High Growth and Big Margins in the $61 Billion Bicycle Industry

Perhaps, you know or work with someone that owns one of the 451 million bicycles in the U.S. It's an industry that has seen annual growth rates between 10% - 25% worldwide. For example, the increasing numbers of over 3.8 million people in the U.S. using bicycles daily to commute for work. The global bicycle market shows significant growth revenues exceeding $61 Billion through 2011.

The leading global bicycle manufacturers include:

Dorel Industries, Inc. (DRLAF.PK) manufacturers bicycles including the Cannondale, Schwinn, GT and Monogoose brands in U.S. markets. Dorel is a $2 billion company with forty-six hundred employees, facilities in seventeen countries, and sales worldwide. For the year 2008, the recreational and leisure group was up 73 percent to 650.7 million compared to 374.8 million. This increase was principally due to the acquisition of Cannondale, SUGOI and PTI. Sales increase was driven by the core bicycle business with sales gains at the majority of the mass merchant customers. Gross margins rose to 23.4 percent from 19.5 due principally to the contribution of higher-margin products sold by its Cannondale and SUGOI brands.

Giant Manufacturing Co. Ltd. The largest bicycle manufacturer in the world targeted 8% profit growth this year and expects global output to increase reaching 10-million units by 2014. The company is also a manufacturer of electric bicycles or “e-bikes” showing growth (25% - 30%) market segment very popular in the European Union. In 2008, China the world’s largest “e-Bike” market purchased 21-million electric bicycles. China also exported 580,000 “e-Bikes” to 170 different countries including Europe and India.

Trek Bicycle Corporation (privately held) is a heavily marketed U.S. company that has expanded to offer bikes, clothes, accessories, road support for events, training for shops, and other services distributed in 65 countries worldwide.

Shimano Inc. (SHMDF.PK) is the largest global manufacturer of cranksets, derailleurs, drive trains, brake sets, hubs. Its headquarters are in Japan with offices, distribution, and factories worldwide. The company is the dominant supplier of parts for higher-end bikes, and today 90% of those are sold by Trek, Giant, and Specialized, the top three brands in the U.S.

December 31, 2008, consolidated net sales amounted to 170,602million yen, a 12.2% increase compared with the figure for the same period of the previous year, ordinary income was 27,876 million yen, a rise of 23.7%, and net income was 18,644 million yen, 17.8% higher. In particular, Shimano’s bicycle operations sales segment soared 19.2% compared with the same period of the previous year to 133,498 million yen and operating income jumped 33.1% to 25,550 million yen.

In the U.S. the average daily bicyclist can burn calories while reducing carbon emissions and saving money by riding a bicycle instead of driving. For example, a rider that completes 50 miles per week burns 2,350 calories, saves $11 in gas, and reduces carbon dioxide emissions by 48-pounds, simply by not using a gas-powered car. In one year, individuals riding 50 miles per week burn 122,200 calories, save $572 in gas and reduce carbon dioxide emissions by 2,496 pounds making bicycles a great way to promote healthy physical and mental living habits.

Comments

[jcsegenmd:]

Wow
Did you even read the first sentence of your posting? Garbled syntax is a minor criticism compared to your number --451 million US bike riders. Perhaps you should check the latest census on the US population and get back with us?

Apr 26 10:10 PM

[Wkleintop:]

The average reader of Bicycling Magazine (www.bicycling.com) owns 3.2 bicycles. I have four in my household -- I have 3 and my daughter 1.

May 27 10:05 AM