After a record year at the end of COVID, the cycle market continues to show good growth indicators with 3.4 billion euros in sales in 2021. This momentum is driven in particular by the 28% increase in the electrically assisted bicycle (EAB) segment. Fast, inexpensive and practical, bicycles are becoming a preferred mode of transportation. For example, according to the Union Sport & Cycles, 2.79 million bicycles were purchased in 2021, compared to 1.63 million cars.
However, the crisis of electronic components and transportation makes it more difficult for the cycle industry to meet this demand, with long delivery times and rising costs.
The components crisis: a global industrial problem
Existing since the beginning of 2020 and linked to the global health crisis, this crisis affects more than 165 industries around the world. With demand outstripping supply, components are becoming rare and prices are rising. This made supply difficult. At that time, the bicycle industry was experiencing an average price increase of 30% for conventional parts and more for technical one. The difficult situation in global maritime trade has only added to the difficulties encountered by lengthening product supply times. In 2021, at the consumer level, the situation was such that it took 6 to 15 months to receive a bike.
2 years after the beginning of the crisis, what is the current state of the market and what prospects can we expect for the cycle industry?
The global components and transportation crisis in 2022: a continuing crisis for the industry
In 2022, the components and transportation crisis continues. The supply of electronic and technical components remains difficult. Even if they are assembled in Europe, the majority of bicycle parts come from Asia, creating a strong dependence on this geographical area. The factories there are still struggling to absorb all the global demand. As a result, without key parts such as derailleurs or brakes, the assembly of a bike cannot be finalized and it cannot be marketed. This logistical problem is multiplied by the number of parts required for assembly.
In addition to the problem of spare parts supply, there is a persistent problem of transport. The reason for this is the high demand due to the economic recovery and the interplay between the various industries. Once the components have been found, everyone wants to be delivered quickly as possible. It is a game of auctions that is being played out between the various players. The place is given to the highest bidder. Moreover, the “zero covid” health policy instituted by China reinforces this difficulty. Indeed, following this policy, several factories and ports have had to close in the country; consequently slowing down the global activity.
The war in Ukraine has given a new twist to the crisis for both components and transport. Indeed, Ukraine produces 90% of the neon, an essential gas in the production of semiconductors. In addition, the increase in fuel prices and inflation resulting from this situation is also hurting industries, making sea and air freight even more expensive.
A cycle industry not too affected
Despite these continuing difficulties, the lights stay green for the bicycle industry. The dynamic is maintained with an increase in sales volumes of 4 % and 15 % in value. Electric bikes are driving the market and keeping it healthy.
These numbers can be explained by an industry that is reinventing itself and finding solutions to challenges. In order to overcome the dependence on Asian production, we can see a phenomenon of relocation with a strong growth of made in Europe and made in France. 800,000 bicycles produced in France in 2021 against 660,000 in 2020. According to forecasts, French production could reach 976,000 bikes in 2022. Of these, 50% will be electric.
In addition, the various players in the industry have had to rethink their supply methods with more flexibility and planning. Now, to avoid shortages, orders are placed in advance and stocks are kept to meet deadlines. A better dialogue between service providers and customers has also been established. The crisis is forcing the various players in the cycle industry to strengthen their cooperation. By implementing a different operating mode in order to work between partners and players in the sector over the long term, the industry is ensuring its sustainability.
In addition to the made in France, the industry is also organized around recycling to respond to the crisis of components. Through this process, it is possible to recover nickel, steel or manganese. Metals that can be reused in new batteries. It is also possible to create metal frames with the batteries. At the end of the process, it is about 65% of a bicycle battery that can be recycled.
The year 2023 is still uncertain in terms of supply and transport of goods. Experts expect the situation to return to normal in at least one year. In the meantime, the industry will have to continue its efforts to keep up.