The best way to explain the situation in the bicycle industry is to talk about pigs. In economics, the pork cycle is a model for a cyclical fluctuation in prices. First there is too little pork and prices rise. Due to increased demand, more and more pigs are bred, which leads to an oversupply many months later, whereupon the price drops abruptly.
Full warehouses collide with empty wallets
The bicycle market is currently at the lowest point in the hog cycle. On paper, the bike business is very simple: produce or buy bikes, sell them as quickly as possible and use part of the profit to finance new bikes. However, in the bicycle trade, the time between ordering, production, delivery and sale is traditionally very long. During the pandemic-related delivery problems, however, it took on unprecedented proportions - while demand was enormous. Dealers had shops full of customers but no bikes to sell. This led them to order more and more goods, which in turn prompted manufacturers to increase their production. "Shimano sometimes quoted delivery times of two to three years for certain brakes and cranks," recalls Volker Dohrmann, Head of Strategy and Product Marketing at Stevens. "That's why some manufacturers panicked and ordered replacement components, but they arrived very late."
Large quantities of goods then arrived with a long time lag. The hog cycle was at its tipping point - and now, of all times, Russia's war against Ukraine fuelled inflation and triggered a reluctance to buy. The result: full warehouses collided with empty wallets. A dangerous mixture, with rising credit interest rates acting as an accelerant. Little money in the shop tills and at the same time ever higher costs for loans fuelled a price war in the bicycle market. "I've been in the bike industry for over 30 years now, but we've never had this kind of pressure on the market. Stock levels are under pressure like never before, which is why manufacturers are offering big discounts," confirms Dohrmann.
>> You can find the latest news from the bicycle industry here: Update - Bike industry without power? More and more companies are going bankrupt - what's going on?
Bike manufacturers with highs - and crashes
The Dutch Accell Group, one of the largest bicycle companies in the world, is a prime example of the rollercoaster ride. The company's brands include Ghost, Winora, Koga, Haibike, Lapierre and Raleigh. In 2022, the company's value was estimated at up to two billion euros - the bicycle boom gave wings. The brutal crash followed in 2023: according to media reports, profits fell by 90 per cent. Just how bad the decline was is shown by a figure that Accell has now announced: debts totalling 1.4 billion euros have been accumulated. From boom to crisis almost seamlessly - a painful path. In Germany, Bike24 also reflects this rollercoaster ride: the company advertised sales growth of 45 per cent when it went public in 2021. The share price rose rapidly to 20 euros and then lost over 90 per cent, driven by a slump in sales. "Bike 24 share on the downhill" was the headline of one investor magazine. But things got even worse: Fahrrad.de had to file for insolvency. The bankruptcy affected the entire market and put all suppliers under price pressure, especially for accessories, components and clothing.
Discounts for MTBs vs. delivery problems for gravel bikes and road bikes
But is everything really as bad as it currently seems? The situation on the bike market varies greatly depending on the type of bike. "The gravel bike is doing very well - regardless of whether it's an entry-level aluminium bike for €1,299 or a carbon bike for €4,499. Retailers don't have too much of it, they have too little," says Dohrmann. Canyon and Rose Bikes also reported good business with gravel bikes and road bikes in 2023. A trend that can be seen in many brands. Pinarello and Colnago have been on an uninterrupted upward trend since 2020 - with double-digit growth rates in 2023 as well.
In Germany, figures from the association "ZIV - Die Fahrradindustrie" (ZIV - The Bicycle Industry) confirm the upward trend in the sporty bike segment: the market share of racing bikes, gravel bikes and fitness bikes rose by two per cent to nine per cent in 2023. However, this figure is also a reminder of how small this segment is. Two thirds of all bikes sold are used in an urban context - from city bikes and children's bikes to e-bikes for commuting. Rose Managing Director Thorsten Heckrath-Rose knows which bikes are causing problems on the market: "Classic trekking bikes and mountain bikes, urban e-bikes - where the market is broad and deep." Areas in which a large number of brands and retailers compete with very similar products are particularly competitive and under price pressure. Too many products on the market that absolutely have to be sold - the discount battle then spreads to everyone.
