The recession that began in 2008 left most families with less money for discretionary purchases like boats, and those that were buying boats were more likely to focus on value than luxury.
Thus, it’s no surprise that the cruiser market – boats 22 to 32 feet in length, and the core of Cobalt Boats’ business – was among the boating sectors that suffered the worst during this period.
That put Paxson St. Clair and the entire Cobalt Boats team in a particularly challenging position. Without the vision to imagine new areas of growth for the company and the leadership required to bring it to life, the company could have faced declines in excess of 65 percent, which is what the segment as a whole endured.
Instead, largely as a result of its innovative strategies, Cobalt has experienced a 20.4-percent increase in retail unit sales so far in 2011 versus the prior year, with cruiser market share doubling from 5 percent in 2007 to 10 percent in 2011. In July alone, sales were up 41 percent, compared to the same month last year. Meanwhile, the cruiser market as a whole continues to face steep year-over-year declines.
“We were hit hard in 2008,” Paxson explains. “Certainly, in an environment where there were low retail sales and a lot of inventory, we had to regroup locally with our manufacturing facilities and regroup our dealer network.”
While this regrouping involved reorganizing internal operations and the boat builder’s U.S. dealer base, the company didn’t get bogged down in this process. In fact, it simultaneously began working with its dealers to identify opportunities to develop new products. While other boat builders were hunkering down in a desperate effort to cut costs and right-size their companies, Cobalt was boldly investing in its future.
“Going into the downturn in the summer of 2008, the decision was made to bolster our engineering team and expand our new product development efforts,” says Pack St. Clair, Cobalt Boats’ founder and chairman. “Paxson and our sales and marketing team worked closely with our dealer body to be sure we were bringing the proper new boats.”
That partnership with its dealers is a long-standing tradition at Cobalt, which sports more than four decades of boatbuilding experience. Positioning the Cobalt product such that its dealers can make a respectable margin is part of a dealer relations strategy that has been highly lauded by its dealers.
“We are now capitalizing on that in these times. We have stayed steady at 90 North American dealers, which provides more room for dealers to work territories that don’t have overlap, allowing the dealer to have a larger market, sell more boats and be more profitable. It’s all about long-term consistency, rather than implementing an aggressive plan to recruit dealers,” says Paxson.
The strength of Cobalt’s distribution network – combined with an expanded focus on marketing – only served to boost consumer response for the four new models the company rolled out in 2010. These competitively priced, trailerable models were smaller than Cobalt’s traditional product base and thus represented a courageous step into previously uncharted waters for the boat builder.
Cobalt’s strategically timed investment also resulted in the introduction of a flip-down swim step, fender locks, and a trend-setting sea grass sisal floor covering.
“When times are tough, spending money on product development is an investment in the future,” he says. “In Neodesha, we have an innovative group and an environment of creativity. This has given us the opportunity to set ourselves apart with features and customer-focused innovation, which has also helped sell boats.”
In September, the company will put on a repeat performance of its 2010 new product introduction by presenting two new deck boats, a cuddy and a traditional bowrider at its dealer meeting.