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Market Slides: 2009 Imports Hit New Lows

Published July 6, 2010

BY MATT WIEBE

Bicycles are the answer to dependence on fossil fuels, growing carbon emissions, urban congestion, obesity and a variety of health issues—a perfect storm sure to sweep new bike buyers into shops. So where were the customers last year?

That was the big question as suppliers booked large orders with Asian builders while retail orders slowed. The mismatch between market optimism and market reality left suppliers with more than 100,000 unwanted units as 2009 closed.

“It was a challenging year for retail no matter what you sold last year. And with the weather so bad well into June everyone got off to a very slow start,” said Steve Meineke, Raleigh USA’s president.

Imports dropped to 14.84 million units, the lowest number of bikes imported in 10 years, and 25 percent lower than the 10-year import average of 19.79 million, according to the Department of Commerce.

Cannondale, the last large scale domestic manufacturer, began winding down its Bedford, Pennsylvania, manufacturing plant last year in favor of sourcing its bikes in Asia. This brought total domestic production of all manufacturers to an estimated 89,500 bikes, the lowest figure over the last 10 years and probably the lowest domestic production in the past 100 years.

Total bike exports of domestic and foreign manufactured bikes totaled 150,645 last year, based on U.S. Department of Commerce data.

Adding total imports with estimated domestic production, then subtracting bicycle exports suggests the total market in 2009 was 14.8 million units. That’s down 20 percent from an estimated market size of 18.46 million units in 2008.

The Bicycle Product Suppliers Association reported its members’ shipments to dealers fell by 9 percent last year.

Utility/City Bikes. Ever since gas crested at $4 a gallon in summer 2008, suppliers bet that bikes targeting transportation users were the next big thing.

Imports of 700c bikes took off in the second half of 2008 and remained strong in 2009 as suppliers waited for customers looking to park their cars. This optimism left many suppliers with historic levels of unsold bikes last year, and a fair bit of head scratching as to why these customers never materialized.

Transportation bikes did sell, however. The BPSA reports shipments of hybrids to dealers only slowed 3 percent last year to 500,525 units. But sales needed to increase more than 10 percent to keep up with suppliers’ forecasts.

At the same time large suppliers adjusted expectations of the transportation market down, small start-up bike companies focusing on the same market were bullish, launching new ventures.

“We’ve been developing the bikes for the last five years but went to Interbike last year and were so encouraged we launched,” said Adam McDermott, who co-founded Linus Bikes with Chad Kushner.

The company signed up eight stores at Interbike and now it’s up to 40 and growing. McDermott said containers of their simple steel city bikes are mostly sold before they land.

Rob Forbes recently launched Public Bikes, a new bike, accessories and apparel company targeting urban cyclists after spending the last few years tuning his designs.

Other transportation-focused brands have thrived during the recession—Abici, Batavus, Brompton and Swrve clothing, to name a few. Usually tucked into corners at Interbike, or not exhibiting at the Vegas show, some of these brands are European, but a surprising number are homegrown.

Sales volume is small, but interestingly these suppliers are developing a dealer channel specializing in transportation bikes, with nary a road, mountain or mainstream branded bike in sight.

“I worked in traditional bike shops, but that wasn’t the sort of business I wanted,” said Josh Cridler, who with Gillian Kitchings own Portland Velocipede in Portland, Maine, a transportation bike retailer.

“Our town infrastructure is quite a bit behind the other Portland, but many people are looking for simple bikes to get around on. Even though we are a new store, our sales are stronger than expected,” Cridler said

Topics associated with this article: Earnings/Financial Reports

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