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European business is stable but wait-and-see

Published May 24, 2012

LAGUNA HILLS, CA (BRAIN) Thursday May 24 2012 3:28 PM MT—The bike business in Europe is showing resilience despite daily headlines on the continent’s turbulent economy that are bound to push buying to the back of some consumers’ minds.

No doubt the industry is keeping a close watch on the political and economic landscape as leaders of the EU 27 met again this week to try to resolve the European debt crisis and keep the euro zone intact.

“The biggest concern is what’s going to happen in the next six months,” An Le, global marketing director for Giant Bicycles, said recently in response to the situation in Europe.

Giant’s sales have held steady in regions like the U.K., Benelux and Germany thanks to strong road sales in the Netherlands and healthy sales of e-bikes, a category that so far seems to be resilient to the economy’s ebbs and flows.

John Nedeau, vice president of sales for SRAM, said business in Europe is generally stable despite larger economic concerns. It’s well known that weather factors into sales more than anything in this industry, and that has been the case in Europe this year.

“[The weather was] great in March, but dismal in April,” said Nedeau, who is based at SRAM’s offices in Schweinfurt, Germany. More than half of SRAM’s sales come from Europe.

Most agree the effects will be regional, with the weaker Southern European region feeling the pinch more than the economically stronger German-speaking countries or the Nordic zone.

In Germany and Austria, for instance, demand remains high, particularly for e-bikes and 29ers, said Urs Rosenbaum, chief editor for Swiss-based magazine and website Cyclinfo. Europeans only just came around to the big-wheeled bikes within the past two years, but now they rule the high-end off-road market, and demand is higher than anticipated.

“One problem is that a lot of sportive high-end bikes have been sold out very early this year, already in the first days of March,” Rosenbaum said, describing a predicament similar to that in North America. “Reasons for that are various, but mostly it is a consequence of the harder competition in the bike industry.”

Politically independent Switzerland is suffering from the same bottleneck in supply as Germany and Austria, but nevertheless, it is seeing better results than last year when the strength of the Swiss franc drove buyers to bordering countries for big-ticket purchases, crippling Swiss retailers.

The government has now set a limit to the currency exchange rate for the euro, and bike suppliers and importers have reworked prices to be stay competitive.

Spain is one country where bike sales could be expected to suffer the most given its sky-high unemployment, real estate collapse and debt-saddled banking system. But the sports sector has been insulated, at least to this point, said Jon Fernandez, managing director of Basque bike brand Orbea.

Sales for Orbea globally increased nearly 7 percent last year, and 10 percent in the first quarter of 2012. While those numbers reflect Orbea’s overall business, it is faring just as well domestically in Spain, Fernandez said.

“What is happening is that stronger brands are taking more share of the market and some smaller companies are disappearing,” Fernandez said in an email.

Nicole Formosa

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