Brace for Supply Chain Price Increases in MY22

As the bicycle and e-bike manufacturing industry readies to update pricing for MY22 by April 2021, expect significant price increases at almost every segment ranging from bike frames, bike components, packaging materials, labor, and shipping.

Since the start of the online 2021 Taipei Cycle trade show, the bike manufacturing industry has been under scrutiny for production capacity limitations and extraordinary lead times. Such is the case for other industries as well due to the impact COVID-19, with general shortages of raw materials and components needed for automobiles, semiconductors, appliances, and other consumer goods.

Production capacity limitations will not improve until the COVID-19 situation is entirely eliminated. Manufacturers are generally not interested, at this point of time, in investing more production capacity within Taiwan or China. Most have already invested in manufacturing facilities in Southeast Asia, namely Vietnam, Cambodia, Thailand, Malaysia, Philippines, and Indonesia. Due to COVID-19 however, production in Southeast Asia is lagging from shortage of management, skilled labor, and raw materials. Do not expect the bike manufacturing supply chain from Southeast Asia to reach optimal production levels until the pandemic is under control.

Under the current supply chain difficulties caused by COVID-19, it is not surprising that the bike manufacturing industry will push for general price increases. Due to extremely long lead times for components, most brands have already entered into formal orders for MY22 and advance forecasting for MY23 in knowledge that prices will need to be updated. For MY22 in particular, brands have seen prices for aluminum alloy bike frames have increased by 20%, chromoly steel bike frames by 15%, carbon fiber bike frames by 10%, general components by around 20%, cardboard stock and plastic materials by 10%, general overhead by 15%, and freight shipping costs by nearly 400%.

An additional factor which readily affects prices is currency exchange rates. Due to the general weakness and volatility of the US Dollar in the past four years, the exchange rates against the Taiwan New Dollar and Chinese Yuan Renminbi have caused final purchase pricing for bikes, ebikes, and bicycle components to increase dramatically.

Production delays are increasingly common now. Securing supplier order confirmations and capacity has become more difficult than ever. Moving forward, brands should prepare their MY22 and MY23 forecasting conservatively and to plan for increases in costs due to supply chain uncertainties. Keeping an eye out for new sourcing possibilities, better shipping rates, and ideal currency buy rates will be crucial to ensuring an advantage for the next two model years.