Download - SEM Bicycle Industry Growth Drivers Group 1
The Bicycle Industry And Its Growth Drivers- Indian vs. Global Industry
Submitted By:Tanvi Gambhir (F10055)Sonia Maria Scolt (F10111)Tanu George (F10117)Alix Gerbet (F10121)
ContentsCHAPTER 1: The Global Bicycle Industry..........................................................4
1.1 The Global Bicycle Market......................................................................5
1.2 Global Growth- History...........................................................................6
1.3 Major Global Players...............................................................................7
1.4 Global Bicycle Trends:............................................................................9
1.4 Global Growth Drivers:.........................................................................10
1.4.1 Increasing concern for environment...............................................11
1.4.2 Affordability and Economic Development......................................11
1.4.3 Innovation in the Bicycle Industry..................................................12
1.4.4 Government Initiatives and Promotional Events............................14
1.4.5 Rise in Gasoline Prices....................................................................14
1.5 Future Prospects: Global Bicycle Industry............................................17
CHAPTER 2: The Indian Context.....................................................................18
2.1 Indian Bicycle Industry- History............................................................18
2.2 Indian Bicycle Industry – Present..........................................................19
2.3 Major Indian Players.............................................................................20
2.4 Indian Industry Trends..........................................................................21
2.5 Indian Growth Drivers...........................................................................23
2.5.1 Demand in rural India and small towns..........................................24
2.5.2 Lucrative Children and Teenager segment....................................24
2.5.3 Government Schemes....................................................................25
2.5.4 Promotional Events........................................................................26
2.6 Challenges Faced by the Indian Bicycle Industry.................................27
2.7 Future Prospects- Indian Context.........................................................29
CHAPTER 1: The Global Bicycle Industry
A popular means of transportation in various areas of the world today, the
bicycle actually evolved from a little wooden horse with a fixed front wheel,
in France in the 1790's. This model was improved in Germany in 1817, by
Baron Karl von Drais. The model for the modern bike was the "safety
bicycle", invented in England in the early 1880's, with a chain, sprocket
driving rear wheel and equal sized wheels. The years that followed saw the
further development of the bicycle with pneumatic tires, two and three
speed hub gears, and the derailleur gears, which was the last major
innovation of bicycle design until the 1970's. Bicycles today offer more than
just the simple pleasure of cycling. From fitness and trekking to racing,
bicycles today cover a much broader spectrum of activities than in the days
of their predecessors.
The industry’s high point, in terms of unit sales, was the so-called "bike
boom" in the 1970s. The boom ended suddenly when the industry reached a
rapid saturation point and did not have breadth of product choices to sustain
sales levels.
Today, the industry has a much stronger foundation, with an estimated 2,000
companies involved in manufacturing and distributing cycling products to
retailers, and approximately 150 different bicycle brand names to choose
from. A wider variety of product is being sold to a wider range of consumers
than ever before. Since the "boom," no part of the bicycle has remained
unchanged, with fundamental improvements in design and materials being
the norm throughout the industry.
Today’s quality bicycles are more comfortable than ever before, the
components more function-specific and reliable, and new and exciting
features are introduced regularly. This allows professional retailers many
options to match the right bike to each consumer — male or female, big or
little, frequent or infrequent rider, and status-conscious or not.
As an example of the actual diversity of bicycle sold, please find below
the details of the bicycle sales in US from 2005-2010.
1.1 The Global Bicycle Market
The Global Bicycles Market is expected to exceed US$77.7 billion by 2015
(according to a New Report by Global Industry Analysts, Inc.) Moreover, the
global market has registered a 4% growth in 2010. According to the NPD
group, the global sales totalled 137 billion bicycles in 2010.
1.2 Global Growth- History
The global production of bikes increased dramatically beginning in the early
1970s. After nearly doubling from 1950 to about 1970, worldwide bike
production grew by a factor of six from just over 20 million units in 1970 to
130 million units by 2007. The following graph depicts the same:
1.3 Major Global Players
Although bicycles are produced in dozens of countries, the top five
producers- China, India, the European Union, Taiwan, and Japan - are
responsible for 87% of global production.
China: China alone had some 58 percent of the global market in 2004. The following year, 2005, was a record year for the production of bicycles in China with a 16% increase in the production of bicycles and E-Bikes to a total of 80,430,000 units produced, of which about 65% were exported. The People’s Republic of China makes two out of every three units made globally. That is a huge 66%. Moreover, 86% of the bicycles sold in the US are imports from China.
