With the acquisition of the Roadtrek brand by the European-based Rapido Group set to close by July 5, RVBUSINESS.com was able to sit down with Mike Reuer, a German native who’s tasked with leading the revival of a North American brand that long had held a sizeable piece of the Class B market.
Reuer’s challenge is daunting, as Roadtrek — which according to Statistical Surveys Inc. boasted a 28% North American market share prior to its February 2016 acquisition by Germany-based Erwin Hymer Group (EHG) — has been fraught with turmoil.
After its EHG acquisition, Roadtrek became a brand under the newly formed EHG North America (EHG NA), but alleged financial improprieties emerged in the latter quarter of 2018 when Thor Industries Inc. was conducting its due diligence in preparation for its February 2019 acquisition of EHG.
Ultimately, EHG NA was carved out of Thor’s EHG acquisition deal and the Cambridge, Ontario-based company went into receivership proceedings — essentially the Canadian version of bankruptcy — as its 900 employees were laid off, its top executives dismissed, and its four Ontario-based production plants were idled.
During the proceedings, the Rapido Group, the third-generation family owned and operated corporation whose 11 European RV brands includes Westfalia, beat out a reported 18 other bidders for the right to acquire the Roadtrek brand. The company has since indicated it plans to reopen one production facility and hire back some 200 workers, while at the same time providing some peace of mind for current Roadtrek owners as it would honor a portion of Roadtrek’s six-year warranty.
In fact, Rapido Group– which traces its roots to 1958 when Constant Rousseau built a folding camping trailer for his family, a unit that eventually was introduced to an eager public — is hoping Reuer has the same success with Roadtrek as he did with Westfalia. Rapido Group acquired Westfalia when the company had declared bankruptcy, and Rousseau tapped Reuer to lead its revival. From renovating the product line, to identifying the most valuable markets, to rebuilding the dealer network, Reuer and his team revived the brand and established a solid future for this iconic camper van.
In an interview with RVBUSINESS.com, Reuer, who remains the general director of Westfalia, discussed Rapido’s plans for the Roadtrek brand.
RVB: First of all, thank you for your time and congratulations on the Roadtrek acquisition; it’s big news in North America. An acquisition strategy seems to be a winning formula for Rapido Group, and Roadtrek certainly offers new opportunities for the European-based company.
Reuer: Thank you. We’re quite excited about it. Yes, Rapido Group is always interested in companies that would be good for the brand portfolio. We believe it’s important for us, having companies in France, Germany, Italy, and the U.K., to have a presence in North America. Roadtrek does that for us.
RVB: What was it about Roadtrek that caught Rapido Group’s attention?
Reuer: While there are other brands out there to be acquired, we’ve always liked Roadtrek as a brand. Rapido has a very solid and strong B-Class business. If you look at Westfalia, it’s strictly B-Class, manufacturing over 7,000 units every year.
We see the potential in the B-Class, a large market share in Europe. In the U.S., even in North America, in general, there has been market growth. We see that A-Class and C-Class units are slowing down a little bit, but we are confident that B-Class vehicles can be developed further. It’s definitely a strong segment. And this is where Westfalia is strong. This is where Rapido is strong.
RVB: With the Thor Industries acquisition of Erwin Hymer Group, what are your thoughts about the globalization of the RV/caravan market?
Reuer: Globalization — companies acquiring others or participating in joint ventures in other countries — is something that’s happening everywhere. I think it is needed for companies to grow and to be international players. It’s not an unusual business practice, regardless of the industry.
RVB: With the Roadtrek acquisition, do you consider Rapido Group an international player?
Reuer: We haven’t really thought about it in those terms. I think it’s more or less looking at the core markets in Europe and in the world and determining where we want to participate. We can either serve them from Europe or have a presence in that market. I think North America cannot be served from overseas so it’s important to have a manufacturing location somewhere on the North American continent.
Like in Europe, the North American market is a very competitive one. Manufacturers are making strong efforts in developing their products and putting them out. We’re going to have to take on that challenge. We’ll do our very best to be as competitive as possible.
