Boating Industry

October 2014

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October 2014 | Boating Industry | 25 [ 2014 Movers & Shakers ] work – Pegg started Chaparral in 1965 and Lane became his partner in 1978 – is that each has their responsibilities and trusts the other to get the job done right, they say. "We have such diverse interests. Buck re- ally enjoys the manufacturing side and I enjoy the business side," Lane said. "The relationship that we set up in the very beginning hasn't really changed a great deal. We meet on everything, we make decisions together." When the recession hit, those decisions were especially diffi cult as the company made the nec- essary cuts to survive. Being the major employer in Nashville, Georgia only made the process more painful. With many families having both parents and multiple generations working at the factory, the management team tried to take all those nuances into consideration. "We had to surgically go through and look at all the people and how it would affect their families," Pegg said. "We had to lay off some people or we couldn't have survived this thing … but we wanted to make sure we didn't do it to a complete family." In the worst days of the downturn, the com- pany kept more employees than it needed, but that helped to position Chaparral and Robalo to hit the ground running as the market recovered. "We can't say enough about how much the employees have helped us grow the business," Lane said. "There's a pride in the company and the town, and our employees work together to help us build the highest quality product." Recognizing the importance of a strong dealer network, the company also spent millions supporting its dealers during the recession to help them move product through the pipeline and stay fi nancially stable. When dealers did go out of business, that allowed Chaparral to better control the product, distributing it to other deal- ers rather than having it end up at auction. It was an investment of more than $18 million that helped keep the dealers healthy – and ready to buy more boats – coming out of the recession. Constant innovation Heavy investment in research and development has also paid off with a wave of new products from Chaparral and Robalo over the last few years. The products refl ect Pegg's long history of de- livering the right boats to the market, Lane said. "Buck has a unique knack for knowing what the customer wants," he said. In 2012, Chaparral jumped into the entry- level market with its H2O line. With the stern- drive market struggling, the company was looking for a way to gain market share and bring more buyers into boating. The tough part, Pegg said, was to maintain the "Chaparral DNA," with a high-end boat at a low price point. "Our dealers had been asking for a line of boats like that, because they were missing a lot of business out there in entry-level boats," Pegg said. Beyond being a less expensive boat, the H2O was marketed with a national price to make the boat-buying process more transpar- ent to newcomers. "The marketing strategy was developed to make that boat available for a nationally ad- vertised price that the dealer and the customer could feel comfortable with," Lane said. "We worked with our dealers to come up with that pricing strategy and we backed it up with a very good advertising program." To make the numbers work required both Chaparral and its dealers to reduce margins, but the product has accomplished the company's goal of capturing more of the entry-level market. Sixty percent of H2O buyers are fi rst-time boat owners, and Chaparral has gone from 0.55 per- cent market share in the 18- to 19-foot segment to 14 percent since 2011. For the 18- to 35-foot segment, Chaparral's share has grown from 7.6 percent to 13.9 percent. The company has sold more than 3,000 boats in the H2O line and increased its sales of stern- drive boats even as the overall market declined. The line now includes six boats in 18-, 19- and 21-foot confi gurations. Chaparral has also jumped into the jet boat market with its new Vortex, introduced this year. For the 2015 model year, the company will offer six models at 20, 22 and 24 feet. Jet boats were a segment the company wanted to enter for years, so it jumped on the opportunity when BRP folded its Sea-Doo line and decided to license the Rotax engine technol- ogy. With excess capacity and labor, adding new lines makes plenty of sense for the company. "We felt like it was a different customer and a way we could expand what we were doing," Pegg said. Like with the H2O line, the company is em- phasizing the Chaparral brand, saying the Vortex isn't a jet boat, but a Chaparral with jet power. "We looked at it as a power source, not a jet boat," Pegg said. "It's the same DNA as the rest of Chaparral. The only difference is that it's pow- ered with a jet engine." The latest innovation will be a line of out- board-powered deck boats for 2015, which Chaparral introduced to its dealers in September. For the Robalo brand – which the company has owned since the early 2000s – it has been equally aggressive, launching several new models and a "Reel Deal" pricing strategy similar to that of the H2O. The fi shing line has been a strong performer for the company, with sales up more than 60 percent in 2014 and 450 percent since 2011. For the 2015 model year, Robalo is rolling out a series of Cayman bay boats. At the same time it has expanded into new markets, Pegg and Lane are quick to point out that Chaparral has continued to invest in its tra- ditional market of bowriders and cruisers. The 327 SSX, a large open bow day boat with a full-beam cabin, was introduced in 2011 and won an NMMA Innovation Award. The com- pany followed that up with a 257, 277 and 307. The SSX line has sold more than 650 units since its introduction. The SSi and Sunesta lines were also redesigned and retooled in 2014. "We believe we're going to see a resurgence in the market as the new product our engine manu- facturers are making comes out," Lane said. "Volvo and Mercury over the next couple of years will have a lot of exciting new product that will offer a lot of features and benefi ts to the customer." » Percent of H2O buyers that are fi rst-time boat owners 60% "The relationship that we set up in the very beginning hasn't really changed a great deal. We meet on everything, we make decisions together." — Jim Lane

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