Brazil 2011: Growth Levels Less than Expected

Sales & Trends

Reports from the Brazilian industry organization Abraciclo indicate that the market volume for bicycles in Brazil is in decline. Last year Abraciclo expected a volume of 5.7 million units for 2010 and a growth of at least

Brazil 2011: Growth Levels Less than Expected

Last year Abraciclo expected a volume of 5.7 million units for 2010 and a growth of at least 300,000 bicycles in 2011 and 2012. This positive forecast had to be downgraded in the face of declining sales.

The Bicycle Market in Brazil

Market volume Import Export
2005 5,300,000 n.a. n.a.
2006 5,000,000 49,000 26,000
2007 5,400,000 91,000 21,000
2008 5,500,000 191,000 16,000
2009 5,300,000 190,000 10,000
2010 5,200,000 255,000 5,000
2011 5,000,000 450,000* 0,0

* Estimates
Source Abraciclo

The Brazilian bicycle market has been showing signs of stagnation since 2009. In that year total market volume still measured 5.3 million units. But projected sales increases did not become a reality. In fact the market started to stabilize and even to decrease at that time.

For 2010 Abraciclo reported a small decline to 5.2 million and for this year the forecast is another decline by 3.8% to 5 milllion. The industry organization has not yet announced a forecast for next year.

The main problem for the Brazilian bicycle industry is not the stagnation in sales volumes. These fluctuations are not big enough to cause serious problems for them, as Brazil is still by far the third largest bicycle producing country in the world following super-producers such as China and India.

Number four in this ranking – Taiwan, doesn’t even come close to Brazil when taking in numbers. As the third largest producer in the world, Brazil is often called the main hub for bicycles outside Asia. However, Brazil is not a real hub, as the largest portion (in fact 99 is meant for the local market and not even exported to neighbouring countries on the continent. Brazil is a stand alone super-producer and it has been like that for years.

Export volumes have been negligible making the local producers dependent on their home market completely. In 2006 Brazil still exported 26,000 bicycles. This year the export volume will stop at 0. Brazil’s major threat is the combination of a low export volume and a rapidly expanding import from its main competitor China.

As in other markets, the Chinese are claiming market share with low cost imports and they have been very successful in Brazil. Imports expanded from 49,000 units in 2006 to an estimated 450,000 bicycles in 2011.

Will anti dumping duties save the industry?

Last September, Brazil announced plans to raise its import duty from 20% to 35% for bicycles assembled in China, Taiwan and Vietnam. The anti-dumping duties for the import of P&A from these three countries will range from 14% to 20%. The impact of smuggling will have ceased, as these anti-dumping rates apply to imports in all Mercosul (Southern Common Market) members (Argentina, Brazil, Paraguay and Uruguay) and associate members (Bolivia, Chile, Colombia, Ecuador, Peru and Venezuela).

According to Eduardo Musa, president of the country’s biggest bike maker Caloi and chairman of the industry organization Abraciclo, the import duty increase is caused by the huge influx of bicycles into the country, where the economy is growing quickly.

Bicycle Production in Brazil

2006 4,980,000
2007 5,330,000
2008 5,325,000
2009 5,120,000
2010 4,950,000
2011 4,550,000

* Estimates
Source Abraciclo

“Our economy is booming at an annual growth rate of over 7%”, said Musa. “The bike market is gaining advantage (from) the new economic situation. We see a shift in bicycle sales from mid and higher end models. Also sports bikes are gaining popularity as the country is looking forward to organizing the Olympic Games in 2016. This comes with major investment in sports facilities and the promotion of cycling and sports in general.”

To improve the competiveness of the Brazilian bicycle industry, Abraciclo has proposed a new policy for the industrial sector. In this plan Abraciclo states that the market faces serious problems with regard to unfair competition for the bicycle industry. Abraciclo further notes that the problems begin with a loss of competitiveness in the domestic market.

Like many other countries, Brazil has a relatively high cost structure compared with Asian countries, while existing mechanisms of control for the certification of components as well as special import regimes have a low efficiency. According to Abraciclo the bicycle industry is faced with harmful consequences such as the tendency to reduce local production of bicycles and components and outsource these to China.

As well, the industry organization notes an increase in companies, micro and small businesses, who import partially-assembled bicycles from Asian countries. To avoid a complete decline of technical know how and the loss of productivity, Abraciclo wants to strengthen the national supply chain and develop an industrial policy for the sector. The main target of this policy should be, according to Abraciclo, the creation of jobs, the stimulation of cycling, reducing production costs, revitalizing export, and more investments in technology and know how.

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