Bicycles have become more expensive: These are the reasons
In 2020, an average of €1,279 was spent on a new bicycle or e-bike in Germany. This is according to market figures from the German Bicycle Industry Association (ZIV). This figure has more than doubled in recent years, which is due in particular to the increasing demand for high-quality e-bikes. But even without this factor, prices are rising - and the strong demand since May 2020 is fuelling further developments. E-bike manufacturer Riese & Müller, for example, has increased its prices by an average of six per cent as of 1 March 2021. Similar developments can be heard from other manufacturers and the accessories market. Lighting specialist Busch & Müller, for example, has announced an average price increase of seven percent as of 1 August 2021. Prices for child trailers and even bicycle parking systems will also rise in the coming months.
It would be easy to think that an industry is trying to make a fortune from the current high demand. Uwe Wöll, Managing Director of the industry association VSF (Verbund Service & Fahrrad), clearly refutes this view: "The industry is being very cautious and is trying to cushion and balance out as much as possible until it is forced to raise prices." He has yet to see a supplier take advantage of the situation and increase prices without proportion. "I see the industry as careful, cautious and fair to consumers. Everyone knows that we are nothing without buyers," says Wöll. Heiko Müller, Managing Director of Riese & Müller, confirms: "Price increases are no coincidence."
But what are the reasons? Is it all to do with corona? And what are the forecasts for consumers?
1. the transport costs
According to Heiko Müller, one important point is the price increases in the supply chains. As many bicycle products are manufactured in Asia, the outbreak of the coronavirus pandemic in March 2020 led to a shortage of transport options, which has not yet been restored. As a result, freight costs have risen and continue to rise. These have now reached "a level beyond good and evil", says Markus Krill, Managing Director of trailer specialist Croozer. Initially, the company looked at alternatives such as transport by rail, but this is no longer profitable. "What started with ships has now spread to all transport routes," says Heiko Müller.
There is also a shortage of freight containers. These are either in the wrong harbour or do not exist at all, as Andreas Hombach, Key Account Manager E-mobility at bicycle parking system provider WSM, explains: "Four million containers are produced every year, compared to just 2.5 million in 2020. So the question is not where the containers are. They are simply not there." As a result, freight costs are currently up to ten times higher than they were a year ago - including long waiting times. "We took a lot on ourselves at the beginning, but at some point that's no longer possible and you have to pass on the costs," says Krill.
2. the supply of raw materials
The situation on the raw materials market is just as tense, which Andreas Hombach describes as "dramatic". WSM not only builds bicycle parking systems, but also roofing systems and mobile room systems and is therefore firmly anchored in the construction industry. However, according to Hombach, there has never been a situation like the current one in the company's almost 70-year history: "The situation is no longer predictable. The supply of raw materials is scarce in all areas: steel, plastic, wood, insulation, packaging." Contracts that have been concluded are being cancelled by suppliers. In order to remain able to deliver and produce, prices have to be paid that are far above the usual market price.
However, this shortage was intentional, especially in steel production, and has nothing to do with the coronavirus situation, explains Hombach. As early as 2019, 70 blast furnaces were closed worldwide, of which only 20 are currently back in operation. High demand and artificial shortages are now coming together, which is driving prices up. "We should actually be doing super well, but we're not getting any material or only at exorbitant prices. It's a paradoxical situation," says Hombach. This means that manufacturers of bicycle products are also struggling with price increases for raw materials, as steel is also used in the production of some frames or components, for example.
However, aluminium, copper and granulates for plastics have also risen sharply, as authorised signatory Guido Müller from lighting manufacturer Busch & Müller confirms: "The raw material price for granulate has risen from €1.90 per kilo to €3.20 per kilo in the last quarter. These are huge increases that you can't imagine." Even cardboard packaging has become significantly more expensive. "We're glad that we can still get packaging at all so that we can ship our products," says Guido Müller. The higher prices charged by the suppliers then have to be paid by the bicycle manufacturers who install the products. "No supplier is currently prepared to offer price stability for twelve or just eight months," adds Markus Krill.
3. the specific market situation
While the first two points also affect many other sectors, there are definitely sector-specific characteristics for the price increases. For example, due to the global demand for bicycles, demand for some components is significantly higher than supply. These include, in particular, parts that are highly dependent on material prices, such as chains or brake discs. The situation can change quickly, especially when purchasing parts, and bike manufacturers can be confronted with new prices and calculations. "We are not used to price increases during the year in the industry, but this is commonplace this season," confirms Alexander Kraft, press spokesman for recumbent bike manufacturer HP Velotechnik. The Kriftel-based manufacturer generally has a different production rhythm to larger bicycle manufacturers. As a result, the company has stocked up sufficiently early and has therefore not yet had to increase prices.
On the other hand, suppliers are already asking for components to be pre-ordered for 2023 - a problem for small manufacturers. "We don't know what will happen by then, but we're ordering anyway," says Kraft. It seems questionable whether the prices offered by suppliers today will be maintained. In order to avoid getting into economic difficulties, prices must therefore be constantly compared and, if necessary, adjusted for end customers. This is why some bike manufacturers are currently focussing on stockpiling as quickly as possible before prices rise further.
However, this is causing bicycle dealers to frown, as specialist dealer Sandra Appel points out. She runs a bike shop in Baunatal, Hesse, which specialises in high-quality bicycles and e-bikes. Most of her fellow dealers do not have a purchasing department or storage space to keep large quantities of inexpensive components ready for workshop work or customised builds. However, this is exactly the kind of service that customers expect from dealers when they buy a high-quality bike. "If the replenishment of parts is not guaranteed, end consumers are less understanding than they are of higher prices," says Appel.
4. outlook
Suppliers are already announcing further price increases for components, which will be passed on to end customers with a time lag. In addition, the constant technical innovations are also driving up prices. "I can't imagine that prices will go down again - even if supplier prices fall," estimates Heiko Müller. It is more likely that the additional budget will be used for development and research. "There's still plenty of room for improvement. Customers are used to the comfort and safety of a car, and bikes and e-bikes are still a long way off in many areas," continues Müller. Driving this development forward costs money.
Uwe Wöll brings the topic of sustainability into play as a further aspect. More and more consumers are attaching importance to different materials and environmentally friendly and humane production processes. This will also have an impact on prices in the medium to long term. "But the industry also needs to be a pioneer here. Consumers are the ones who decide what they want and what they don't want," says Wöll. But at the end of the day, it's the bike dealers who face prospective customers at the shop counter - and then the price always plays a role. "We have to argue the higher prices to customers. This works if the manufacturers provide us with good arguments," reports Sandra Appel from practical experience. With the examples mentioned, customers are now more willing to accept the higher prices.
Source: Bicycle Press Service | www.pd-f.de
