article

<b>Russia 2006:</b> Bike Production Up, Imports Down

Sales & Trends

MOSCOW, Russia – Apart for the troublesome show war in Russia with two shows taking place in the same month in Moscow, there’s a strong bike market in Russia. It showed few twists in 2006. Two words to describe situation are “mature and saturated”. Exponential growth has stopped. Imports could have declined up to 10%, […]

<b>Russia 2006:</b> Bike Production Up, Imports Down

MOSCOW, Russia – Apart for the troublesome show war in Russia with two shows taking place in the same month in Moscow, there’s a strong bike market in Russia. It showed few twists in 2006. Two words to describe situation are “mature and saturated”. Exponential growth has stopped. Imports could have declined up to 10%, in first 6 months.
 
Local production grew slightly thus pushing the total sales number to 3.5 million. Still no reliable control available and estimates can vary. Along with this conservative approach we have heard of 7 million bicycles sold with 4 million of them representing children bikes.
 
Domestic market leader in Russia is Velomotors company from the Moscow region. The company is estimated to assemble from 800,000 to 1.2 million bikes mostly from imported components. The production is sold under the ‘Stels’ brand name in the European part of Russia.

 

Consumers want high-end and entry level

This year Velomotors started building bikes with aluminium frames to meet the more sophisticated demand. Sales managers admit that Moscow customers ask for higher quality bicycles even on an entry level. Some new models are made for the high-end market and the production now also includes 17 BMX models for teens. Also Velomotors will start this year with the import of mopeds and scooters with a 50cc capacity. If the sales are good, local assembly is considered.
 
Russian local brand number 2 is ‘Forward’. It belongs to the Stefyvelo company from the town of Perm at Ural mountains. Behind the Urals lies the vast Asian part of Russia. Stefyvelo claims to fully control the bike market in this eastern part of Russia. ‘Forward’ models are designed in Russia with the help of professional racers, but produced in China. The company is proud of a number of victories won on its bikes and of a Tibetian bike expedition it has sponsored.
 
While most bikes sold can be considered as modern; more than half a million are still the old fashioned road bikes with fixed gear and 28” wheels that follow the century old geometry which are still popular in Russia. They are cheap, tough, easy to fix and in rural regions considered appropriate for older people, while the multi-gear bikes are for the younger generations. They compete in popularity only with 20”-wheeled folding bikes. Those are often used by women.
 
Most of the traditional bicycles come from Belarus capital Minsk and are produced by ‘MotoVelo’. According to the news agency BelTA, MotoVelo made about 450,000 thousand bicycles in 2006, which is 3.2% more than in 2005.

 

Distribution

On the distribution of bicycles in Russia; there’s still a strong trend towards bike sales at Hypermarkets. Also sporting goods megastores are successful. Recently Decathlon opened the largest sporting goods store in Russia. It is located on the Moscow ring, near an Auchan Hypermarket and a Leroy Merlin mega-store. Decathlon, Auchan and Leroy Merlin belong to the same family holding company. Despite initial delivery problems and the lack of a full scale introduction campaign, the new Moscow Decathlon outlet that has a 150 staff, is reported to score more than satisfactory sales. Next to Sportmaster and Intersport store chains are also operating in Russia.
 
The shift from the traditional Russian bike to more sophisticated models will continue in the coming years. Also because two strong companies are there to promote the sale of MTBs, BMX, road racing and even Trekking bikes. The tow companies are located in the town of Perm. One is making ‘Forward’ branded bikes with aluminium frames and Shimano components. The other company makes bikes under the renowned ‘Ural’ and ‘Kama’ brands. These ones are basic and cheap. Bike Europe asked the representatives of the two companies to tell about their business and market approach.
 

Interview Andrey Pepelyaev, sales manager of Atalis
 

Bike Europe: How did you become one of the major traditional bike makers?
 
Andrey Pepelyaev, sales manager of Atalis: The Velta bike factory went bankrupt and the brands it owned were bought by our company.
 
BE: How many bicycles did you make in 2006?
AP: We made about 60,000 bikes, about two thirds of them with 20 inch wheels.
 
BE: Did you use Shimano components?
AP: Mostly we are wholesaling Shimano equipment. We have one Ural model with a Nexus gear hub, but it is much more expensive than the same bike with a regular hub. We need affordable bikes for our regions which spread from the Ural Mountains up to the Far East.
 
BE: What is the price difference?
AP: The price a dealer pays for purchasing a traditional Ural is about RUB 1,800 (€ 52) and for the one with the Shimano Nexus hub it is about RUB 3,000 RR (€ 87). The consumer prices are respectively RUB 2,500(€ 72) and RUB 4,000 (€ 116).
 
BE: Who are your competitors? Do you feel market pressure from modern-style bikes?
AP: We feel a lot of market pressure. But we have our own brand, a very well-known one in Russia! Perm is a town with an established bicycle culture. ‘Forward’ bikes are the biggest bike brand, but we are growing and getting stronger each year.
 
BE: Are you planning to start making bikes from imported kits?
AP: We are considering this business model. We shall use it. Chinese frames and components can be of very high quality.
 
BE: What would happen then with traditional bicycles?
AP: It will be a separate line. We will make both legacy and modern bikes.
 

Interview Maxim Bratouchin, manager Stefyvelo

Bike Europe: Can you tell more about your company and its market position?
 
Maxim Bratouchin, manager Stefyvelo: Our company is operating since 1999. We were selling affordable folding bikes. Later we were approached by sportsmen who needed quality bikes with aluminium frames. First models were made in 2003. Six sportsmen become Russian champions on our bikes in 2006. We provide bikes to the members of Russian cross-country team.
 
Our frames are all constructed in Russia, company’s chief engineer is a former member of a racing team. Three times he became a champion of Russia. We have our own laboratory in Perm full with various testing equipment. Additionally bikes are tested by sportsmen. We listen to their advice before launching a new model. Last year we made and sold about 500 thousand bicycles. And we are planning to sell 700 thousand in 2007.
 
We are competing mostly with “Stels” brand bikes, but only on entry level, where frames are made of steel. We don’t have competitors among Russian brands in aluminium segment. We sell 4 of each 5 bikes behind Ural Mountains now. And we aim at European part of Russia.
 
BE: Concerning two exhibitions. Which one is better Velo-Park or MISS?
MB: Velo-Park. Honestly, we have expected more from MISS. Velo-Park has a good image, there are riders, end consumers – folks who come to the shop and buy bikes. MISS is more for wholesalers, people talking here and sign agreements. We consider it average.
 

Comment on this article