What is going on now --2024 Q3

After Eurobike, it seems the future of the bike industry is still vague. Just some memo to help myself to remember what is going on in the market now. All the information below, please verify again by yourself. All? information are? from market statistics, export numbers, website price trend, and in general, industry whispering, which I had verified with more than one source, but still, please read the information carefully and if there is anything false, please message me and I will immediately correct it.?

China Market

• Booming Sales: The Chinese market is on fire, especially when it comes to road bikes. It’s like everyone there suddenly decided that cycling is the new cool thing to do. Most of the buyers are new to biking, so it’s all about making a lifestyle statement.
• What’s Selling: The most popular bikes are either dirt-cheap models with Li-TWoo groupsets or more solid mid-range ones with Shimano 105, Sora, or Tiagra. Price competition is fierce.
• Cost Breakdown: I did some quick math, and it looks like a carbon road bike with Shimano 105 Di2 and carbon wheels has an MSRP that’s only about 50-60% higher than the basic factory cost, even after including Chinese VAT.
• Big Players: XDS has become a huge Shimano customer, and this hot market in China is basically what’s keeping Giant’s profit margins in the green while everywhere? else are? struggling. Merida is also benefiting—they’re moving more inventory and selling more bikes thanks to this surge. According to both XDS and Giant’s report, that represents 5.5 to 5.8 millions China IBD bikes in China for 2024. Now you know why Shimano is still having some delivery issues
• Chinese Brands are coming -will it be another EV invasion? :With the success of Chinese brands in their local market , we see more and more Chinese brands are stepping out of China and aiming at the global market. Besides XDS, another manufacturer is looking to buy a world tour team. I will have another article to talk about Chinese brands and players,also how I see it will affect the landscape of the bike business.?

Asia Suppliers

• Sluggish Orders: Across Asia, orders are crawling. To give some context, before 2022, Taiwan’s average export quantity was around 2 million units annually. But then, in 2022, things spiked to a historical high of 3.32 million units, thanks to the Covid-induced bike boom. Fast forward to 2023, and that number plummeted to around 1.95 million units. Looking ahead, my "educated guess" for 2024 is that exports will dip even further, probably to around 1.3 million units.?
• Vietnam's Rise: Vietnam, though, is still getting a lot of love. More and more suppliers are setting up shop there. The list keeps growing—Axman, Sanfa, Tektro, Massload, and plenty of Chinese parts companies are all heading that way. But, there’s a catch: the Vietnamese government is cracking down on taxes and pushing for domestic sales licenses, which means the old ways of doing business might not fly there.
• Challenges in Vietnam: On top of that, land prices and labor costs are creeping up. Running a company in Vietnam today is a whole different ball game compared to the past. And an important question is : which market will be the major market for Vietnam made bike?
• Other Options: Thailand and India are starting to look like viable alternatives. India, in particular, is trying to create its own "Bike Valley" to attract some of the big players from Europe and Japan. Southeast Asia is definitely a region to keep an eye on.

USA Market

• Dealer Caution: In the U.S., dealer inventories are finally shrinking, but everyone’s still playing it safe. Buying at the last minute. The weather and the shaky economy are keeping consumers from pulling the trigger on new purchases. Discounts are still everywhere(good for dealers who are capable of shopping around) and the second-hand market is buzzing.
• Sales Slump: According to People For Bikes, sales in June 2024 dropped by 14% year-over-year. If you zoom out and look at the trend from 2017 to now, using 2017 as a base, the U.S. market is down by 31% in terms of units sold. Not a pretty picture.
• Ebike inventory is high:? which I suspect might be caused by wholesalers aggressively having inventory before the end of exemption. It might just be a temporary situation, let’s keep an eye on the sell-through. But you could see the price competition is severe?
• Live or Die ?? : Some Traditional mid-size Local Brands such as Fuji, Jamis, Diamondback are relatively quiet. Also heard from suppliers that REI is restructuring its Product Team. Curious whether they will keep expanding their own house brand or just to buy more third-party brands to reduce its inventory burden and expense.?

European Market

• The Usual Suspects: Over in Europe, the big winners are the same old names—Cube, Orbea, Gazelle and some other German brands are still going strong and stable. Cost control is still the key and maybe just even more. It seems the demand side from consumers are still relatively stable. Tenway is undercutting pricing. They are putting a cap on Hub Motor Bike price.?
• Rumors and Adjustments: I’m hearing whispers that a big bike group in the Netherlands (probably Accell )is looking for buyers.? Very sure more brands are for sales and looking for investors.? The biggest German-base Performance B2C brand has had to slash its forecasts with Asian suppliers, so things are definitely shaky.?

Short Summary

• Regional Rollercoaster: The bike industry right now is like a rollercoaster, with huge ups and downs depending on where you look.
• Watch Southeast Asia: If I were betting on the future, I would not just keep watching Southeast Asia. It is a trend, but trends are not always right .?
• Economic Reality Check: At the end of the day, the economy is still the elephant in the room, especially in the U.S. and Europe. It’s playing a big role in shaping consumer behavior and market trends.
• New faces; Different Faces: We are also seeing more and more companies are changing their leadership team,the generation change within the company, or even more new players. By the end of this year we might see some big changes.