Prices for P&A as well as Bikes about To Surge Again

AMSTERDAM, the Netherlands - Dealer acceptance of price increases between 5% and 10% overall was one of the big issue’s at Eurobike this year. There’s a lot more to come on this front; for parts and accessories as well as for complete bicycles.

That the prices for P&A as well as for complete bicycles are expected to surge again is due to the increased appreciation of the Taiwan dollar, the Japanese yen and the Chinese yuan against the US dollar. Bloomberg reported yesterday: “The Taiwan dollar climbed twice as fast as the Chinese yuan in the past three months, reaping the benefits of strengthening trade and investment ties with the world’s fastest-growing major economy.

“The island’s currency appreciated 5.6 percent versus the greenback since Aug. 20, while the yuan has risen 2.2 percent as Chinese President Hu Jintao said this month foreign-exchange policy changes will be “gradual.” Taiwan’s economy expanded 9.8 percent in the third quarter, completing its longest stretch of outperforming the mainland in 19 years.”

Last June China and Taiwan committed to the ‘Economic Cooperation Framework Agreement (ECFA)’ which is a preferential trade agreement that must break down all trade barriers between the two countries. According to Bloomberg, Taiwan’s shipments to China jumped 18 percent in October from a year earlier, accounting for more than 26 percent of total overseas orders. The financial specialist also noted that “A booming Chinese economy will mean more appreciation of the Taiwan dollar.” A more expensive Taiwan dollar will bring higher prices for bicycles in Europe as Taiwan is the number one suppliers of complete bikes to Europe. Next to bikes lots of parts and accessories sold in the 27 member states of the European Union
comes from the island.
 
Prices for tyres and tubes are also expected to increase in the very near future. This is caused by adverse weather conditions in Thailand, the world's biggest rubber producer. Like in Thailand flooding has also affected northern Malaysia, the third-biggest rubber producer. The number two producer, Indonesia, is in its dry season but that also reduces the supply of latex from trees. All in all it is leading to rubber prices which are reaching historic highs.

Bike Europe asked the major tyre manufacturers/suppliers about what’s to happen in the very near future. They did not announce price increases just yet. One tyre maker said ‘to analyze the impact of the development’. Another confirmed the record highs for natural rubber and said that a decision is about to be made. In particular for tyres and tubes it’s expected that at next week’s Ride-On and Taichung Bike Week meetings of parts makers with product managers price increases will be announced.