China alone accounts for a large share of the growth in the world bicycle
market. From 1949-1979 during the first three decades of Communist rule,
people in China aspired to own three durable goods: a wristwatch, a bicycle,
and a sewing machine. According to the website Chinability, by 1981, there
were 135.9 bicycles per 100 households in urban areas. Though even that
level of bike ownership left ample room for growing demand with a market
penetration of 45 percent on the individual level for a family of three. In rural
areas a year earlier in 1980, there were still only 36.9 bicycles per 100
households. As a clear sign of the pace of China’s rapid economic growth, it
took just four more years until 1984 for bike ownership in rural China to
reach a level of one bicycle per household. In addition to economic
development enabling higher rates of market penetration, rising per capita
incomes also give up-and-coming Chinese the means and motivation to
replace old bikes with better, new models. One result of Chinese residents’
move up the economic ladder and bicycle food chain has been strong growth
in the world market for so-called e-bikes.
Asia Pacific: Asia-Pacific dominates the bicycles market worldwide. The region
represents the largest as well as fastest growing market for bicycles in the
world, exhibiting a Compound Annual Growth Rate (CARG) of more than
6.0%.
Europe: The European bicycles market is supported by several city
governments that laid out bike-friendly roads to encourage cycling. With
growing demand, many large cities in Europe including Barcelona and Paris
initiated programs such as bicycle loan facility.
United States: The US represents other prominent market for bicycles, where
they are primarily used for recreational purposes. The U.S. bicycle industry
generated $6 billion in sales in 2010. The size of the industry has remained
remarkably stable since 2003, with sales between $5.8 billion and $6.1
billion each year
Adult bicycles represent the largest product group in the
global bicycles market. Sales of adult bicycles are projected to reach
US$29.2 billion in 2012. In terms of growth, sports bicycles represent the
fastest growing product group, registering a CAGR of more than 6.0% over
the analysis period.
Please find bellow a sum up of the world players in bicycle market in
2007.
1.4 Global Bicycle Trends:
Bicycles provide three distinct advantages that include price, performance
and environment protection. Bicycles are considered as environment-friendly
products and the latest electric-power bicycles are recognized worldwide as
a ‘green transport vehicle.’ The bicycle industry moved forward in terms of
product quality, production automation and techniques by introducing,
absorbing and comprehending sophisticated equipment and technologies
available globally.
However, the role of bicycle that was once deemed as an indispensable item
has come down drastically during the past decades because of significant
improvements in living standards of people across the world. In recent times,
bicycles have become less important in day-to-day life, potentially leading to
fading out of most of the demand thereby resulting in major transformation
in the industry. But compared to other products of the past that faded out of
consumer’s life, bicycles continues to exist in the market with newer
concept, getting new development arena in a different era.
1.4 Global Growth Drivers:
The global economic recession had an adverse impact on the bicycle
revenues worldwide. The market, nevertheless, is expected to recover in
2012 and post substantial growth in ensuing years, driven primarily by
1) Eco-friendly characteristics
2) Innovation in Bicycle Industry.
3) Surging popularity of cycling as a leisure activity and increased
affordability.
4) Governments support across the world is also aiding bicycle industry
through various bicycle promotion projects and policies: For example,
in India, an event called Cycle India 2010 gave a big boost to this
sector. It was a week-long charity event that witnessed worldwide
participation. The event started on January 3, 2010 from Mysore and
ended on January 10, 2010 in Hyderabad.
5) Finally, sharp increase in gasoline prices is also compelling people
to adopt cycling for commuting short distances in cities.
Each of these factors has been dealt with, in detail, in the following section
1.4.1 Increasing concern for environment
At least part of the increase in world bike production is due to an increasing
concern for the environment. Since 1970, considerable progress has been
made in advancing climate change science and convincing public opinion
that global warming and environmental degradation are relevant problems
for most of the world’s people. And, bicycles, owing to their eco-friendly
nature, have been promoted heavily as alternatives tackling the existing
environmental issues.
