2023 was a rough year for bicycles overall, and the general consensus was ebike sales fell ~10% from 2022. Looking at import data for January of each of the proceeding years, we see 2024 fall ~7.5%. This makes sense, as imports are a trailing indicator of sales performance. When brands sell more, they tend to increase their purchasing, and subsequently their imports. Since the bicycle market is experiencing the ups and downs of the COVID-19 bull whip, the imports we see in 2024 are likely to represent the sentiment of brands 3-6 months prior, when sales outlook was pretty dismal.
Looking forward, we expect imports to fall below 2023 in H1, with a potential right sizing in H2, depending on sales performance and holiday sales expectations. Looking at unit share of ebikes to traditional bikes, we can see the data continue to approach a stable point. With falling imports to start the year and hesitancy by brands, we expect 2024 to pull downward on the long running trend.
Imports saw a dramatic turn around in the second half of 2023. When we looked at imports of small electric scooters in August, 2023 was down ~21% compared to 2022 through the same period. This suggested a similar curve as faced by bicycles. However, imports in advance of the holiday shopping season pulled up total imports to the third consecutive year of ~13% growth.
Above we see how 2020 had abnormal growth compared to the proceeding years. Although 2023 YoY growth fell to 10%, it still stayed within the prior two years general trend.
Below we see the monthly sales by year, with 2023 highlighted. We see here how imports climbed strongly in August, September, and October, likely in anticipation of holiday demand. November continued this trend before falling off precipitously in December.
The upward trend of imports highlights the significant importance of holiday sales for the scooter industry, and how limited the affect of early season imports has on total year imports.
Finally, we see January imports in early 2024 have continued to grow, with a slight increase in the pace of growth. We’ll continue to monitor imports to see if 2024 presents another year of import growth.
Overall, shipping manifests indicated an increase in imports for both traditional and electric bikes in November. This resulted in a strong rebound from the October lows. However, the trend for H2 2023 is declining imports in traditional bikes, and a flattening import curve for electric. Heavy discounting during the early holiday season indicates there continues to be inventory pressure on brands.
The chart above shows shipping manifest data and compares data from the US ITC Import Duties records for Adult bicycles. Although certainly not perfect, for 2023, the two sources are fairly well correlated. This supports some use of shipping manifest data to provide another indicator for business activity in the bicycle market. With that said, import data should be considered the source of truth, as it relies on reporting by brands, with legal responsibility, rather than using heuristics alone. If the HTS code system is ever expanded to included electric bicycles, we will include that data on this cart to show how it compares to the rest.
The share of electric bikes mentioned in shipping manifests continues to be strong, pulling up the power series trend line above 20%. As we finish off the 2023 holiday season and enter the historically quiet Q1 winter, it will be interesting to see how imports shift, particularly when comparing traditional to electric bikes.
October saw declines in both electric and traditional bikes in US shipping manifest data. This is a normal seasonal decline that lines up with holiday imports. Any new imports in October and November will need to be rushed through supply chains, so most brands aim to have imports arrive at ports in September.
However, as seen below, electric bike imports have seen less of an import bump in 2023 compared to 2022. This is likely due to headwinds in 2023 for general bicycles, which has affected electric bikes in tern. The downtrend in imports we are seeing in Q4 is likely the result ordering decisions made in Q1/Q2
Even with the declines in electric bike imports, the substantial declines in traditional imports has allowed the ratio of electric to traditional imports to maintain above 20%. As a reminder, this figure provides a ceiling for the maximum ratio of imports of electric to traditional bikes. It is likely lower due to many small children’s bikes being imported in bulk packages, without internal quantities disclosed in shipping manifests.
The chart above shows monthly imports of ebikes comparing the last two years. We can se there is a seasonal increase in units, which declines as we move into Q4. This is likely to be in anticipation of holiday sales, as it may take a bit of time for the products to work their way through the supply chain within the united states.
A note on specific import quantities
When comparing our dataset to data from the USITC tarrif data, there are notable differences. 2023 H1 data matches well at ~1.4m units, but 2022 H1 data is divergent quite a bit. As reported in Bicycle Retailer and Industry News, average bike prices jumped 60% in H1 2023, indicating that the bikes imported last year were of lower value (~$140/bike). Many of these bikes are likely to be smaller children’s bikes, which are easier to group together into bulk packages. Although we can expect that most brands will report accurate bike quantities to government authorities, they may only report bulk grouping quantities on shipping manifests.
