroeconomic factors, which is why its margins are highly impacted by US governmental decisions.
Case Study: Kawasaki Goes Full Throttle in Southeast Asia
Kawasaki Motors is a Japanese manufacturer that builds motorcycles, all-terrain vehicles (ATVs), and utility-terrain vehicles (UTVs). In the 1990s, Kawasaki faced slow growth in maturing, stagnant North American and Japanese markets. The motorcycle market was saturated and their customer base was aging, leading to a decline in first-time motorcycle buyers.
After seeing the impact to their profits, Kawasaki identified markets in Southeast Asia, specifically Thailand, Indonesia, and the Philippines as high-growth markets. In these regions, urbanization was rising, delivery companies were expanding, and there was high demand for low-cost personal transportation. Kawasaki did two things well that allowed them to succeed in these emerging markets. Firstly, they localized production by building manufacturing hubs in Thailand and Indonesia, reducing their transportation and tariff costs. This strategic choice allowed them to price lower than their Asian competitors, like Honda and Yamaha. Secondly, Kawasaki developed cheaper, simplified models rather than exporting their heavy-duty models. This allowed them to successfully capture farm workers, small business owners, and commuters with less disposable income.
If costs and long-term impacts are considered carefully, the strategy of entering high-growth industries and regions with modified products stimulates demand. Today, Southeast Asia substantially increases Kawasaki’s sales. In Q2 of FY2022, part of Kawasaki’s revenue growth was due to an increase in demand from Southeast Asia. Motorcycle demand was expected to decrease in developed countries, but increase in emerging countries.
BRP currently faces a similar issue and can unlock value in the same manner. Due to the expensive and discretionary nature of their product line, growth is slow in developed countries, but rapid economic growth in emerging markets provides an opportunity to capture a new demographic.
Beyond the Trails: Finding Whitespace in High Growth Markets
Due to the lack of demand and supply chain issues in North American markets, BRP should reduce its reliance on purely discretionary sales and focus on essential vehicles used by growing industries. Industries currently facing sustained, high demand for powersports vehicles are the agriculture and tourism industries. In the sectors, off-road vehicles and boats are central to the operations of these businesses. Focusing on critical product lines for fast-growing industries will reduce BRP’s exposure to macroeconomic factors, like interest rates and consumer sentiment. Considering BRP’s established competitive advantages, an effective market penetration strategy into these industries would be to target Latin American markets. BRP is better positioned than its competitors to adopt this penetration strategy because of their strong presence in Mexico. This connection allows them to have advantageous trade routes and an exceptional understanding of revenue drivers in the Latin American market.
Latin America is an ideal market for BRP due to several other reasons as well. In contrast to North America and Asia, the powersports market in Latin America is small. The market size is estimated to be $1.8 billion, while the projected size in North America is $38.2 billion. This generates the opportunity to be many businesses' first exposure to powersports, making it easier to establish brand loyalty. In Asia, there is already high competition for cheap powersports vehicles and since BRP has high variable costs, it would be difficult for them to gain market share in the APAC region. Sector-wise, industries in which powersports vehicles are commonly used, like agriculture and tourism, are rapidly expanding in Latin America.
Open Road Ahead: Nations that BRP Could Expand Into
Many Latin American countries, especially Brazil, are pushing for farm mechanization. ATVs and UTVs provide unique uses that tractors do not. Off-road vehicles (ORVs) provide the advantage of speed and maneuverability across uneven terrain at a lower cost than traditional farm machinery. Some other tasks include transporting feed, spraying crops, and mowing fields using attachments. Over 60 percent of large-scale farms in Brazil are now equipped with mechanized transport. Since the Brazilian government has raised farm funding, farmers are more inclined to purchase expensive technology, which will cut expenses in the long run. BRP’s new Can-Am Defender has class-leading clearance, towing, and cargo capacity, making it perfect for agricultural work.
In Latin America’s tourism industry, the compound annual growth rate is six percent, with boats and ORVs playing a central role in tourist experiences. In fact, company management has stated that BRP showed sustained solid momentum in Brazil and Mexico for personal watercraft and ORV sales in fiscal years 2025 and 2026. In Q2 of FY 2026, BRP’s powersports sales grew by 16 percent year-over-year in Latin America while it fell 21 percent in North America. BRP should start strategically building manufacturing facilities in countries like Brazil, Argentina, and the Dominican Republic to secure contracts with tourism companies.