1.4.2 Affordability and Economic Development
Rather than an Eco Indicator of efforts at environmental conservation, the
dramatic rise in the global demand for bicycles is as much or more a function
and sign of the rapid economic development that has occurred around the
world since 1970. At a tiny fraction of the price of cars, bicycles become
affordable to much larger portions of the populations of developing countries
long before cars do. As of 2009, private car ownership in China remained at
just 26 million units in a country of 1.3 billion people with a long-standing
one-child policy.
The timing of the sharp increase and divergence in bike and car production
aligns well with a particularly productive time in the world’s economic
development. Over the period 1970-2009, the average increase in the
Human Development Index (HDI), which correlates closely with per capita
income levels, for countries around the world was a healthy 44 percent.
1.4.3 Innovation in the Bicycle Industry
In addition to economic development, new trends in popular culture and
innovations in the bike industry are other important drivers of the growth in
world bike production that seem to have limited environmental connections
in most cases.
Schwinn Sting-Ray – The introduction of the Schwinn Sting-Ray and
other so-called “wheelie bikes” with large front wheels and banana-
style seats kicked off a boom period in the popularity of biking in the
U.S. during the 1960s.
European-style derailleur-equipped “Sport Bikes” – The availability
of lightweight, smooth-shifting European-style road bikes also helped
fuel America’s renewed interest in biking and “Bike Boom” of the latter
60’s and early 70’s.
BMX dirt bikes – In the 1970s in the U.S., BMX dirt bikes and racing
became popular as teenagers sought to imitate professional motocross
racers popularized by the movie On Any Sunday. The BMX movement
lasted a decade and accounted for one-third of all bikes sold in the U.S.
in 1982.
Mountain bikes and extreme adventure sports – During the
1970s in California, Joe Breeze, Gary Fisher, Charlie Keller, and Tom
Ritchey were the leading figures in the development of modern
mountain bikes. In 1979, Fisher and Keller started the Mountain Bikes
Company using Ritchey frames. By a year later in 1980, they were
awash in sales of their new high-end, off-road bikes. In 1983, Fisher
founded Gary Fisher Mountain Bikes and the National Off-Road Bicycle
Association. In 1993, Trek Bicycle Corporation acquired Fisher
mountain bikes. (To learn more about the history of mountain biking,
check out the documentary Klunkerz: A Film About Mountain Bikes.
Homemade creations called “Klunkers” that adventurous types used to
bomb down rough mountain fire roads were the precursors to modern
mountain bikes.)
Hybrid bikes – Hybrid bicycles are a more recent iteration that
combine features of road bikes and mountain bikes. Hybrid bikes are
purpose-built to suit the needs of commuters, shoppers, and casual
bike riders. They are designed to be more comfortable and rider-
friendly than their more specialized mountain and road bike cousins.
Lance Armstrong and the Tour de France – The colorful stories
around Lance Armstrong’s domination of the world’s most famous bike
race inspired a whole new generation of Lance followers and weekend
bike warriors. After recovering from cancer, Armstrong went on to win
the grueling 21-day, 2,000-plus mile tour six consecutive years from
1999 to 2005.
1.4.4 Government Initiatives and Promotional Events
In recent years, many world cities have been promoting biking as a way to
help alleviate troublesome traffic congestion, air pollution, and other
environmental ills related to increasing urbanization. From 2006 to 2010, the
city of Amsterdam in the Netherlands, which boasts some of the world’s
highest cycling rates, planned to invest more than $160 million in bicycle
paths, parking, and safety. In Copenhagen, Denmark, where 36 percent of
commuters biked to work by 2006, the city planned to invest $200 million in
bike facilities between 2006 and 2024. In Freiburg, Germany, 70 percent of
local trips are made by bike or public transit or on foot thanks to regular,
annual investments in bicycling infrastructure dating back to 1976. In
Australia, the state of Victoria, which is home to Melbourne, the country’s
second largest city, amended planning laws to require all new large buildings
to provide bike parking and other facilities such as lockers and showers. As
of 2008, the 50 largest U.S. cities had plans in place to double their bicycle
and pedestrian routes.
1.4.5 Rise in Gasoline Prices
The rise in gasoline and fuel prices has triggered the sudden surge in
demand for e-bikes. E-bikes use a battery-powered electric motor to assist
riders with pedaling. They can typically go as fast as 15 to 20 miles per hour
(24 to 32 km/h) or more. Depending on the country, e-bikes are often
classified as bicycles and not subject to the level of regulation or laws that
can restrict the ownership and operation of cars and other motor vehicles.