Insolvencies in the bicycle industry
There is evidence that stocks are still full despite the discounts. According to the ZIV's market data for 2023, retail stocks in Germany were twice as high as in normal years at 1.45 million bikes and e-bikes. At the same time, fewer bikes were sold than in previous years and production and imports were also lower in the first months of 2024. The differences vary greatly depending on the type of bike - racing bikes and gravel bikes are not at the centre of the sales problems, but because most manufacturers offer bikes in several categories, the sales crisis in one segment still threatens the entire company. Simplon and Poison Bikes filed for insolvency in 2024 and Müsing (Ditmar Bayer) already in 2023.
Job cuts in the bicycle industry
They join a list of companies ranging from VanMoof, Cycle Union/Prophete and Bikesale to WSF Bicycle Technology that have had or are having payment problems. According to figures from the industry association CONEBI, 5.5 per cent of jobs in the bicycle industry were cut across Europe in 2023. The crisis has often exacerbated home-made problems - the bankruptcies of Fahrrad.de, Wiggle and Chainreaction are examples of this. However, their discount offers have also put pressure on companies that are doing serious business. The fact that brands such as Specialized suddenly offered 30 to 50 per cent discounts on their bikes shows the seriousness of the situation. And Cube, Trek and co. also offered high discounts - at least in selected price ranges and on certain models.
"The discount competition in the industry is keeping Canyon on its toes again this year. We had to reduce our prices more than usual," admits Christoph Listmann, Vice President Categories at Canyon. The fact that many warehouses are still (too) full can be seen from a new company foundation. Universal Transmissions GmbH has launched a new trading platform that offers original equipment manufacturers and retailers a quick and secure way to anonymously reduce excess stock.
How is the stationary specialised bicycle trade doing?
The reluctance to buy in Germany also affects the Internet sales channel. For years, online retail was a growth engine - but it has stuttered somewhat: The turnover of the top 1,000 players in German online retail in 2023 is virtually stagnating. Adjusted for inflation, turnover fell by 164.5 million euros. This is according to the study "E-Commerce Market Germany 2024" by the EHI Retail Institute. Before the pandemic, sales in the top 1,000 online shops had risen by an average of 10.7 per cent per year since 2008. This is another reminder of how important the stationary specialist bicycle trade is: in 2023, 74 per cent of all bikes were bought in local specialist shops, reports the ZIV.
The example of industry giant Shimano shows that the cycling trend has been dampened, but still promises good business. The company's figures show a doubling of operating income from 2020 to 2021 and only a brief setback in 2023. In 2024, the Japanese company is already expecting profits to exceed the pre-corona period. Shimano's growth curve is intact - also thanks to its great market power. For Europe, Shimano expects sales in the bicycle components business in 2024 to be on a par with 2020. "Inventories are still very high and delays are expected in reducing stocks," says the company.
German (e-) bike stock
Plenty of bikes: The number of bikes with and without electric drive has grown significantly again since the coronavirus years. The result: a certain degree of market saturation. The import of bicycle parts to Germany has mirrored the course of the pandemic relatively closely. Due to the high demand and fragile supply chains, manufacturers ordered what they could get for 2022.
Two-wheeler parts: Import
What will 2025 bring for the bike industry?
A look at Taiwan could reveal what will happen in 2025. The most important production location for high-quality bikes is sending contradictory signals. Giant suffered a 45 per cent drop in profits in 2023 and was not yet able to breathe a sigh of relief in the first half of 2024 - sales were still below the previous year's figures. Competitor Merida, on the other hand, has already reported growth. Only when the warehouses in Europe have been reduced will more orders arrive in Taiwan again. But how full are the warehouses in Germany really? A survey conducted by Stevens in July 2024 revealed that 75 per cent of dealers report unusually full warehouses and fear that this situation will continue in 2025. Behind closed doors, there are many reports of excess stock from major brands and retailers.
However, no company representative wants to admit this openly - optimistic quotes are easier to come by. Accell reports that stocks of components and accessories have already been reduced to a normal level and that it expects the stock of bikes to be at a normal level by the end of 2024. Rose reports that the 45,000 unfinished bikes it had in stock two years ago have almost all been sold. Canyon expects "a significant reduction in stock levels and a gradual normalisation" in the bike market by the end of 2024, says Christoph Listmann.
