Chaparral’s Jim Lane on entrance into jet boat market

Jim-Lane-QA

Jonathan Sweet
May 10, 2013
Filed under Features, Top Stories

Last week was a busy one in the jet boat market, with both Chaparral and Rec Boat Holdings announcing plans to jump into the fray.

Both companies will be using jet propulsion technology from BRP, which exited the boat market itself in the fall of 2012.

Boating Industry talked to Chaparral President Jim Lane about the company’s plans for the jet line and why it got into the segment.

Our Q&A with Rec Boat Holdings President Roch Lambert can be found here.

Why do you feel like it’s a good time to launch a jet boat product?

We started looking at jet boats for the first time last year. Actually, we met some of the BRP people, spoke with them, had a meeting with them at MDCE last year. Had a nice meeting with them, looked at the market share data on jet boats, looked at the products they were making, we looked at where we were in our product lines, spoke to a number of our dealers. We decided that we could move into that section of the business with the end result that we’d bring some new customers into boating and we would offer our dealers some additional opportunities for profit.

We’ve been working with BRP to work up a supply agreement and our engineering department has been doing a lot of work deciding what these jet boats should look like, how they should perform and we finally completed our agreement with BRP.

The response has just been overwhelming so far from our dealer network and other people interested in being in the jet boat business. I think BRP left a big vacuum when they left.

How do expect to take this to market? Will it just be existing Chaparral dealers or do you see an opportunity to add more dealers?

We are still in the process of trying to develop our distribution model. It is something we’re going to put a lot of thought into. We’ll be prepared to announce our distribution model sometime in the near future.

With the Rec Boat Holdings announcement this week, does that change how you feel about the opportunity at all?

No, it really doesn’t. Back in the very beginning it was our understanding that BRP was going to talk to more than one boat manufacturer. I knew they did and I wasn’t a bit surprised to find out that they were one, especially because I know that Roch had previous experience with [BRP]. I thought they would be a logical choice and I thought there might be an additional company as well. It doesn’t bother us a bit that they’re in the market.

We saw BRP exit the market. What makes you guys feel like it makes sense for you to come in?

I didn’t become involved in why they decided to exit the market. I’ve heard many stories, but I’ll let them explain why they did exit the market. We looked at our dealers and our market, we did numerous evaluations of the price/cost structure for the jet boats and we felt that we could offer additional products and if we did, our dealers would have an opportunity to get into another business. We would improve the flow-through in our factory and the end result would be that we would create value for ourselves, the dealer and the customer.

Is this something for which you currently have the capacity in your plant?

We have the capacity here. We can easily fit jet boats into our current footprint. At our factory here in Nashville we have almost 1.2 million square feet and with the downturn that we all experience over the past number of years, we have capacity now that we did not have at the time.

If this opportunity had presented itself prior to the downturn, we may not have considered it. Now that we are where we are, I think that most companies are looking for a way to increase their production … and that’s certainly true of us.

What will you bring to the market that is different?

What we’re going to bring to the market is a boat builder’s perspective and the design of sports boat into the jet boat market. We’ve always had a very, very engineering department and the view of the boats that we have looked at are a little bit different than the current jet boats. They’re a little more designed along the direction of a sport boat. I think they’re going to fit in very nicely as an additional power source for all of the many people that have been using jet products in the past.

I think it will be a natural move to go into our product with a little more of a traditional look.

Do you see more growth coming for jet boats?

I think it’s a good alternative for some people that like the jet product that they’ve experience as they’ve owned other personal watercraft. Our goal is to take those people and move them into our product line. In the past, if they left a personal watercraft they’d be moving into a sterndrive product. Some people like jets. Our goal has always been to offer the power that customers like. If they like any power, then that’s what we want to offer to them.

Are you worried about this hurting the sales of your sterndrives at all?

That hasn’t been a concern. I’m sure there will be some people that when they look at our design will say, “Instead of buying that sterndrive, I’m going to buy the jet.” I think there will be some of that. I think there’s a wealth of new customers coming out of personal watercraft that would like to use the same power and move into a traditionally designed sports boat.

So, really this is about attracting a new buyer to Chaparral.

I think that’s true. We probably will see some people that were prepared to buy Chaparral sterndrive … but I think the more likely scenario is that they’ll be looking for a jet and they’ll find ours the most appealing, the best style and offer the best performance.

You’ve got the H20 series as an entry-level, more affordable boat. You’ve got the Chaparral brand as a solid mid-level boat. Where do you see your jet boat offering fitting into the market?

I think the jet boat is going to fit into both of those categories. I think a lot of our customers will think it’s an entry-level boat and a lot of our customers will feel it’s a mid-level boat. I think we’ll be fitting in with a split on both sides of that market.

Our view is to make the boat the most appealing we can … and to make the pricing shying on the side of value-minded.

When do you expect to have boats ready to ship out?

We don’t have an exact date, but it will be during the 2014 model year.

Have you determined yet how many different models you’re going to offer?

We haven’t made that determination either. We’re still in the process of evaluating that.

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