Electric bicycles, or “e-bikes,” have accounted for a large portion of more
recent growth in world bike demand and output, with production doubling
from 2004 to 21 million units in 2007
Electric bikes require less work on the part of riders and make it easier to
negotiate inclines, tolerate biking in hot weather, and, generally, bike under
other more strenuous conditions. They also make biking more accessible to
many countries’ growing populations of aging residents. According to Hu
Guang, Deputy General Manager of leading Chinese e-bike manufacturer,
Xinri (which means “new day” in Chinese), “Motorcycles are too dangerous,
cars are too expensive, public transportation is too crowded, and pedal bikes
leave you too tired. So people buy e-bikes.” Hopefully, some buyers also
have other motivations, but the environment is still notably absent from this
explanation.
In 2008, China bought 21 million e-bikes, compared with 9.4 million autos. In
2009, China had about four times as many e-bikes on the road as cars. As of
early 2010, there were estimated to be a total of about 120 million e-bikes
on China’s streets and bike paths. In 2009, about 60 percent of Taiwanese
Giant Manufacturing’s 300,000 e-bike shipments went to mainland China.
In Germany, sales of e-bikes nearly tripled in 2007. Analysts forecasted 2010
sales of roughly one million e-bikes in Europe and 300,000 e-bikes in the
U.S., about doubling the number sold in the U.S. in 2009. E-bike sales have
also been growing rapidly in the Netherlands and India.
Like other bicycles, e-bikes are an attractive alternative to cars in more ways
than one. In addition to carrying far lower price tags and facilitating mobility
in crowded urban areas, they also cost far less to operate and keep on the
road.
It’s an unlikely coincidence that the divergence of bike and car production
occurred just about the time of the 1972-73 Arab oil embargo that led to a
dramatic and sustained increase in gas prices. Several sources point to a
direct, eye-opening correlation between energy costs and motorized vehicle
usage. The chart below from Jim Puplava’s Captain’s Log shows the interesting
relationship between vehicle miles traveled and oil prices.
The oil crisis also led to a pronounced reduction in car and engine sizes in
the U.S.
1.5 Future Prospects: Global Bicycle Industry
The outlook for the future in bicycles is very positive, though stability is the
story of the recent past. The bicycle industry is a seasonal business that
can be impacted by unusual weather, as well as an industry that relies on
discretionary spending impacted by economic conditions. Industry sales of
bicycles seem to be stable as well as accessories and service. Moreover, as
explained, trends related to the green movement, environmental
sustainability, the need to address health problems related to inactivity, and
higher gas prices also bode well for the future of human-powered
transportation.
CHAPTER 2: The Indian Context
2.1 Indian Bicycle Industry- History
Bicycle was first seen in India in the year 1890. Import of cycles, however,
started only in 1905 and continued for more than 50 years. Complete ban on
imports was announced by the Government in July, 1953, but cycle kept on
simmering in the country till 1961. In 1890, the selling price of an imported
bicycle was around Rs. 45/-; in 1917, during the First World War, the price
jumped to Rs. 500/- but dropped considerably, month by month and came
down to Rs. 35/- or so (U. K. makes) to Rs. 15/- or so (Japanese models).
It would be interesting to note that in 1919, five persons in Punjab imported
cycles and used them on The Mall, Simla. These included one Bishop, two
military men and two contractors. Under special permission of the Governor,
they were allowed to use cycles on 'The Mall' only for one hour a day. They
imported B.S.A. Cross Bar Cycle from U.K. and that destined one hour would
be watched by hundreds of people every day. Later, a firm was formed under
the name of Singh & Co. with shops on Railway Road, Jalandhar and Bazaar
Vakillan, Hoshiarpur, which imported bicycles in the year 1930 onwards.
2.2 Indian Bicycle Industry – Present
With an annual turnover of more than 12 million bicycles, the bicycle
industry is one of the established industries in India. The country's position is
that of the second largest bicycle manufacturer in the world, next only to
China. India has seen a tremendous increase in the number of bicycle
manufacturers and bicycle exporters in the recent past. Today, the Indian
bicycle manufacturing and bicycle spares industry is well accepted and is
also widely recognized for its quality standards in international markets.
