The Eastern Europe market: it can’t take off (for now)
Russia, Poland, Hungary, Czech Republic: in these and many other Countries of Eastern Europe the recreational vehicles could become a profitable business, but it seems really hard to predict the future.
Many invested their very hope in a promising development of the recreational vehicles market in the former Soviet bloc countries, but this has not happened yet. What is the current situation in Eastern Europe and what can we expect in the future? In November 1989, the Berlin Wall was pulled down, but the reforms in the Soviet Union had already started for some time, with the Mikhail Gorbachev’s perestroika. The USSR dissolution in 1991 led to the birth of Russia (Russian Federation) and other smaller states such as Estonia, Lithuania, Latvia, Ukraine and Belarus. To these we should add all the other countries that were somehow associated with the Soviet Union: Poland, Hungary and Bulgaria, not to mention Yugoslavia that on several occasions it was dismembered, giving life to independent states like Serbia, Croatia and Bosnia. Most of these countries has tried to change their economy and its culture according to Western ideals and models. The free market and the free movement of goods, gave the consumer the possibility to buy products of all kinds: this has inevitably brought these countries closer to the west, at least theoretically. And this has also meant the birth of a new huge catchment area both for western companies working in the exports area and nascent or transforming local companies. Needless to say, the field of recreational vehicles has believed in a possible, indeed probable, expansion into East of the campers and caravans market. This also because, in 2004 the Treaty of Athens entered into force, which has formalized the accession to the European Union of many Eastern states like Poland, Slovenia, Hungary, Slovakia, the Czech Republic, Estonia, Latvia and Lithuania, a process that continued until 2007 with the Romania and Bulgaria inclusion. However, things have not gone as many hoped for. The reasons are many and vary from state to state.
The hope in a new market
The Eastern markets have started a first development of the caravan sector around 2000-2001: at the time all the signals were promising, obviously related to the purchasing power of the local populations and the lack of campsite culture. Actually, the culture of the campsite existed in some areas while lacked in others. For example, it did not exist in the biggest potential catchment area, i.e. Russia while it existed, at least in part, in Poland and in the Czech Republic. In Poland they had even a local industry, the Niewiadow, which had been involved for decades in the caravan construction. Where the culture of the campsite was absent it was even necessary to create a suitable term, which in the local language could give an idea of a product like the camper. And often the infrastructures were insufficient or event lacking, like campsites and parking areas. As to the caravans diffusion, which need to be towed, a car use decidedly lower than in Western Europe impacted on the situation as well. Moreover, a sales network needed to be created, with adequate workshops for assistance. The work to be done was huge, we cannot deny it, but the insiders never lost their enthusiasm and thus some companies rolled up their sleeves and began to plan a market development in the East. But they had not taken into consideration the economic crisis that in 2008 hit the East and actually cancelled the job done until then. Suffice it to think of the Baltic Republics – Estonia, Latvia and Lithuania – that in 2007 barely reached 50 camper/year and then fell under ten pieces per year. After all, if we take the German manufacturers’ exports as a benchmark, which are the only relevant and known, in 2010, in the middle of the crisis, several member states featured really low figures, even lower than ten units in Ukraine, Bulgaria, Belarus, Serbia and Croatia. Also in 2010, the German manufacturers’ exports to in Russia amounted to 118 units (43 campers and 75 caravans), and we are talking about a Country with a population of over 140 million inhabitants.