Retailers see no light at the end of the tunnel
The assessments revealed to management consultants Roland Berger in confidential discussions are much more pessimistic. For the report "The European bicycle industry in crisis mode", 34 managers from bicycle manufacturers in German-speaking countries were interviewed. The conclusion: the persistently high stock levels will probably continue to burden manufacturers for longer than expected. Retailers continue to order very little because their own stocks are high. Company managers therefore fear that normalisation will not begin until after the summer of 2025 and that a recovery phase will not start until the 2026 season. In figures, this means that more than 70 per cent of the bicycle manufacturers surveyed expect a further decline in sales in 2025. "The order behaviour of retailers during Eurobike was described by interviewees as very weak overall compared to previous years," the study states. For some bike manufacturers, this means a dicey situation in view of rising interest rates and thin capitalisation.
Flexibility is required
Small bike manufacturers are particularly under threat - but what does the rollercoaster ride mean for bike dealers? Torsten Hieke is a board member of the VSF bicycle trade association. He sees very different effects: "In the VSF, we have many smaller shops that specialise in good advice. The sector continues to function well. In addition, small shops also live from the workshop and if more bikes are sold during the coronavirus years, more will come in for servicing." He sees problems with full warehouses primarily with individual large bicycle chains and shops. "If I have an inventory worth a million and I have to finance it for a year with a high interest rate, then that's difficult." Smaller bike shops do not have so much surplus stock and are well networked via the associations - this also opens up favourable financing options for them. Hieke himself is Managing Director of Radhaus Büren and has noticed that manufacturers are suddenly very flexible and are endeavouring to attract bike dealers. "Three years ago, we received cancellations from many manufacturers because they couldn't deliver. Now they are back in our shop and want to supply us." Manufacturers are also suddenly very flexible when it comes to pre-orders. "You can tell that the competitive situation has changed."
Are end consumers benefiting from the situation?
This depends primarily on the type of bike. Reduced bikes will continue to be available over the next few months. In some categories, you can get more bike for your money than ever before: classic trekking bikes and mountain bikes are under particular price pressure - including some e-bikes. In the booming road bike and gravel bike segments, on the other hand, big bargains are not to be expected. Hieke even expects certain gravel bike models to be sold out in spring 2025 because orders were placed too cautiously. From the consumer's point of view, racing bikes and gravel bikes are expensive, but this will not change. Raw materials such as aluminium and carbon have become more expensive over the past two years, component manufacturers are charging surcharges of between five and ten percent, and labour and transport costs have also risen. Price increases are unavoidable in the long term. "Many manufacturers and suppliers have not yet realised the last price adjustment that would have been necessary because the market is not yet ready for it," reports Heckrath-Rose.
Sales market: Bicycles in Europe
Profiteer of the pandemic: When the bicycle became a guarantor of mobility and an anti-virus fitness vehicle, sales skyrocketed. Then supply chains began to break and, with the start of the war in Ukraine, it was not only rising inflation that depressed the buying mood. Experts do not expect the market to normalise until 2026 at the earliest.
What will happen in the supplier industry in the future?
Will the crisis change the bicycle market in the long term? It probably will. The debate about production in Europe has flared up again and the frequency of new launches is also being scrutinised. The frequent model changes are a problem for dealers and manufacturers. "New colours or new models every year devalue the old stock," says Dohrmann. He can well imagine that manufacturers will let their models run longer in future. In the medium term, a new problem is already looming: "We have a huge problem in the supplier industry in Asia that they have no capacity utilisation due to a lack of orders and you don't even know who is still at the start," reports Dohrmann. The first companies are already on short-time working. If huge orders suddenly arrive again from Europe, long delivery times and price increases are inevitable. The pig cycle could then start all over again.
Market development during Corona
- January 2020: First corona case in Germany
- February 2020: China is sealing itself off - supply chains are interrupted, production in Asia is severely restricted
- 2nd quarter 2020: Biggest slump in gross domestic product in Germany since recording
- February 2022: Russia invades Ukraine. This leads to a global rise in prices for OPEC crude oil and commodities
- 2022-2024: Rising inflation and reluctance to buy
Thomas Musch
Publisher