Most bicycle components, spares and bicycle
accessories in India, except for free wheels and single
piece bicycle hubs, are manufactured by the Small
Scale Sector (SSIs), while the large scale units are
permitted to manufacture bicycle frames, chains and
rims for captive consumption. Manufacture and
export of complete bicycles fall within the purview of
the Organized Sector.
The size of the Indian bicycle industry stands at US
$1.2 billion. The number of units (finished bicycles
including all segments) produced is around 12 million,
according to an industry source. Of this, the number
of units exported annually is about two to three
million, which points to a huge demand in the
domestic market. According to figures from the
Engineering Exports Promotion Council, in 2007-08
India exported bicycles and components worth US
$185.42 million.
The Indian bicycle industry is currently in the midst of
making endeavors for enhanced and increased
bicycle exports since the scope for export of Indian
manufactured bicycles in the international market is
significant.
2.3 Major Indian Players
The Indian bicycle market comprises four major
players—Hero, TI, Avon, and Atlas—who also export
to the Middle East, Africa, the US and Latin America.
Most of the big players started operations between
Some Quick Facts-
India is the second largest manufacturer of bicycles in the world with 12 million units annually.
In value term that is US $1.2 billion
Global bicycle production is around 130 million units. Thus, India produces a little over 9% of the world’s bicycles.
Hero Cycles is the largest bicycle manufacturer in the world.
Major exports from India are to the Middle East, Africa, the US, and Latin America.
A bicycle dealer in Patna, Bihar, sells around 10,000 bicycles in a month.
the mid-1940s to mid-1950s. The oldest and the largest one, Hero Cycles
from the stables of the Hero Group, started as early as 1944, but stabilized
its production only after 1956. It has a 48% market share in the Indian
bicycle industry. An annual sales volume of over 4.8 million has made it the
largest bicycle manufacturer in the world. Hero Cycles rolls out around
18,500 units every day.
Hero Cycles TI Cycles Avon Cycles Atlas CyclesStarted 1944 1949 1948 1951Brand(s) Hero BSA,
HerculesAvon, Buke, Apsara
Atlas
Production(million units)
4.9 2.8 1.7 1.2
2.4 Indian Industry Trends
Driven by the perennial demand in rural areas, favorable government
schemes and a booming children’s segment, the bicycle industry is on a roll.
Summer vacation in schools and colleges across India is also another boom
time for bicycle retailers. For instance, in a big city like Delhi, a retailer, on
an average, sells 250 bicycles during the months of April, May and June.
These are mostly in the children and teenager segment that for long has
been a money-spinner for bicycle manufacturers. The sales figure in this
segment could even touch the 500 mark, depending upon various schemes
and discounts to lure customers. Add to this the standard bicycles, women’s
bicycles, mountain terrain bicycles (MTBs), and so on, and you have a
market large enough to be considered a huge opportunity.
Within the bicycle industry, the standard model—which is recognized as the
one usually driven by the labor class —dominates with a share of around
50%. This segment still has a huge potential for growth as this basic model is
hugely popular. This is because this model is still used
for commuting and transporting goods.
On the other hand, in urban areas there has been a
shift of preference from standard models to other
types, with urban consumers using a bicycle more as a
means of fitness and recreation. “Today people,
especially urban adults, are becoming more and more
aware of the consequences of global warming, health
issues, pollution, and so on. As a result, it is observed
that they are taking to greener modes of
transportation like bicycles and electric scooters.
Hence, there has been a considerable shift in the
perception of bicycles from a mode of commuting to a
recreation/personal mobility solution.
New Age Markets are also evolving in the country.
Some popular bicycles that have caught the interest of
this market are Electric bicycles, Fitness machines like
exercycles and Innovative sports bicycles.
An exercycle is an exercise bicycle with saddle, pedals
and some form of handle bars arranged as on a
bicycle, but is used as an exercise equipment rather
than transportation. It is basically used for general
fitness, cardiovascular exercise, during trainings for
cycle events etc. Major bicycle manufacturers like Hero
Cycles, TI Cycles and Avon also manufacture a fitness
range. Electric bicycles (e-bikes) are also catching on
in the cities. Avon is actively involved in its production.
“The spares market is estimated to be larger than the cycles. With the growth in specials category with gears, the demand for accessories will grow and will be an opportunity area in future.”
-Raghuram, Senior Vice President, Bicycles and Fitness, TI Cycles, the bicycle manufacturing arm of the Murugappa Group.
