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<b>Japan 2008:</b> Tide Turned

Sales & Trends

TOKYO, Japan – Last year, many in the Japanese industry predicted that the 9.6 million bicycles imported into the country in 2007 would be the peak of the flood of foreign-made products. And they were right: in 2008 the tide turned and imports fell by 5.1% in the first 11 months year on year. The drop represented less a revival of domestic production than a changing pattern of demand – the production of bicycles in Japan actually fell by 3% in the Jan-Nov period in 2008. On the plus side, the value of both imports and domestic production rose significantly, showing that Japan is finally edging towards higher quality products.

TOKYO, Japan – Last year, many in the Japanese industry predicted that the 9.6 million bicycles imported into the country in 2007 would be the peak of the flood of foreign-made products. And they were right: in 2008 the tide turned and imports fell by 5.1% in the first 11 months year on year.

Bicycle Production, Import, Domestic Shipments (x 1,000 units)

Year
Production
Import
Domestic shipments
2004
2,500
9,100
11,600
2005
1,900
9,100
11,100
2006
1,300
9,300
10,600
2007*
1,000
8,900
9,900
2008*
0,865
8,400
9,500

Sources:
MET Machinery Statistics
MOT trade Statistics
Japan Bicycle Association

* 2007: January – November
* 2008: January – November

The drop represented less a revival of domestic production than a changing pattern of demand – the production of bicycles in Japan actually fell by 3% in the Jan-Nov period in 2008. On the plus side, the value of both imports and domestic production rose significantly, showing that Japan is finally edging towards higher quality products.

Electric bicycles continue to show steady gains, as Japanese producers apply new technologies even as lower prices make the products affordable for greater numbers of consumers. Panasonic and Sanyo brought out e-Bikes with regenerative braking, but more importantly, new regulations that came into force at the beginning of December allow a doubling of the power assist force for electric bikes.

Numbers

Japan imported 8.4 million bicycles in the January-November period of 2008, a 5.1% decrease from the same period of the previous year, according to statistics from the Finance Ministry’s Custom Bureau. China exported 8.1 million units, a decrease of 5.4% and Taiwan supplied 283,000 units, a 5.9% increase compared to the corresponding period a year earlier. Imports from the US were down 25.4% to 6,500 units, and those from Italy also fell 35.0% to 1,500 units. Imports from Vietnam, on the other hand, increased 65.3% to 4,600 units in the first eleven months. In value terms, total bike imports through November increased 4.8% to 72,630.69 million yen, suggesting that Japanese suppliers and consumers are edging towards higher quality products.

On the domestic production side, the member companies of the Bicycle Association (Japan) produced a total of 864,494 bicycles in the first eleven months of 2008, a 2.8% decrease from 890,000 units a year earlier, according to recent statistics released by the BAJ.

By type, light cycles with and without gears, fell 9.4% from previous year’s 538,898 units to 488,252 units, and single-speed mini-cycle increased 1.9% to 29,358 units, while folding bikes down 50.2% to 1,198 units. Pedelecs increased 10.2% to 255,452 units, and children bikes (between 18 inch and 24 inch) up 33.5% to 20,188 units.

Significantly, total BAJ member production in the first eleven months rose 14.9% in value terms to 24,830.39 million yen. The average unit price was 28,722 yen, a 18.2% percent increase from the year before.

Higher value models

The market trend in Japan during these past two years, light sports bikes and electric bikes have been in the spotlight. Strong consumer interest in sports, health, bike commuting and cool design means that the relative boom in sports bikes is likely to continue. Given the focus on health in combination with an increasing awareness of the environment and ecology, future expansion is predicted in this market.
There is probably scope for further expansion of casual bikes that look trendy and cool on city streets. With continued development of more advanced designs will bring more opportunities to sell parts and accessories as options, resulting in a sharp increase in the sales share of these items and contributing to higher profits.

The market scale for the sports bike category is somewhere over 1 million bikes, including light sports bikes, primarily cross bikes. Even when the 300,000 electric bikes are added in, however, sports bikes still do not reach 15% of the total volume. On a value basis, however, they account for half of assembled bike sales, and the demand for higher-level specs and after-sales services is by no means negligible. Spare batteries have a large profit margin, and demand for these is expected to increase in the electric bike category.

Electric bikes

Turning to electric bikes, the market definitely broke through the 300,000 bike mark for the first time in 2008, compared with 2007’s 283,000 units. Panasonic (National) stood out in particular, posting sales of 74,000 bikes in the first half of the year, and is likely to have come close to 150,000 for the year as a whole. The company is likely to surpass the Yamaha/Bridgestone combo in terms of volume as well.

The assist ratio allowed by Japan’s traffic regulations was increased to a maximum of 1 : 2 in December 2008, providing the fuel for further market expansion in 2009. By mid-December, Sanyo and Panasonic had announced models adopting the new regulations. PCT (Panasonic), which currently leads the market, is planning to bring out seven new models in the beginning of 2009. Executive Director Hirabayashi says that prices will be around 6% higher, but the company is working to beef up parts such as hubs and chains to match the increased power, and will also be finding ways to deal with heat generation.

Yamaha says it sells about 50% of its e-Bikes to seniors, 40% to housewives and 10% to businessmen, students and others.

Rental Bike Systems Catch On

A minor but interesting trend, at least from a European point of view, is the growth of rental bicycle systems in Japan. Generally run by public transport companies, the schemes enable commuters to quickly get from their homes to the nearest rail station. Traditionally, commuters have used their own bikes and parked them at stations, but these bikes have been the cheap and shoddy Chinese-made products that have clogged not only the limited parking space outside stations, but also the Japanese bicycle market as a whole.

Although rent-a-bike schemes were first tried in the early 1990s by local governments anxious to reduce the scores of abandoned and illegally parked vehicles littering the streets around train stations, those early projects suffered from low take-up and a limited choice of models. Now there is renewed interest in the provision of these systems, with Western Japan leading the way. A bike rental service is operated by JR West subsidiary Eki Rent-A-Car Kansai Co., based in Amagasaki, Hyogo Prefecture. The company, which runs bike rental shops at a total of 18 train stations, said the number of users has doubled in just four years.

Businesspeople on sales calls are increasingly turning to bike rentals to save on parking fees, a company official said. The charge is 300 yen per day or 2,000 yen per month – less than the cost of the bike parking lot by the station. Users do not have to worry about repair costs either. Other railway operators in the Kansai region around Osaka are offering similar services. Hankyu Corp. runs bike rentals at 11 stations on its commuter train lines while Hanshin Electric Railway Co. operates at two stations. The Hankyu-run business had 2,719 registered users for the year ended March 2008, up 16% from a year earlier.

The popularity of rental bikes has had the beneficial side effect of reducing the numbers of abandoned bicycles in and around stations. Setagaya Ward in Tokyo is providing rental bike services at four train stations. The Nagoya municipal government is also considering installing a bike rental facility. A company has even popped up in Tokyo that offers free bicycle rental for students. Bike Off Co. reclaims illegally parked or abandoned bikes, fixes them up, and rents them to users. Its costs are covered by advertising on its website.

 

 

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