Rebounding Traditional Bikes
Last month we reported on a precipitous drop in traditional bike imports due to a major importer pulling back. This number has rebounded slightly to similar levels seen in January. However, this drop combined with the gains seen in electric bikes have pushed the monthly ratio to 27% electric bikes. Traditional bike imports YTD appear to be up slightly at 1.3% in our data set
In this series, we will explore what insights can be gained by reviewing public company disclosures and results. We’ll focus on the indicators that provide the most insight into the broader market. Naturally, these documents are written with the intent of communicating an individual company’s performance and there is a base level of bias to be aware of. However, as will be seen, we can still find quality indicators in the data.
Introduction
KMC (Kuei Meng) International Inc. is the self claimed largest chain manufacturer in the world. In this post, we will explore their investor disclosures, which can be found on their website. Their primary business line is bicycle chains, which accounts ~75% of their revenue, with Auto, Motorcycle, and Garage Door units accounting for the remainder.
Within bicycles, they sell both through OEM channels for new complete bicycles, as well as aftermarket replacement chains. These two distribution channels represent different places in the market. OEM sales are much farther up the supply chain, as they are a production input to complete bicycle manufacturing. As such, this business unit is likely reflective of lagging demand from bicycle brands. We say lagging, because orders will slow from bicycle brands when they see demand from their consumers falling, relative to their inventory levels, resulting a slowing of orders to OEM bicycle assemblers, and in turn a slowing of input demand. On the other hand, aftermarket sales are a more direct measure of end consumer demand. This division sells both direct to consumer, and through bicycle retailers.
Bike Sharing
From 2017 through 2022, KMC tracked sales into OEM bike sharing partnerships. This was during the aggressive boom times of bike sharing expansion throughout the world. Many of us in the industry are aware how this story played out with bicycle graveyards of discarded bike-share bikes showing up around the world. Large capital investments pushed supply up substantially, while downstream obstacles, such as competition and local regulations slowed efficient utilization. As a result, many of the aggressive players in the market have pulled back, leaving a more stable and established landscape for this channel.
As seen in the above chart, bike-share was a significant source of demand for KMC for four years. However, in line with the general fervor surrounding the bike share boom, this appears to be more representative of a short term supply push, rather than a long term sales channel. KMC, being the largest manufacturer of chains is likely to be a bellwether for the bike share segment. Does this falling supply indicate that bike share has failed in general? We don’t think so. We see this chart as demonstrating that the wasteful oversupply of has subsided, and this market channel can resume stable growth.
Internal Inventory
The chart above shows quarterly inventory snapshots since 2019, when KMC first started including the data in their quarterly reports. In 2022, they only reported inventory as a year end number, so we assigned that amount to all quarters in that year.
It is interesting to note that the overall inventory is pretty stable given the substantial inventory swings in US wholesale inventory throughout the pandemic. This may be a reflection of the quality of KMC’s management, supply flexibility, or may hide some product mix challenges due to its aggregate nature.
At Bicycle Market Research, we have tools to infer inventory and sales data from some individual web pages. Using this proprietary technology, we took a snapshot of kmcchain.us, which implies roughly 680,000 units and ~$2.8m in US inventory if assuming keystone margins at landed cost. This gives us a reasonable idea of their US aftermarket relative to the global reach of KMC overall, at roughly 8% of current inventory holdings. This business is smaller than OEM, but has higher gross margins for KMC as their quarterly reports have indicated.
Ebike Premium Chains
KMC has published reports on High End Ebike chains for nearly a decade now, which gives us a unique view on the global growth of the ebike market. We should note here that hub driven ebikes do not benefit from a premium chain, as their torque is not translated through the chain. In stead, all of their torque goes straight into the wheel and tires. However, mid-drive motors, which are prevalent in many higher end ebikes, do benefit from added chain performance. As such, the following charts are indicative of the global mid-drive ebike market.