Present and Future
Today we can start all over again, treasuring the experiences built-up in the recent past. Certainties, however, are few. Some dealers that believed in the camper marketing have disappeared, while others have remained and new operators may arrive on the scene. In some cases we have cars dealers that have thought to widen their operating field, in others we see small entrepreneurs involved in the vehicles hiring. The lack of a structured network is unquestionably a big problem: it is not possible to grow a market without stable operators aimed at the vehicles sale and service. Unfortunately, the low numbers often prevent the creation of an organized network: conspicuous investments are necessary to establish a local organization and these usually come when sale figures are quite good. In many cases, the local customers does not even consider a few local dealers, but go to the German dealers, only a few hours away by plane or car. The German dealers can offer an adequate sampling, excellent show rooms with many vehicles, sometimes even better conditions of sale. Surely, where adequate infrastructure to accommodate the recreational vehicles are lacking, a considerable additional work must be done. The creation of campsites and parking areas is desirable as well, also to ensure a certain degree of security to camper owners, which is not everywhere at the highest levels. After the inclusion of the Eastern Countries in the European Union, a notable increase of tourism linked to recreational vehicles has been observed in these areas. It should be pointed out that Croatia is the top of the list, with a truly remarkable and historically consolidated offer of campsites on sea, while we see a lower turnout in Hungary and the Czech Republic, which is decidedly scarce in other Countries.
It is hard to predict when the Eastern market will develop, some make five years’ plans, others do not commit themselves despite the growth trend is evident in some contexts and especially for certain companies. Adria, for example, has a quite primary role: although it has no importers, but operates through several dealers instead, the results are encouraging so that its growth in Eastern Europe is about 10% per year.
The German Export
German companies are quite active, but they can boast acceptable numbers only taken as a whole. Just to give a few examples, in 2015 the exports from Germany to Hungary counted 243 vehicles (54 campers and 189 caravans) and to the Poland 308 vehicles (133 campers and 175 caravans). In some respects, the Czech Republic seems the most promising market, with an export from Germany of 322 vehicles (212 campers and 110 caravans). For the remaining countries the figures are very low, except for Slovenia (the only country officially recognized by the ECF) that in 2015 registered 266 vehicles (caravan and motorized vehicles): of the 118 camper sold, 34 were imported from Germany. Russia is quite another story: even with a high population, it fails to take off, so much so that in 2015 the German companies exported only 33 vehicles (in 2010, 118), i.e. 23 campers and 10 caravans. However, let us not forget that in Russia also the automotive sector has suffered a setback: after a strong growth that culminated in 2012 with 2.755.000 cars sold, in 2015 the car market-related figures fell to 1,600,000 units, a fall in part explained by the end of government incentives, in part due to the devaluation of the rouble and the effects of the Crimea crisis.
In a nutshell, the situation is uncertain and varied. Nobody can predict what will happen in the future, because everything depends on a set of hardly predictable factors as a whole. At the moment, the numbers are the only thing that counts: camper registrations in the most virtuous countries amounted to a few hundreds of pieces. Virtually nothing in comparison to 17.414 registrations of France and to 28.348 vehicles in Germany (2015-related data). Figures are also low in comparison to a well grown Sweden (4.034), Italy that has stopped the free fall (3.693) and Spain finally featuring a marked revival (1,745).
East and West: so many differences
What perhaps differentiates most the nascent market of the East from the thriving Western one (despite the economic crisis) is the kind of purchaser. In the rest of Europe, in fact, the largest part of buyers consists of pensioners who have lots of free time and a good spending power. Conversely, the Eastern pensioners have not an adequate purchasing power, we could even consider them as poor based on the criteria which we are accustomed to in Germany, France, Italy and United Kingdom. In the Eastern countries the potential buyer is one who has an independent job, a small business related to production or trade: an entrepreneur, in a word. And perhaps this is why conventional holidays, tourist packages flight + hotel as well as cruises are the greatest enemy for the recreational vehicles dealers (as it happens in the West). However, there are also other factors to consider, which vary from state to state. Let us think of high taxation on any new vehicle purchased, customs duties and the second-hand market that affects the development of new registrations. Before the economic crisis someone thought that high-end products, the expensive campers, could become popular in the Eastern countries. Actually, this forecast has not come true, or at least, has not fully matched the expectations. In some respects, the Motorhome rental segment has worked better, featuring mid-range products, re-sold on the second-hand market at attractive prices. Is it still worth then investing? Certainly yes, but we need to find the right formula to develop a market that actually does not exists.