<b>Spain 2007:</b> Bike Industry Surviving Bank Crisis

Sales & Trends

MADRID, Spain – Like many other countries, Spain is going through the financial crisis. However, it doesn’t seem to be affecting sales in the bike industry. The leisure business overall seems to be in good shape.

<b>Spain 2007:</b> Bike Industry Surviving Bank Crisis

MADRID, Spain – Like many other countries, Spain is going through the financial crisis. However, it doesn’t seem to be affecting sales in the bike industry. The leisure business overall seems to be in good shape.

The Bike Market in Spain (x 1,000 units)*

Domestic production

* Jan. – Aug. 2005
** Jan. – June 2007
Source: Sector Espanol Empresarial de la Bicicleta (SEEB)

The bank crisis now hitting most of the world doesn’t seem to be affecting the sales of bike companies in Spain. The majority opinion in the business is that figures are level or slightly increasing compared to previous seasons. End users are spending money for leisure and cycling is one of the main beneficiaries. It seems that consumers are investing in sports leisure activities as a way of spending their free time and avoiding more costly pursuits.

Annual sales in Spain numbers are about one million units. In 2006 it looked like Spanish consumers were buying more bikes: the one million-unit barrier was broken, compared to 750,000 in 2003 and 2004. The increase does not seem to be related to sports models. Racing models enjoy healthy sales in Spain, but they are not increasing in popularity among final consumers.

Foldable bikes and city bikes

Sports bike sales have been quite steady for a long time. On the other hand, Spain is an almost virgin market in what comes to foldable bikes and city bikes. Moreover, the bike mobility philosophy, so far absent from this country that features perfect weather for bike commuting, is arriving and more and more bikes can be seen in the cities. City Halls are investing more resources in the creation of bike lanes. Pollution and dense traffic are among the main problems that politicians need to solve and bikes are a way of decreasing both.

Gumersport distributes Proflex in Spain. Gumer Olmo, the company’s general manager, confirms that the figures of the company are rising. “We are in the process of computerizing the pre-orders for the 2009 range, but so far we are looking at a + 45% increase over last year”, he says. When asked about the way he thinks business will evolve in the Spanish market, Olmo thinks that  “sales will be slightly smaller and the companies with no brand value will struggle to survive.

The distribution channels will stick to suppliers they can trust and that offer them a better margin. Good brands and good companies will survive and the business will grow for products related to the bike as a means of transport and a family leisure product”.

Rotor & Merida

Spanish bike components maker Rotor is another company that is not finding a reflection of the economic crisis in its results. Curro Nieto, marketing manager at this Madrid-based company thinks that “from our point of view, brands need to differ from competitors in order to succeed. We are working in that direction and our figures rose in January and post-summer. Spring was quite bad for us, though. We are getting really good feedback from the industry after the shows. It is true, though, that we are a small company and that our figures do not need to be huge to mean a good increase in our growth. In think that big manufacturers must have sold less than expected, but their goals are always really high”.

Merida SWE, another young company like Rotor, was established in Madrid with to offer better service to Merida’s markets in South Western Europe. Manuel Mendes, Marketing Manager at Merida Bikes SWE S.A., points out that: “Merida Bikes SWE S.A. was created in November 2006 in order to take care of the French, Portuguese and Spanish market. After a year and a half of pushing really hard, we can proudly say that we have consolidated our existing dealer network and we have achieved the goals we had planned for this first season. During 2008 we have been able to open new sales points in areas where our brand can still grow”.

Sources we have talked to do not feel this global crisis is having an impact on financial results in the bike business. It is true that the main sectors on the edge are real estate companies and banks. Like it or not, this last group has an important effect on every industry. Anything related to the banks will, sooner or later, affect the normal operation of companies, as almost all companies need money to grow or move their business forward.

"People are not forecasting like in previous seasons"

There is some fear about how long this crisis might last but this doesn’t seem to affect daily business with customers, although it is notable that dealers are less open to forecasting big orders, due to this uncertainty.
One of the big players in the Spanish industry is Macario Llorente.

His marketing manager, Eduardo Roldán, points out that “we are noticing that our growth is slowing down a little bit. We are used to growing easily year after year, and now things are a little bit calmer. The daily orders are staying more or less the same, but people are not forecasting like in previous seasons. Dealers do not want to run risks and they prefer to count cash in their bank account instead of having a lot of stock in their shops”.

No matter we talked to; small or big companies, there were no negative comments inside the industry about the uncertain and serious economic situation the country is going through. 


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