Children ride bicycles during the opening ceremony of the 29th Track and Field Games for students in … [+]
Bicycles may be greener than cars and globally outsell them, but the $61 billion bike biz isn’t as healthy as many might assume. Periodic surges—such as the emergence of mountain biking in the 1980s or the stellar demand driven by Covid lockdowns—hide the industry’s low margins.
According to an analysis by Yahoo in Taiwan, the bicycle industry is facing a “super cold winter” of falling demand. Asian suppliers of cycles and cycle components have yet to recover from the inevitable market crash that followed the Covid bike boom and still carry high inventory levels.
Bernhard Lange, managing partner of the company Paul Lange, the German importer of the Japanese bike … [+]
The revenue in the first half of the year for Japan’s Shimano, the world’s largest manufacturer of cycle transmission systems, decreased by about 13% year-on-year, with projections of an annual decrease of 28%.
SRAM, the world’s second-largest shifting system manufacturer, reported on August 9 that its Taichung, Taiwan, factory would lay off workers, a shock to the globalized industry.
Guimeng, the world’s largest supplier of cycle chains, has seen its revenue in the first half of the year decrease by 34%.
Global Taiwanese bike brands Giant and Merida are faring better than components suppliers but have reported half-year revenue decreases of 5.44% and 6.72% respectively.
As well as selling under its own brand name Giant also makes complete bikes for brands such as Scott and Colnago. Giant’s half-year European product sales were down 12%, while US sales fell by 44%. (E-bike sales provided 35% of Giant’s half-year revenues.)
“Considering the global economy situation, as well as the current market is undergoing inventories adjustments, this year would be a year to adjust production, sales, and supply back to normal,” stated a Giant financial press release from earlier this week.
“In the long run, people’s awareness of ESG [environmental, social, and governance] and health has greatly increased, and governments around the world are actively building a friendly cycling environment,” continued the release concluding, somewhat optimistically, that the bicycle industry is “full of unlimited business opportunities.”
This assessment is shared by Mike Sinyard, chairman of California-headquartered Specialized, one of the world’s leading high-end bicycle brands and part-owned by Merida for more than 20 years.
(Merida makes bikes for itself, Specialized and Centurion of Germany. It took a 49% stake in Specialized in August 2001, ending Specialized’s manufacturing contracts with Giant.)
Specialized chairman Mike Sinyard in the Old Fruit Market, Glasgow, and in front of an S-Works SL8 … [+]
Sinyard founded Specialized in 1974 in the aftermath of the great American bike boom. Built on late 1960s baby-boomer wealth, burgeoning environmental concerns, and the same health kick that saw the rise of jogging, this bike boom started in 1970 and peaked in 1973 and was many times larger than the mountain bike boom of the 1980s.
Since 1974, Sinyard—now Specialized’s chairman after stepping back from the CEO role last year—has ridden the peaks and troughs of an undulating industry that still prides itself on its eco credentials.
But it’s cycling’s impact on health that Sinyard believes is the industry’s savior.
“We say pedals, not pills,” he told me in an interview conducted in a pop-up installation close to the road course at the UCI Cycling World Championships in Glasgow, Scotland.
Specialized’s S-Works Tarmac SL* road bike in front of wind tunnel turbines. … [+]
The company hired the city’s former fruit market to house a half-size wind tunnel promoting the $12,000 Tarmac SL8, an aero race bike that is “everything we’ve learned about bike performance in fifty years,” said Sinyard.
“Cycling lights up the brain,” he continued, referring to Outride, a research and health program with Stanford University led by the company’s charitable foundation.
“During Covid, people were riding their bikes like crazy,” said Sinyard.
“There are now a lot more cyclists out there.”
And more people bicycling is not just good for them—Outride’s Riding for Focus program shows the mental and physical benefits of cycling outdoors—it’s good for the planet.
Industry analysts believe 2023 will be a trough year, with sales recovering through 2024 and beyond and at a more sustainable level than the heights of the Covid bike boom.