The Next Tracks: BRP’s Expansion Timeline
It is better for BRP to expand into Latin America’s tourism industry first, then agriculture later once they are well established in the region. The tourism industry offers faster industry turnover and lower regulation. Tourism companies buy larger fleets of powersports vehicles more frequently than farmers because of the high usage and large companies. Fleet turnover for tourism companies is often two to four years while equipment turnover is 10 to 15 years for farmers. Cash flows will be faster, which is crucial when expanding to a new market because of high capital expenditure. Like most countries, the Latin American farm industry is heavily regulated. Farm vehicles face compliance challenges with safety standards and towing requirements. Since personal watercraft, boats, and ORVs typically are classified as recreational vehicles, regulations are less stringent. Since recreational vehicles generally face less regulations than on-road vehicles, compliance with local laws and regulations is not a big problem. Unlike auto manufacturers, powersports manufacturers do not have to comply with International Organization for Standardization (ISO) rules.
Due to the seasonality of the industry, BRP should start securing contracts in December of 2025 because tourism reaches a peak during the summer. Xcaret Group, a major eco-adventure and theme park operator, is a suitable company to secure large fleet contracts. Xcaret caters to millions of visitors each year through off-road tours and watercraft rides, demonstrating that they will frequently purchase new models from BRP. BRP also needs other businesses to sign large one-time contracts for fleets. BRP should interact directly with the companies like Xcaret Group to cut unnecessary costs and tailor contracts better towards large accounts. Since tourism companies generally buy entire fleets, they do not need salespeople to advise them. Manufacturing facilities should begin construction in the period before the USMCA agreement is renegotiated in July of 2026. This way, if USMCA has significantly negative impacts on BRP’s cheap production in Mexico, BRP has the option to relocate to localized plants in Latin America. During this construction, BRP must secure future supplier contracts from Asia. If BRP sources raw materials from Asia, the tariff rate applied by Latin American countries is generally lower than those applied by Canada or Mexico. As long as manufacturing is completed in Latin America, BRP does not rack up those cross-border tariff costs.
Although the dominant powersports suppliers in high tourism countries are already Asian suppliers like Honda and BYD, BRP can address the market gap stemming from the demand for niche vehicles. Honda and BYD mainly produce motorcycles and ATVs while BRP has brand recognition for producing boats, jet skis, and a wider variety of ORVs. As large APAC competitors lag on these niche vehicles, BRP can gain the first mover advantage by setting the price and establishing brand loyalty. The market should be penetrated by developing simpler, lower-cost models first, since in general, consumers in Latin America have less disposable income. Additionally, the new customer base is very different from the North American customers. Unlike extreme riders in North America and Europe, travelers pay for a one-time experience on ORVs and jet skis so they do not care about sophisticated add-ons. Analyzing the chain, this means that Latin American tourism companies will not pay an additional premium either for newer features.
In the past, BRP had success with innovation with their low-end, high-value models. Spark and Spyder were highly successful in gaining market share from the younger demographic, demonstrating their strong ability to target a population with lower income. Employing the correct market penetration strategy while capitalizing on their competitive positioning in Mexico will allow BRP to establish themselves as a dominant powersports manufacturer for Latin American purchasers. Throughout the expansion, BRP should constantly evaluate the churn rate to ensure that it is not exceeding the customer growth rate to ensure a successful expansion. As BRP develops a larger presence in Latin America, the percentage of fleet contract wins should increase as well.
A Thrilling Ride: BRP’s Future
Bombardier Recreational Products’ innovative nature and product line diversification highlight the strength of the organization. However, stagnant demand for powersports vehicles in North America and supply chain pressures put downward pressure on their margins. By pivoting towards the high-growth tourism market and relying less on purely discretionary items, BRP has the chance to stimulate growth and demand once again, paving new roads for the future.
Editor(s): Sabrina Yuen, Naveed Pirouzmand
Researcher(s): Eric Zhang
