As demand soars, bicycles industry cruises into high-growth lane

The coronavirus pandemic and the resultant lockdowns have signalled a turnaround for the bicycle industry. Better still, demand is unlikely to fall even in a post-pandemic scenario, as industry players believe that such behavioural and cultural shifts tend to last, coupled with the fact that the factors that led to the rise in demand are expected to persist.

“There has been a 100 per cent year-on-year increase in retail demand for bicycles across tier-1 cities in India, while demand has increased by 50 per cent in tier-2 cities and tier-3 cities from April 2020 onwards. The increased demand is expected to settle down at 25-50 per cent for all times to come due to the higher need for fitness, continued social distancing and a pro-cycling culture,” KB Thakur, Secretary-General, All-India Cycle Manufacturers’ Association (AICMA), told BuisnessLine.

“It has never ever happened that there is so much demand. Our bicycle shops are empty now, because whatever bicycles are coming in are getting booked 15-20 days in advance. This has never happened in the last 30-40 years,” said Thakur.

“People will remember 2020 as the ‘cycling year’”, said Aman Pathak, Sr. General Manager - Marketing, Avon Cycles Ltd. “In India, we are seeing such a demand for bicycles for the first time in the last 40-50 years,” he affirmed. Between May and now, demand for bicycles has been increasing by 20-25 per cent every month, he said.

The need for social distancing, dwindling preference for public transport amid health concerns, rising affinity towards personal mobility — with cycles becoming the most economic option for short to medium distance travelling requirements — as well as cycling emerging as a safe fitness option, are the primary reasons for the surge in demand for bicycles, said Pankaj M Munjal, Chairman and Managing Director, HMC, a Hero Motors Company. The long, sedentary hours spent working from home also prompted people to turn to cycling in a bid to seek some reprieve, he said.

Gyms also continue to remain closed amid the pandemic, further fuelling the preference for cycling as a fitness option, said industry players. Schools remaining shut have also aided demand for bicycles since cycling remains one of the few outdoor activities that ensures social distancing for kids, they said.

This trend of booming demand for bicycles has been perceptible not just in India, but across the globe.

But, will the increased demand seen by bicycles peter off once the lockdowns are fully lifted? Once the lockdowns are fully lifted in a post-pandemic scenario, some of these factors may no longer hold true, coupled with the fact that private vehicles and public transportation will resume operations.

“We believe that demand may peak at some point in the future, but we are not expecting a major drop or blow as you term it,” said Munjal. “We are expecting the shift in consumer behaviour towards cycling to stay… It can be evidently construed therefore, that a behavioural shift has come about among a large number of people vis-a-vis cycling. Yes, we expect this momentum to continue even after the pandemic because evidence suggests that such behavioural and cultural shifts tend to stay, once achieved,” he said.

“We strongly believe that this is the beginning of a turnaround in the bicycle industry, and we will see a larger presence of bicycles on our roads in the near future, which will pave the way for greater mass consumption of different types of bicycles,” Munjal added.

The coronavirus-induced lockdown has also led people to seriously introspect on the importance of health and the environment. With pollution levels in cities falling drastically during this time, people are now focusing on reducing the carbon footprint, explained Thakur.

More
A nation getting on the cycle to ride out a pandemic

Moreover, while demand has picked up for almost all categories of bicycles, it is the premium cycles that have witnessed exponential growth, said industry players. Since geared and premium bicycles, which fall under the broad term ‘fancy bicycles’, are more attuned to the fitness requirements of customers, the demand for this segment has been going up so much that a ₹25,000-bicycle is no longer considered premium, unlike before, said Pathak.

Hero Cycles has witnessed a 100 per cent jump in demand for bicycles above v10,000 and electric cycles, along with a 50 per cent jump in demand for traditional cycles in the ₹5,000-10,000 range, said Munjal. This demand has been most notable in metros and top tier cities where the urban affluent consumers have been taking to cycling increasingly, he added.

“The demand for mid- to high-end bicycles is likely to remain for some time even when the gyms open because of the health-scare factor, coupled with the fact that schools are also likely to remain shut for a while,” said Rajeev Singh, partner and automotive sector leader at Deloitte.

“The demand, thanks to the fitness freaks moving away from gyms to taking up bicycling, or because of kids taking to cycling, elastic (in nature). It will not go back to pre-Covid time numbers, neither will it continue at the same point that it is at today. But it will definitely create some significant shift, going ahead, in those categories of bicycles. There will be a permanent shift that will happen because of these changing habits. Because of the consumer habits that have changed in these months, at least some of these people will continue to do bicycling even in the post pandemic era,” explained Singh.

Meanwhile, against this increasing and unexpected demand, the bicycle companies have not been able to even cater to the normal demand — demand pertaining to pre-Covid times — due to factors like shortage of labour (due to migrant labour not having resumed work fully), shortage of raw materials and restrictions within factories on account of the Covid-19 norms, Thakur pointed out. There is a 15-30-day waiting period for supplies, he added.

The bicycle industry has been able to fulfil only 70 per cent of the orders globally due to the unprecedented increase in demand, said Pathak.

Hence, bicycle sales numbers for the April-August FY21 period will not be higher than the corresponding period of FY20, despite the exponential increase in demand.

Going ahead, most of the big bicycle manufacturers in the country are gearing up for large orders because the industry currently has no stock on its hands, said Singh, pointing out that there are waiting periods for cycles. “Even if the consumer demand dips, production will continue because you need to fulfil the value chain, as it is completely empty now following the sudden spike in demand. That’s why production is likely to continue for some time in the future,” said Singh.

The bicycle industry has also been in talks with the government seeking support for sector in the form of infrastructure and cycling tracks to help sustain this growth trend, said Pathak.

All stakeholders, including the Government, are trying to promote cycling, affirmed Thakur. For instance, an advisory issued by the Ministry of Housing and Urban Affairs to all the States and Union Territories of India, dated June 2, 2020, has strongly encouraged the adoption of non-motorised transport (NMT). It cited examples of initiatives taken to promote NMT in cities around the world, which includes pop-up bike lanes and sidewalks, provision of parking and charging equipment and financing options to make cycling more accessible.

“As most of the urban trips are clocked in under five kilometres, NMT offers the perfect opportunity to implement in this Covid-19 crisis as it entails low cost, (demands) less human resource, (and is) easy and quick to implement, scalable and environment-friendly,” it further stated.