High fuel costs and a focus on premium products will spur the industry's recovery
Los Angeles, CA (PRWEB) April 08, 2013
The Bicycle Manufacturing industry has had trouble changing gears over the past five years: Industry revenue has only grown at a rate of 0.3% per year on average to $872.2 million from 2008 to 2013. The industry is highly influenced by the prosperity of US consumers, and industry firms suffer when their customers have little disposable income and are pessimistic about the future of the economy. As such, the recession caused steep declines in industry revenue because consumers held back on discretionary purchases. This trend yielded an industry-wide revenue decline of 5.0% in 2009, indicative of falling bicycle demand in the United States. “Cheap imports produced with low-cost labor have also been challenging the industry, so domestic producers have been responding by closing facilities or relocating facilities abroad to compete,” says IBISWorld industry analyst Nima Samadi. “Cannondale, one of the few remaining domestic bicycle manufacturers, ended production in the United States in 2010, moving production to a facility in Taiwan instead.” This move directly affected the total number of establishments operating in the United States, decreasing this number at a 1.3% average annual rate to 44 in the five years to 2013.
The Bicycle Manufacturing industry has a low level of market share concentration; Trek Bicycle Inc. is the only major industry player. The industry is composed of small, independent workshops and builders that may outsource aluminum extrusion or other materials shaping to machine shops or other contract facilities; they may also undertake the entire manufacturing process themselves, as does American Bicycle Group. IBISWorld estimates that the average operator has a relatively small staff and produces a small number of frames or completed bikes each year. “The industry's concentration level is not expected to change substantially during the next five years as some small-batch workshops close and other startups open in cities with strong cycling cultures,” adds Samadi.
Over the five years to 2018, the industry is expected to experience a slight resurgence by doubling down on creating high-quality products that consumers are willing to pay a premium for. In addition, although fuel prices have fallen slightly from recent record highs, oil availability is expected to remain a pressing issue. Higher fuel prices are expected to promote greater use of bicycles, as they incur no fuel costs. Additionally, environmental concerns, including global warming, will lead to increased cycling and investment in bicycle-related infrastructure. The creation of new dedicated bicycle lanes and an emphasis on bicycle traffic management are expected to make it easier for people to safely ride in congested areas and increase commuting by bike; greater accessibility will boost demand for bicycles. As a result of these trends, and despite an expected 0.2% fall in revenue over 2013, the industry is anticipated to grow in the five years to 2018. For more information, visit IBISWorld’s Bicycle Manufacturing in the US industry report page.
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IBISWorld industry Report Key Topics
This industry manufactures bicycles. These products are used for transportation, leisurely travel and competitive racing.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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