Head of one of the world’s largest industrial groupings, François Feuillet is not just the top man at Trigano, he “is” Trigano. We asked him how he sees the market development over the next few years and what the challenges are for the future.
Words Antonio Mazzucchelli
More than anyone else François Feuillet has been able to revolutionise the RV sector in Europe over the last thirty years. Despite this he is not a technician, nor an inventor and has never even founded a company. He does however have something that others do not have: a leader’s spirit, the ability to unite and assess risk, anticipating competitors’ moves and then picking, the right path. A 69 year old Frenchman, with a sound financial background, Feuillet gained control of Trigano in 1986. He went on to list the company on the Stock Exchange and started an acquisition policy that still continues today. Currently, he holds 57.8% of the Trigano Group’s shares, which has a turnover of 1,300 million Euros, with branches in several European countries and North Africa. As well as being CEO of Trigano, Feuillet is also President of the ECF (European Caravan Federation). We asked a number of questions ranging from market euphoria at the acquisition of the Slovenian brand Adria, the risk of over-production in the industry, and the complex relationships between socio-demographic evolution and RV sales. Without hesitation and with the usual frankness and critical acumen that distinguishes him, Feuillet answered our questions point by point, drawing an extensive picture of the RV sector and future scenarios.
Aboutcamp BtoB: Looking at US market and relationships between customers and the RV market, is it correct to think that there are good margins for growth in Europe?
François Feuillet: I have always found it difficult to compare the American market with the European one. We have the B license that limits some customers to a 3.5-tonne motor-vehicle weight, so the two are completely different. In the US, larger vehicles can be used, there is more room with plenty of open space in the country and in cities, while Europe has little room for such large RV’s. The buyers of motorhomes in Europe tend to cover small distances, 10-12,000 km per year but they use the vehicle several times mainly for short trips, near home, multiple times a year.
This is the reason why, for example, they sell more vehicles in western France compared to the east and why they sell few in the French Riviera. I think that the two markets are quite different, with different customers, technologies and distribution. It is actually impossible to find correlations between them: that is why few European manufacturers are interested in the American market and, vice versa. Most importantly, when they were interested, they did not succeed: synergies are few and differences are many. Every year I go to North America: I examine, assess their products and every year I say to myself that it is better to wait.
Aboutcamp BtoB: What is your vision of the RV market in Europe over the next few years? Is the growth trend going to last? And, if so, for how long?
François Feuillet: I see a motorhome market that could reach 140,000 units within 2-3 years, and we are currently around 110,000. At the moment, growth is more than 10%, but we must say that it is a bit forced. Most likely, there is a somewhat abundant production by manufacturers. I expect 10% growth over the next few years because the recreational vehicle, for example in France, is a discretionary, non-essential product: whether you buy it or not, nothing will change – campers are not necessary to life. When in 2007-2008, the big economic crisis hit the European market our customers, who are mainly retirees with no employment or cash problems, bought less. There was, therefore, a psychological aspect to consider. Customers lacked confidence in the future; they were worried about their children and grandchildren’s future. This trans-generational concern had a major impact on the camper industry. Despite their spending capacity, this family solidarity produced a lack of confidence in the future. In Europe, countries have recovered from the crisis at different paces. Germany is like a model student who, towards 2011, had economic recovery and left a vacuum in its wake. Other countries declined until 2013 and some like Italy, have not recovered yet. This is due to our customers’ lack of confidence in their respective economies and political situation. Today, in Europe, we have reached the great volumes of 2007 again: 110,000 vehicles, while in 2008 they were 92,000. We still have room for growth because we can recover all these customers who, meanwhile, have rapidly grown as well. The number of camping customers is in fact actually increasing. Remember that economists are always wrong while demographics are not. Interest in caravans has not diminished or increased – all studies show it. The driving values of our products are freedom and cost-effectiveness (similar to staying at home) and ecology (low fuel consumption). These principles are as true today as they will be in ten years’ time. I think we’ve recovered the downfall that hit both manufacturers and dealers. Whilst the crisis was a bad thing, it did have some positive results. Today there is a general lack of recent second-hand vehicles, because we have been producing far fewer vehicles and so less have become available on the second-hand market. I believe that today we have a good economy, with 2% growth in Europe and inflation at just 1%. The result is low interest rates for vehicle financing, helping both dealers and the public. All these aspects are positive, although a significant change has not yet happened in some countries because inflation is still at 2%. France, Italy and Spain, are recovering late compared to other countries, and so will increase even more than the rest of the market. Today, in Italy seven second-hand campers are sold for each new camper sold. This is nonsense. In Germany, ratio is one to two, in France one to three. The real problem in Europe is communication about the use of campers, which decidedly needs to be improved. We communicate a vehicle’s features, but we neglect to explain how to use it. Usage is the same everywhere, but is often limited to the country of origin: 50% of motorhomes do not ever leave their home country.