Accessories like bicycle helmets, knee guards, elbow guards, sippers, shoes,
tires, bells, fancy baskets and carriers for women’s bicycles are also
increasingly being sought after.
2.5 Indian Growth Drivers
Some of the growth drivers for the Indian Bicycle Industry are:
Huge demand in rural India and small towns
Children’s segment
Government schemes for school-going poor children
Gaining popularity of Events that boost bicycle usage in India
Increasing health/fitness consciousness in urban areas
Requirements for zero-emission solutions for polluted traffic routes
India becoming a low-cost manufacturing hub
Higher density of suppliers and dealers
2.5.1 Demand in rural India and small towns
The demand in rural India and small towns is one of the biggest growth
drivers for the bicycle industry. To put this into figures: a distributor/supplier
of TI Cycles’ BSA and Hercules brand in Patna supplies more than 10,000
bicycles to all the nearby village areas, including the city on a monthly basis.
“With no roads in place, no affordability, the bicycle is the most preferred
option for commuting. One will hardly see motorcycles, scooters on the lanes
here,” says Vikas Kumar Binjrajka of VV Marketing, a bicycle dealer in the
Muzaffarpur town in Bihar. “Maximum demand is for standard bicycles here
as they are the most trusted models. An average price of every unit sold
here is around Rs 2,500. On the other hand, an average life of a bicycle is
three years. Hence, the demand for its spare parts is even more than the
bicycle itself,” he adds.
The rural market is far from saturation. It is believed that the replacement
market may generate annual sales of three million bicycles in the near
future.
2.5.2 Lucrative Children and Teenager segment
In the urban market, the children and teenager segment is growing very fast.
This segment has shown a healthy growth and is likely to continue growing
in the future too. The kids’ and teenagers’ segment is witnessing a robust
growth. The average price of a bicycle sold in the urban market is around Rs
4,000. Prices depend on suspension, gears, accessories, etc, which all kids
want in their bicycles.
2.5.3 Government Schemes
Government schemes are also helping in driving growth. Most state
governments have special schemes that involve gifting bicycles to people,
mostly children, in the economically weaker sections of the society. Such is
the impact on this industry that the government is one of the biggest
customers for bicycle manufacturers. State governments invite tenders for
supply of bicycles and the big players get to make the most of it.
The central and state governments are believed to have ordered around 1.5
million bicycles in 2008 to hand them over to poor children under various
social welfare schemes. An industry source estimates that the figure could
go up to 2.5 million units in 2009. States like Maharashtra, Madhya Pradesh,
Bihar and Jharkhand are among those suppling bicycles free of charge to
poor school-going children.
There are more such examples. According to the Pudducherry government,
Due to long distance and shortage of transport facilities, poor students are in
great need of bicycles to go to schools. By getting cycles, students need not
walk more and hence energy is saved and more time is available to
concentrate on studies and the students can also reach the school in time.
By using the cycles, more work may be attended [to] in a shorter time. Thus,
a new scheme was formulated to distribute free cycles. In a year
approximately 10,500 cycles (each cycle of Rs 1,385) are supplied to the
boys and girls studying in IX standard in government and government-aided
schools.
The Assam government has made a provision for Rs 24 crore in 2008-09 for
providing bicycles to about one lakh girl students living below the poverty
line. The Haryana government has supplied bicycles to certain schools under
the Sarv Shiksha Abhiyan scheme. The bicycles are to be provided free of
charge to those girl students who have to walk more than 2 km to school.
The Tamil Nadu government also runs schemes to encourage higher
education among the Scheduled Castes/Scheduled Tribes, Scheduled Caste
converted Christians studying in classes XI and XII in government and
government-aided schools, under which free bicycles are distributed to
students.
Despite the slowdown, the bicycle industry is booming, thanks to
government tenders for more bicycles. Even the second-tier suppliers and
smaller vendors supplying to the big four are full with orders.
2.5.4 Promotional Events
Bicycle events also boost sales for the Industry. Several events are being
organized across the country to increase awareness about the use of
bicycles. For example, every Republic Day, an annual cycle rally is organized
in Pune by the Pune Cantonment Block Congress Sports Committee in
association with the Ekta Mitr Mandal, a self-help group. It is a 22-lap cycle
race with people participating from all over the world.
