Friday, 29 March 2024
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Industry leaders forecast what next for the global bike business

As the final Eurobike in Friedrichshafen wound to a conclusion – leaders from across the bike business gathered on stage to address the industry’s most pressing issues. CI.N recaps on a talk touching on supply, sustainability and regulatory wrangles that could cost the trade dearly…

Panelists
Bonnie Tu, Chair of Giant and Liv Cycles’ founder
Ton Anbeek, CEO of Accell Group and Vice President of CONEBI
Erhard Buchel, President, CONEBI
Johanna Urkauf, MD of KTM Bicycles
Kalle Nicolai, Universal Transmission founder
Bernhard Lange, Chairman, Paul Lange

Are we facing a bike bubble?

Erhard Buchel: My view is that the bike business is not in a bubble, but that now we are seeing a change in the consumer’s mindset on cycling. Before it was chic to have nice car and to show off. Now it is chic to have an electric bike. What’s more, this is getting many more people to ride; not only the older generation, but also young people who will continue to drive a stable growth, as we have seen in Germany.

The projections of CONEBI, CIE and the ECF show that by 2025 we should have more e-Bikes sold than normal bicycles. This will only continue with favourable legislation. It needs a fight to maintain that of course, the EU almost put an insurance on pedelecs, but we fought for a stability and a sensible foundation.

What growth levers could the EU pull to drive new trade through the bike business?

Ton Anbeek: It is always most significant to promote and invest in infrastructure to make sure that safe cycling is able to penetrate urban spaces. Fiscal stimulation and good legislation builds on top of that foundation to stimulate the long-term growth.

Johanna Urkauf: The European legislation that exists is central to our long-term growth. I like the idea of a plat- form where we can discuss with EU decision makers to maintain best practice. We are worried about illegally tuned e-Bikes. This is not good for our trade’s reputation and so we must take a stand there. It is so important that the e-Bike is treated as normal bicycle, as it is now. Anything else now would be a catastrophe for our industry. In fact, adjustment could reduce the e-Bike’s chances of being such an important part of the future of sustainable transport.

How does the bike business work through its supply chain headaches?

Erhard Buchel: The situation is very grave now as many bicycle companies cannot work thanks to a lack of spare parts. The containers that are scheduled to arrive in 40 days sometimes need up to 120 days, so for factories it is impossible to have a production plan. Many factories start on a Monday with assemblies, but by Wednesday the parts to complete a bike don’t arrive and then they have to re-plan completely. It has disturbed companies to make them work at 50%, or even 30% capacity.

On top of the supply chain being destroyed, we are hit in tandem first by a ship blocking the Suez Canal. People thought it would get better then South China’s main harbour closed, followed by Ningbo, then Shanghai. This presented a ripple problem in that the price for a container delivered from the Far East to Germany in September 2020 was $1,250 US. Yesterday it was $16,000, today $22,000. There is no end to this hike visible (live prices can be tracked here).

There is a saying that if it is raining gold you must have a spoon to collect it. At the moment it is a teaspoon versus a soup spoon. The sales figures began to show pain in Q1. By the end of this year a decline may come. In order to fight this the only solution is not to globalise, but to regionalise parts production. In Europe it is good to create a shorter supply path and also for the CO2 balance. People can reduce need to carry so much stock. The only solution now is to encourage production to Europe. This is not protectionist, it is just an urgency to overcome this hurdle and get back to normal. There are several examples of such things happening already.

Bonnie Tu: These problems are happening at all my factories too. It is great to have local production, but the situation at present bike industry is that we are globalised. Each country contributes to pollution. It is not possible for one country or continent to absorb everything, it needs to be a joint effort and we must co-develop a more flexible manufacturing process. Currently, I don’t see a quick solution, we still have to go through unpredictable changes in logistical systems.

How will the supply chain evolve in the next three years and are brands now reshoring for a reason?

Johanna Urkauf: The growth potential for the industry makes it interesting to invest here in Europe. For example, at KTM, we have invested over €30 million in Austrian production and we are not the only ones. This is creating jobs and filling demand. We need the support of EU decision makers to make a bike and e-Bike friendly legal framework in future.

Many manufacturers had existing EU production plans prior to the pandemic, but Covid accelerated this reshoring movement. At the moment, our growth is unusually high, but for the next two years I do not think it will be so high. After that it will resume an upwards trajectory.

Bonnie Tu: For Giant, our investment in Hungary started in 2016. We strongly believed we should produce in the heart of the European market. We started construction in 2018 and launched production July 2020, in the peak of the pandemic. Up to now we have managed to produce up to our targets and we are very confident that our Hungarian operation, plus our further factories, will be able to meet our European needs in future.

Could a revision of EU type approval become the single greatest issue for the e-Bike industry?

Erhard Buchel: Revised type approval could put the e-Bike in the graveyard. Registration, use of a motorcycle helmet and limited cycle lane access would be a disaster. In the US, some places consider e-Bikes motor vehicles and so they do not play a big role in transport. We need an industry forum on this, to exchange the views of the industry to the politician without any regulatory risks.

Ton Anbeek: Mandatory type approval would be detrimental. If you treat the e-Bike like a moped it has huge consequences for the development of that market.

Kalle Nicolai: We cannot compare the bike business to the car industry. Lots of small companies would have such a big burden if it became a duty to fulfil different type approval regulations. We would put each of them in danger. The diversified nature of bike industry needs protecting and these small companies are perfectly able to build simple, safe vehicles for the market. Any change on the current framework would likewise create a negative impact for the bike dealer.

Bernhard Lange: It would kill hundreds of small manufacturers in Europe. If the variety of bicycles is gone, what is there left? I think just ten to 20 large manufacturers; we will have a uniform bike and I fear if hundreds go that the remainder would become named Volkswagen, Peugeot and Fiat. They will jump in and make these uniform cycles. I like to see the variation and we should not kill this industry with changed regulations.