The global cycling industry is bracing for another “lost year” as manufacturers and retailers backpedal from an unexpected burst of enthusiasm during the pandemic when people turned to the sport for transport and exercise.
At the world’s largest cycling trade show, Eurobike in Frankfurt, which runs until Sunday and is expected to attract up to 70,000 visitors, “everyone is talking about the slowdown,” said Manuel Marsilio, general manager of the Confederation of the European Bicycle Industry.
Exhibitors show off innovations like fully automated gearing, locks with fingerprint sensors and helmets with built-in brake lights, all the while the first week of the world’s most famous bike race, the Tour de France, draws to a close.
Yet cycling has undoubtedly hit a speed bump as people took up other activities after lockdowns and became more cautious about spending due to the rising cost of living. Sales of bicycles and e-bikes fell by 8.9 per cent in Europe last year and bicycle production and exports in the region dropped close to 20 per cent, according to Conebi.
Its data shows that the bust also wiped out 5.5 per cent of jobs in the European cycling industry last year. The number of exhibitors at Eurobike, which opened its doors on Wednesday, fell by about 5 per cent to 1,800.
“Everybody agrees that 2024, unfortunately, is another lost year for the industry,” said Tjeerd Jegen, chief executive of one of Europe’s largest cycling businesses, Accell Group, which owns brands including Raleigh, Koga, Batavus and Ghost. “We’re still collectively sitting on too much stock.”
The slump in demand was made worse by the fact that manufacturers raced to increase production during the pandemic boom. This additional stock hit the market with a time lag, just as interest started to wane, saddling the industry with a glut of unsold bikes and kit, little cash and no option but to offer discounts.
“Cash is tied up in inventories and you see a lot of brands offering heavy discounts as they are trying to turn inventory into cash,” Joshua Hon, the founder of Taiwan-based folding bike maker Tern Bicycles, told journalists in Frankfurt. Earlier this year, US manufacturer Specialized was selling high-end mountain bikes at discounts of up to 50 per cent.
In Europe’s largest cycling market of Germany, the industry is sitting on 1.45mn unsold bikes — more than a third of annual sales and twice the normal level of inventory, said Burkhard Stork, the head of German cycling industry association ZVI.
The pandemic boom lured investors into the sector. Bike24, a German online bike retailer, was valued at €1.2bn after its Frankfurt IPO in 2021. Its shares are down 95 per cent since then and for the first quarter of 2024, it reported an operating loss of €7mn.
In late 2020, Belgium investment group Groupe Bruxelles Lambert bought a majority stake in German bike maker Canyon, valuing the group at €800mn including debt. Canyon, which sells directly to consumers online, has survived the crisis relatively unscathed compared with others. Its sales increased 22 per cent in 2023, but its earnings before interest, tax, depreciation and amortisation were down 9 per cent.
A foray into the sector by buyout group KKR was less successful. In early 2022 it acquired Accell in a deal valuing the company at €1.6bn, which then had to deal with a significant rise in inventory from late 2022 and a costly recall of faulty Babboe cargo bikes.
Sales fell 10 per cent last year and ebitda, which was €140mn in 2022, dropped by more than 90 per cent. Production in Germany and the Netherlands is being cut, along with 150 jobs and Accell is in talks with lenders to restructure its €1.2bn of debt. KKR declined to comment.
Jegen is confident that “the overstock situation will be normalised in most of our markets by the end of 2024”. In its Dutch home market, a recovery is already in evidence, he said. Accell sold 11 per cent more bikes there in the first five months of the year compared with the same period in 2023, Jegen added, while sales across the country fell by 4 per cent.
Despite the current gloom, the industry is adamant it has not run out of road, stressing that despite setbacks, sales in many countries are well above pre-pandemic levels and that there are strong grounds to assume people will remain keen on cycling because of the health benefits and often faster travel times than cars for shorter distances.
“People are taking so many trips in cars that are less than 5km. Let’s turn them into trips by bicycle,” said Hon.
“We do know that consumer demand is there, that the products are great and that many manufacturers are well positioned for the future,” Gunnar Fehlau, an industry expert and author of several cycling books, told the Financial Times.
“At Canyon, the road and gravel categories are still growing and we see huge potential in the e-bike segment,” Canyon chief executive Nicolas de Ros Wallace told the FT, adding that he believed that “the industry, as a whole, will emerge stronger and well positioned” from the recent crisis.
Kevin Mayne, the boss of Cycling Industries Europe, an industry association, said the current bust had been exacerbated by a structural weakness in the sector. “We don’t have real time data [on supply and demand] like other industries do and which can stop panic buying and selling,” he told journalists in Frankfurt.
The bulk of bicycles are sold by small, independent bike shops who do not necessarily report inventory levels to their suppliers. Manufacturers therefore had little information about whether the surge in orders during the pandemic was a structural or one-off change. “That was the biggest mistake the whole industry made,” Jegen said.
According to Fehlau, this lack of data may cause problems again. “Retailers are currently extremely careful with regard to their orders, and manufacturers can only guess what the market wants,” he said, adding that many were keeping production for 2025 as low as possible to preserve cash.
If demand rebounds quicker than expected, there will be supply bottlenecks again. “If the worst comes to worst, this could drag on long into the 2025 season,” he said.