RVB: Are there any other North American companies on Rapido’s acquisition radar?
Reuer: No. Our focus is entirely on the Roadtrek brand. We will spend the next two years focusing on reestablishing the growth of the existing portfolio, bringing it back to the market and making it successful again. After that success, we may want to think about bringing Westfalia products to North America, but not before two years. We must walk before we run, so in the beginning the focus will be on resurrecting Roadtrek. In that time, we’d like to bring our market share up to 25% or greater.
RVB: As you move forward, will Rapido Group rebrand the business and the product offerings?
Reuer: No. We will resume the existing models, for the majority at least, taking a look at the models that have sold well and those that have not sold as well. There may be models we will choose not to continue. But in general, we will not change the Roadtrek DNA and will continue with the existing portfolio. Of course, eventually, we’ll look to upgrades and modifications. We will rely upon dealer and customer feedback for this purpose. It’ll be important that we produce a product to North American standards as compared to the touch and feel of European equipment and appliances. This will be respected.
RVB: Does that mean you will be using North American suppliers? What about employees?
Reuer: Absolutely, yes to both. We would like to hire people that have worked for Roadtrek; they have experience with the product. We expect to hire approximately 100 employees to begin, increasing the number to 200 after a year’s time.
RVB: Will you rekindle relationships with Roadtrek dealers?
Reuer: Oh, definitely. The existing Roadtrek dealers played a large part in the success of the brand before everything stalled. We’ve spoken to many of them and they are also looking forward to working with one another in the future. We rely on our dealer network so certainly want to continue where it was left off.
RVB: What other information should dealers know?
Reuer: We will be happy to continue to work with the existing Roadtrek dealerships. Since we are in contact with the dealerships, we will announce further news after the final closing of the acquisition, what is expected to happen by the latest on July 5.
RVB: Has there been a resolution regarding the Roadtrek warranties?
Reuer: Yes. We will honor warranties, of course. However, we will not be able to honor the previous six-year warranty. Instead, warranty claims will be honored for a two-year period commencing on the date of purchase up to a maximum warranty claim amount of $1,500 per unit. New units will have a two-year warranty.
RVB: With an anticipated July 5 closing, how long do you think it will take to resume production?
Reuer: That is a good question; it will take some time.Erwin Hymer produced in four facilities here in Ontario. This is something we’re not going to do. This is not a company acquisition; it is an asset acquisition. We bought everything related to Roadtrek products: parts, tools, and intellectual property.
After the closing, we will have to create an entirely new company beginning with establishing an administration and production staff. We’ll have to separate the Roadtrek-related parts that we have purchased from Erwin Hymer, the trailer parts, and all the other parts stored in the four facilities and move them into the single facility we’ll be working in. It’s then that we can begin operations there.
With that work ahead, I think it’ll be mid- to late-September or early-October before we can restart production, and we should be able to deliver first products to the dealers in November or December 2019.
RVB: Have you chosen that production facility yet?
Reuer: We’re still in negotiations but are leaning toward assuming the lease at the 20 Tyler Street facility in Cambridge, Ontario. We intend to lease the facility for a period of five years, with annual renewal after that period.
RVB: Rapido Group is proud of its Corporate Social Responsibility policy. Will you be refitting the facility to make production more eco-friendly?
Reuer: Yes, that’s something we have in mind to introduce. That will come as we move along, step by step. We’ll first, of course, establish our business here and then take on the issue of sustainability.
RVB: Have any C-suite hiring decisions been made?
Reuer: No, not yet. We are searching for new executives because, of course, we would not consider moving forward with the former executives. So this process is still ongoing. We have not finalized any decisions yet.
I will remain at the helm of Westfalia. But for the time being, while we do not have the other positions occupied, I will — with the Rapido Group’s top leadership including Pierre Rousseau, Nicolas Rousseau, and Emmanuel Lebas — take care to assure things are running as they should.
— Evanne Schmarder