In Chandigarh an annual cycle day is observed by holding a cycle rally. This
is organized by the Chandigarh Tourism Department in association with the
Society for Tourism and Entertainment Promotion.
A proposed event called Cycle India 2010 is also likely
to give a big boost to this sector. This will be a week-
long charity event that will witness worldwide
participation. The event will start on January 3, 2010
from Mysore and will end on January 10, 2010 in
Hyderabad.
Another growth driver is environmental awareness.
This is driving many in urban areas to choose bicycles
as a mode of transportation in the neighborhood. The
desire to adopt healthy lifestyles has also helped in
bolstering this market.
2.6 Challenges Faced by the Indian Bicycle Industry
The Indian bicycle industry is also facing some
challenges. The biggest dampener is the demand
for motor bikes. Changing socio-economic
patterns, increasing purchasing power along
with the available financing options, the middle
class, lower middle class, and also to some extent the
poor class has shifted their mode of commuting and
transport to motor bikes in urban areas. Even school
and college-goers prefer riding their own motor bikes
and scooters over a bicycle. The use of motor bikes
is increasing in the rural areas too with better
finance facilities and availability of these motor
bikes.
In big cities, the increasing number of
automobiles on congested road has made it
Ludhiana is the hub for bicycle manufacturing in India.
“More than 25,000 cycles per day are manufactured in Ludhiana alone. The city is home to over 1,500 factories making bicycles and components, providing employment to 0.25 million people and today it is a jewel in the crown of India’s industrial cities.”
-All India Cycle Manufacturers’ Association.
riskier and more difficult to ride bicycles. With no option of separate
cycling lanes, bicycle users in the urban areas face tremendous risks while
commuting. Also, it becomes easier and much more comfortable to ride a
motor bike than a bicycle in big cities where destinations are further away
than in villages.
People from villages and small towns are moving to metros and other cities
for work and this factor has translated in the long term to more people
switching over from using bicycles to motor bikes.
Sources in the industry say that shortage of funds is another problem in
this sector. Funding is not available to players who wish to expand their
production units. And even if it is available, it is at a very high cost.
Other difficulties at the global level include the competition from China,
besides rising steel and rubber prices.
To summarize, below mentioned are the major challenges the industry faces,
today:
Increasing demand/popularity of motor bikes
Increase in migration of people to cities
Long commutes to work in big cities
No dedicated cycling tracks in cities
High risk involved while commuting by bicycle
Low awareness of cycling as a sport in India
Lack of funds for expansion of infrastructural facilities
High costs involved in setting up better quality manufacturing units
Competition from China and other low-cost manufacturing destinations
Rising prices of raw material such as steel and rubber
2.7 Future Prospects- Indian Context
There are a lot of cycling enthusiasts in the country who are into serious
cycling. There has been a gap in the availability of performance bicycles in
the country for quite some time. TI Cycles has filled this gap by introducing
high-end bicycles from leading international bike manufacturers Bianchi and
Cannondale. Cannondale, a US-based sports bicycle manufacturer, has also
made an entry into the Indian market.
The super-luxury segment is now opening up for Indian customers. The
launch of the Rs. 2 Lakh bicycle by TI Cycles in partnership with Bianchi, an
Italian bicycle manufacturer, is a case in point. TI Cycles estimates the size
of this “super-premium” segment will help it rope in sales of over 5,000 units
annually. These high-end bicycles will range between Rs.17000 and Rs.2
Lakh per unit. Hi-tech engineering and use of expensive materials like
titanium and carbon fiber that absorb vibration, for a smooth ride, make
these bicycles expensive. The high-end accessories market is also up for
grabs. These include helmets, apparel and shoes.
It is expected that in times to come the bicycle industry is set to grow faster.
The replacement and the spare parts market will become a major growth
area. The accessories segment is also in for good times. However, demand in
rural areas is likely to stay stable, yet good enough to support the existing
growth. In urban areas, the leisure market is yet to be tapped fully and there
is huge potential here. The children and teenager segment is quite lucrative
as well.
The All India Cycle Manufacturers’ Association wants the government to
frame policies that popularize the use of cycles in cities and towns, keeping
in view the overcrowding of roads, increasing pollution due to auto vehicles
and increasing cost of imports – Congested and central areas in the cities
and towns should be declared as cycle areas and entry of vehicles should be
lawfully banned.