Aboutcamp BtoB: Do you think that fear of terrorist attacks may encourage the purchase of recreational vehicles?
François Feuillet: Fear of terrorism has made very low cost destinations (North Africa, Far East, Turkey) as well as big cities (Rome, London and Paris) much less appealing, thus indirectly helping our industry. RV’s allow widespread tourism that lets the owner feel as safe as if he was at home. It is a healthy form of tourism: ten years ago they said that a motorhome owner was afraid to sleep in a resting area in a small town. Today things are quite different, RV owners get together: they are few and are not touched by this new war that targets the crowds. To me, therefore, the use of the RV has a more interesting future compared to other types of leisure.
Aboutcamp BtoB: Do you think European RV manufacturers are producing according to market demand or do you think there is an excess of production? What are the risks involved?
François Feuillet: This year production will be 10% more than actual registrations. The possible reasons for it are many: with the market improving in Europe, dealers are starting to have sufficient demonstrator stock again. In the past, due to economic reasons, they reduced the number of vehicles held in their showrooms. From January to February they began selling the demonstrators saying “We are lucky”. So the people who came to buy in April did not have a correct picture of the product range. Distribution through dealer networks was not efficient. Today however dealers understand that favourable financing is available and therefore they are no longer trying to sell their vehicles quickly. In addition, dealers have seen a recent reduction in the availability of second-hand stocks. In the showrooms today you find empty spaces. Previously, instead of displaying older vehicles, dealers decided to show new campers they bought with a loan. Excess production was also determined by another factor, which frightens me: some brands have created the fear of not having available products, so dealers have bought too many vehicles of some brands, which have not been registered. However, this is not Trigano’s policy: we have always thought that the health of our network is more important, because they have to pay for the vehicles in the end. Having unsold vehicles is simply unacceptable. Now Trigano, in the first seven months of this year, has grown by twice as much as the market, which recorded an 11% increase while Trigano recorded 20% growth. We expect this to drop back to 10%, which is still quite a good result. We have to stop producing too much, or face the risk that dealers will no longer engage. They may tell customers that a product is unavailable or that choice is limited, thus our efficient distribution network could be jeopardized.
Aboutcamp BtoB: Touring caravans are a small percentage of Trigano sales. What do you think of the caravan’s role in Europe?
François Feuillet: The caravan is a product that has undergone a major success from the last war until the 1980s. The reasons for its success are motivations and values very different from those of the motorhome. For caravan owners their main value is not leisure, but holidays. A caravan is more suitable for families and retirees. Unlike the motorhome owner the value is not so much the freedom to roam but the certainty of the holiday for a worker. The caravan started to show problems when the number of workers decreased and when having a caravan that was used just once or twice a year became questionable with regards to costs. At the same time mobile homes became more popular. These are now found on many campsites providing improved turnover for site managers compared to caravans or tents. Obviously, the best sites, near water, have become places where you can rent mobile homes throughout the year. Environmentally with regard to fuel consumption and harmful emissions, we can say that renting a mobile home does not necessarily involve driving hundreds of kilometres towing a one tonne trailer. Also you do not need a place to store the caravan when you come home from vacation. Obviously, motorhomes have some of those issues but sales will continue to grow. The values offered by campsites, such as child safety and large swimming pools, can be bought for 300-400 Euros per week by renting a mobile home, which has now become the caravan’s respectable competitor. Despite this Trigano is still growing in the caravan market, we will consolidate our position in the future, but massive growth is behind us.
Aboutcamp BtoB: What is the reason, in your opinion, for the boom in panel van conversions, a type that has always existed, but only in recent years has won over users of all ages and budgets?
