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The Big Uneasy: Weather, currency weigh on European minds

Published August 28, 2012

FRIEDRICHSHAFEN, Germany (BRAIN)—Market factors such as the devaluation of the euro, Europe’s economic slump and poor weather are all weighing on the minds of many gathered here for the start of Eurobike on Wednesday.

“It’s not an easy time right now however according to our facts and figures, the domestic deliveries of bikes only declined slightly by 2.1 percent primarily due to weather that was not reliable in April, May and June,” said Siegfried Neuberger, CEO of the German trade association, ZIV, speaking at a press conference on the eve of Eurobike. Sales to the end consumer have dipped 3 to 5 percent this year.

In 2011, 4 million bikes were sold in Germany for a total of about 2 billion euros, added Thomas Kunz, CEO of the Verband des Deutschen retail association. Sales from parts, accessories and service added another 1.45 billion euro. Specialty retailers’ share of revenue grew from 76 percent in 2010 to 78 percent last year. The number of units sold stayed constant year-over-year, but the value per unit rose from 460 euros two years ago to 500 euros in 2011. Kunz expects a flat year this year, as the first two quarters suffered from bad weather.

Germany remains an important manufacturing base for the European industry, and production declined 2.3 percent in 2011 to 1.6 million bikes and e-bikes, Neuberger said. That is due in part to ongoing relocation of production to Eastern European countries like Lithuania, Romania, Hungary and Poland where labor rates are cheaper but suppliers can keep the duty advantages of shipping within the European Union.

“This is where production was set up to recognize the trend to be close to the market and have flexibility to respond to market conditions,” Neuberger said.

Electric bikes continue to be a success story in Germany with 310,000 units sold last year, a number expected to grow to 400,000 this year, representing 8 percent of the overall e-bike market. This is certainly a good opportunity for retailers, however, it can be difficult for small independent shops to stay on pace with the trends as they often don’t have the floor space or the capital needed to invest in expensive battery powered bikes.

“Large retail chains (including some from abroad) are expanding more rapidly and gaining market share,” VBZ said in a press release. “A tendency toward larger units is apparent in family-owned specialty retailers as well with smaller companies losing market share.”

The devaluation of the euro currency also weighs on the minds of many in the industry. The U.S. dollar has gained 12 percent on the euro, and this has dented the pocketbooks of European producers buying supplies in the U.S. dollars. Bernhard Lange, partner of Paul Lange & Co in Stuttgart, Shimano’s European distributor, said he expected price increases to be 5 percent across the board as bike brands try to compensate for those currency related losses.

Despite this year’s challenges, those in the German market say the industry continues to thrive as mobility gains a higher priority status among politicians amid megatrends like sustainable and healthy living.

“I don’t see the bicycle as loser of the economic crisis, but one of the winners,” Lange said. “I see the bicycle overtaking on the lane of the future.”

Topics associated with this article: Eurobike

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