Q&A with Jim Lane, president, Chaparral & Robalo

While not immune to the boating market crash, the Chaparral and Robalo boat brands have weathered the downturn better than many.

Jim Lane, president at Chaparral since 1977, has seen his share of ups and downs in the boating market, but says he is confident about the future of the company’s brands. With its H2O line focusing on the entry-level market and refreshed products across the brands, the company’s publicly traded parent Marine Products Corp. reported strong sales growth in 2013. Coupled with more new products, including the Vortex jet boat, on the way, Lane says the brands are poised for continued growth.

Boating Industry: We’ve been through Miami and several of the other boat shows now. What’s the sentiment from buyers out there?

Lane: Obviously, every market is entirely different, but if I were to summarize what I’ve seen attending boat shows and what our regional managers have seen attending the boat shows, I guess I come away with a feeling that it’s mostly upbeat, but there are a lot of customers that are remaining cautious. We’re seeing a trend where a customer will come to the boat show completely prepared, come asking the right questions and [the dealer] will say, “Are you ready to make your down payment on this boat?” and he’ll say, “Can I stop by the dealership after the show is over?” We’re seeing a lot more of that than in the past. I think there are a few less deals being written at the shows, but the follow-up is very strong.

The boat shows are still a great format, but the urgency to sign on the bottom line has lessened a little bit.

Boating Industry: You recently reported your year-end results, which showed a 12.8 percent increase in sales in 2013. What’s behind that?

Lane: We like to say it’s two words: new sells. We have continued to spend a tremendous amount of money in our research and development department and have consistently come out with exciting new product. This year we came out with quite a few new boats. We came out with new boats in our H2O line, we came out with new boats in our SSX line and in Robalo we came out with a brand new series of bay boats, called the Caymans. I think we’ve been pretty on-the-mark in developing customer interest in those boats. Obviously, we have a great distribution network because without our dealers, nothing would sell.

Boating Industry: What specifically seems to be moving the needle with buyers?

Lane: Let’s take the H2O line. People were looking for a good, clean boat with a good price. We decided that we would go back and develop an entry-level line of boats, but still use the Chaparral DNA and create a product that was fairly priced. We got our dealer network behind it and generated some good numbers in the H2Os.

In our SSi line, we thought that particular line would be improved by changing the interiors out to some new exciting colors and changing our entire dash network, and I think that was extremely important as well.

Boating Industry: One of the items the company called out in its earnings call was a higher average price point. Is that reflecting a shift to larger models or fewer of the H2Os in 2013?

Lane: If you look at what we did in our SSX line, which is our premium line of sport boats, that particular line now has four new boats. We started off a year or so ago with the 327. We followed up behind that with two other strong boats, and this year a new 30-foot SSX. All of those boats have sold well. I don’t think that diminished anything from the H2Os, but what that did do is raise our average sales price, as those boats are considerably more expensive than the H2O brand.

We have seen a little better interest in the cruiser market as well. As a matter of fact, we have been pleased with results of some of the cruiser sales. [Cruisers] up to 37 feet have done better than they have last year. I can’t say that’s a trend, but we’ve been very pleased so far with the results.

Boating Industry: How about the H2O line? Are those boats continuing to sell well?

Lane: The truth is they did just as well if not better because of the introduction of a 21. A lot of our customers said they loved the boat, they loved the price, but didn’t we have a 21 instead of an 18 or a 19. So we listened and we came out with a 21. We introduced that boat last April. We had an opportunity to build a number of them in the summer months. Dealers were very anxious to put some of those in their inventory for the boat shows, so the 21 was a very successful introduction for us as well.

Boating Industry: Will there be more boats coming in the H2O series?

Lane: Our plans right now is to keep the H2O series exactly where it is. We feel that having six models in that H2O line is adequate right this minute. We might be adding some additional product into the SSX line, but not to the H2O line this year.

We feel the additional smaller boats we sell this year will come from the Vortex introduction.

Boating Industry: What’s the current status of the Vortex? When can we expect to see them available for buyers?

Lane: Let me mention something about the Vortex that I think is interesting about us getting into this market. We’re not planning on building a jet boat. We’re planning on building a Chaparral with jet power. I think that’s a very, very interesting distinction.

When we did our homework on this, we found that a lot of customers liked jet power for any number of reasons … but in some cases we heard what was lacking was the traditional sport boat look with jet power. One of the things that we had in our design was to look at the jet boat a little bit differently, like we did the H2O. We wanted to build a Chaparral with our DNA, but power it with a jet engine.

Not that you won’t see some rather interesting graphics and some interesting dashes on those boats that are a little out of the sterndrive look, but for the most part we want people to know we’re putting our same DNA in these boats that we would put in any boat that we build. When we presented that to our dealer network, we got an overwhelming response to that particular method of entering into that market.

We’ve begun a slow rollout. We started putting a select number of boats in key shows and have been very pleased with the response. The big rollout of our product line will be as we move into the 2015 model year. At that time, we hope to have three models and then we’ll plan a rollout of the complete model line.

I believe we’ll have some significant results with this product. I’m very hopeful about it, and listening to our dealers, I think they are behind the project and will push it through their dealerships.

Boating Industry: Is this going to help attract new buyers to Chaparral or are these people who may have bought sterndrives before?

Lane: I think these will be a lot of new buyers. As people age out of their involvement with personal watercraft, they’re constantly looking to move up to different products. I believe we’ll offer them a product they couldn’t find previous to now.

Will this hurt some of the other products out in the marketplace, including some sterndrives?

I think it will. But I don’t think for us it’s going to have a significant impact on our sterndrive business. I think we’re going to attract people who want to move to jet power in a more traditional fashion. That’s what our marketing strategy is going to be.

Boating Industry: What’s your outlook for fiberglass sterndrives? Can you continue to grow in that market?

Lane: We have so far. If you look at our business, look at market share data, we grew our sterndrive business this year. Industry-wide there is a concern about the sterndrive market and it has been in a declining mode, but it is declining less and less. I believe that the new product our engine partners are developing – Volvo and Mercruiser – is going to offer some interesting new power options to the sterndrive market that will help reenergize that.

Boating Industry: What do you expect for 2014? Will the industry have another year of growth?

Lane: I know that’s what we’re planning on. As we submitted our financial plan to the board of directors, we are anticipating for the 2014 calendar year to have growth, and in the ‘14 model year and the new products we have coming into ’15. Is it going to be unprecedented growth? I don’t believe so, but I think it will be smooth and steady growth for us.