François Feuillet: Panel van conversions are now worth 25-35% of the market, depending on the country: 25% in UK, 35% in Germany, 20% in Italy. This growth is unquestionably an important phenomenon. Several interesting aspects are to be considered. At the end customer level, the van is something that appeals to the elderly most. Those who struggle to drive a 3.5-ton vehicle love it, those who do not like the side-wind slap or do not want to have trouble in driving and parking like it as well. Therefore, if the customer wants a camper, the panel van offers an excellent, easy, two-person solution. Then there are young people who had forgotten about such vans. They were niche products for small 50-piece producers at a very high price. Today, young people are very interested in panel van conversions. They are usually over 30, live as a couple, have no children, or only one small child. They can use the vehicle for four to five years while any children are growing up. In addition, the new financing methods fit with panel vans very well – the vehicle is preferably purchased by long term rental formula and after 4-5 years is returned. New financing has brought new customers and persuaded some of the largest manufacturers to produce panel van conversions products. Adria was the first, and then Trigano came along with many others. We took over some small builders’ businesses and turned their workshops into actual factories, so costs dropped. Just look at our new factory in Paglietta, Abruzzo. Today, a high quality van’s final price may reach 40,000 Euros, with many more advantages compared to traditional caravans. Some time ago panel van conversions were more expensive than motorhomes, but today the situation has overturned due to production process industrialisation and openness to new customers.
Aboutcamp BtoB: Where is Trigano in terms of acquiring Adria? At the end of the Düsseldorf fair it will be French?
François Feuillet: I really don’t know if Adria will be French by the end of Dusseldorf Caravan Salon. There is an agreement that we had to pass strict anti-trust tests because Trigano in some countries has a market share higher than 40-50%. For this reason, national authorities have to check whether the purchase of Adria will have any impact on the end customers (who wish always buy a vehicle at a low price) or dealers (who would have to consider only one or two manufacturers in Europe), or small to medium-sized manufacturers (who could not survive the competition with industrial colossuses producing 40,000 vehicle a year). We have passed everything; today we have a positive response in all European countries. The problem now is only bureaucracy. For Slovenia, a small country of 2 million inhabitants, Adria is a major industry, with 1,500 employees, which exports 100% of its production. We are trying to overcome the problems. The package we bought includes even hotels and distribution networks in the car industry: but we will retain only what really interests us.
Aboutcamp BtoB: Trigano Group is increasingly powerful. Is it conceivable that one day there will be a custom chassis for Trigano or even produced by Trigano itself?
François Feuillet: Well, I don’t think so. Automotive manufacturers have reached a very high level of industrialisation. Building basic vehicles not only is impossible for a caravan builder, but it is often difficult for a car manufacturer as well. To date there are brands that still don’t have their own factory: Peugeot and Fiat have a joint production that produces 295,000 units a year. Mercedes and Volkswagen, Renault and Nissan: they are all associated. On the other hand, with a joint venture agreement, for a car manufacturer to develop a specific product for Trigano is one thing you can think of. Today we have 100,000 euro and 40,000 camper vans built on the same chassis. There is no customisation. Perhaps we might think about developing premium products, extra market products, and low cost products with different chassis. For Trigano, which produces 40,000 vehicles a year, this could be an interesting option.
Aboutcamp BtoB: Trigano Group is equipped to implement in-house several production processes that previously were outsourced. Is it not risky to hire new staff and buy machinery in a market that may suffer shrinkage again? Would it not be better to allocate these risks to contractors?
François Feuillet: It’s less risky than having contractors. Being entrepreneurs means accepting risks. I think it’s good to take risks. When you do something for yourself, you save on contractors’ profit. He visits you with luxury cars, employs sales staff and pays to exhibit products at trade fairs. In addition, I have to keep a purchasing department that costs me a fortune to bargain with suppliers and get better prices. Eventually, if a group like Trigano reduces its orders to suppliers and contractors, it will deprive them of their competitiveness. The other recreational vehicles manufacturers would suffer price increases on component prices from their suppliers. There are a large number of component manufacturers that have a de facto monopoly or at least they work in groups of two or three. Just look at the budgets to understand that future profit for Trigano lies in bringing production in-house. That’s why we produce furniture, carpentry, fabrics, fibreglass, mattresses. It is a clear policy for us, which involves some risks but increases profit. Risk-free profit does not exist.
Aboutcamp BtoB: What should a supplier do to collaborate with Trigano in the long run?
François Feuillet: He should have a long-term policy, adopt a transparent pricing policy and always tell the truth.
Aboutcamp BtoB: How do you imagine Trigano Group the day you decide to leave the helm to someone else?
François Feuillet: I bought Trigano at a very low price, 32 years ago the company was in big trouble, and I turned Trigano into a major, healthy group. I feel not so much the owner, but the guardian of Trigano, who has to keep this organisation. In the upcoming years, my task will be to transfer management to clever people and keep Trigano hopefully unchanged for future generations.