Editor's note: A version of this article ran in the April edition of Bicycle Retailer & Industry News.
SAN LUIS POTOSÍ, Mexico (BRAIN) — Mercurio Sports Group, a bike manufacturer and distributor in Mexico, opened a $25 million, 1.4 million square-foot factory here in 2019, with plans to assemble bikes for the U.S. and the domestic market, and to eventually add frame manufacturing.
Initially, the company hoped that U.S. tariffs imposed by the first Trump administration on Chinese bikes would cause the U.S. industry to look to Mexico as an alternative supplier. Six years later, after the ups and downs of the COVID bike boom, the factory has primarily served the Mexican market, although it also assembled bikes for Yuba for the U.S. market, using frames made in another Mexican factory.
Most bikes assembled in the factory use frames and components from Asia, including China. Mercurio plans to add frame manufacturing this year. But recent threats of a 25% tariff on Mexican goods make Javier Noyola, Mercurio's president, unsure about U.S. sales.
"The most difficult part is the uncertainty; we don't know the game rules yet," said Noyola in an interview in early March. As Noyola spoke with BRAIN, President Donald Trump announced, via social media, that a 25% tariff on Mexican goods was being delayed 30 days, for the second time.
Since the U.S. determines a bike's country of origin from the frame, bikes assembled in Mexico with Chinese frames are — as of this writing in March — subject to tariffs of up to 56% when they are brought into the U.S.
Under the USMCA trade agreement negotiated in the first Trump administration, a bike with 60% Mexico-manufactured content would have no U.S. duty. However the administration's on-again, off-again tariffs on Mexico and Canada would raise the tariff to 25% — still 31% less than a Chinese bike.
Despite the uncertainty, Noyola said Mercurio will add steel and aluminum frame making in the fourth quarter this year to serve the domestic market, at least. The company had planned to add that manufacturing years ago but COVID delayed it.
"Our first stage was to assemble the wheels and bikes, and then our second stage was to start building the frames," said Noyola, whose father founded the company in 1964.
"When COVID started, we were very busy selling all (the bikes) we had, so we delayed the manufacturing of frames because we were just focusing on trying to sell the bikes during COVID. And after COVID, the same as happened in the bike industry worldwide, we had something like a recession because of all the inventory, so we also postponed the frame manufacturing again," he said.
"So now this year, we are starting again," he said.
Mercurio sells bikes at a variety of price points and several brand names in the Mexican market, offering bikes with steel, aluminum and carbon frames under bike brands including Mercurio, KRBO, alubike, and Windsor. It also distributes motorcycle parts and accessories.
The company will begin assembling e-bikes in the factory for the first time this year, using Shimano motors.
The company also is the Cannondale distributor for Mexico and assembles Cannondale bikes for the Mexican market in its factory.
Unlike the U.S., Mexico does not charge a tariff on Chinese frames and components if they are destined to be assembled into a bike in Mexico, so the assembly gives Cannondale a price advantage in the country. Complete bikes and aftermarket components from China are subject to a 35% tariff in Mexico.
Market opportunities
Noyolo said the Mexican bike market is growing, especially in the middle and high-end. E-bikes for transportation have been slow to catch on in Mexico, he said, because most commuters prefer to use cheaper regular bikes, while others have adopted sub-$1,000 Chinese gas-powered motorcycles for transportation in recent years. However a growing middle class is interested in recreational bikes and e-bikes, and recent labor reforms give many Mexicans more time and money for recreation, Noyola said.
Mercurio's factory employs about 300. San Luis Potosí is home to a wide variety of manufacturers for the automotive and tech industries. Its central Mexico location gives relatively easy access to ports on the Pacific and Gulf of Mexico and is about 450 miles from Laredo, Texas, the closest U.S. port of entry.