The dramatic chart above shows a substantial slowdown in these premium ebike specific chains. Although most of the bicycle industry is bullish on ebike growth globally, it may be that oversupply of premium ebikes has led to cut backs in orders from brands. In addition, the pandemic induced purchasing by bike shops may have left the aftermarket channel similarly saturated with product.
As we can see from the following chart, although premium ebike chain sales contribute significantly to KMC’s overall sales, they are not perfectly coupled. The pandemic induced purchases from KMC started in early 2020, while the most significant growth in premium ebike chain shipments did not take off until 2022.
In our opinion, we expect KMC overall quarterly revenue to reach a local minimum in the coming quarters and subsequently stabilize in 2024 in line with a market recovery predicted by the People for Bikes S&P Global quarterly report. In addition, we expect high end ebike chain shipments to continue trending downward, with a lagging recovery by one quarter to return to the longer term growth trajectory seen prior to 2022.
August import data showed Electric bikes remaining flat at -1% over July, while the average month over month variation since 2019 was 7.6%, and a standard deviation of 20%. Those figures are simply to point out that a small fluctuation in the fat of 1% is in itself unusual. This is further punctuated by the dramatic drop off in traditional bicycles where we are seeing a drop of 49.95% over July. Naturally, this required some investigation. I double checked there was not an issue with the data export, then started looking for which brands may be most highly correlated with this drop off.
These three brands topped the charts by volume, with Huffy by far leading the way. Of course, there are a lot of other brands moving, but they net out to nearly 0 compared to the shift seen from Huffy. Dynacraft showed up only in July, then dropped off. There are some heuristic improvements we can make to fine tune the model in order to identify brands more specifically. However, this data still serves as a valuable indicator of movements in the US bicycle market. An additional interesting trend seen when finding this data is from the three largest brands by retail value, Giant, Trek, and Specialized.
It is important to note the scale that we are comparing, where huffy imported 100,000+ bikes in a month, these three are showing much lower, at less than 5,000. Again, the specific number is not precise, due to the nature of the method used for gathering the data. Clearly, however, Specialized has had many more imports though Q2, while trek has either flown under the radar, or imported very little this year. NOTE: Electra does not show up in the data as a sub brand of Trek.
Electric Bike ratio
Due to the drop in imports of traditional bikes, the ratio of ebikes jumped, but still tracks at a rolling average of 20% of unit imports. The trend of 50,000 units per month has held pretty stable, and is the same rate of imports in 2022. The stability of these imports may reflect a general bullishness on the ebike category.
With our research into electric bicycles, we regularly come across brands who also produce other micro-mobility devices. Specifically, our interest is piqued by electric scooters, which are as close to an electric bike as these devices get. Furthermore, these consumers may overlap and data on scooters may represent an adjacent indicator to keep on our radar.
Similar to the electric vs. traditional import data we publish, the following data is pulled from shipping manifests and has been cleaned within reason to remove mopeds, which are sometimes referred to as scooters. This first chart shows the first 7 months of each year in blue, and the whole year in red. There are naturally two outliers:
Early 2020 data was heavily impacted by the uncertainty driven by the COVID-19 Pandemic, hence it’s substantial reduction.
For 2023, we currently only have data for the first 7 months. However, the trend indicates, we should expect a down year relative to 2022, which is similar to what we are seeing in electric bikes.
This next chart shows how imports varied throughout the year over the past four years. Here we can see some more detail on the 2020 drop to near zero imports and a spike in November. Similarly interesting is how the imports of these units fall in the holidays. It may be that retailers are expected to already be stocked with the product by this point in the year. 2023 appears lower than the past couple of years, but not dramatically so, reflecting that these products are likely still popular for long term use. If we can draw parallels to the ebike market, there may be excess supply in the US, pushing down new imports.
July saw shipping manifest data for both traditional and electric bikes increase. The larger increase in traditional bikes is reflected in a decreased share of ebike imports at 18%, though still in line with the annual trend of approximately 20%. Also of note is that both categories of bikes hit their peak import level of the year. This makes sense in a historical context as it typically coincides with peak bicycle sales a retail.
Month
Electric
Traditional
Electric Import Share
Jan 2023
50,560
179,678
28.1%
Feb 2023
46,132
205,907
22.4%
Mar 2023
35,999
195,368
18.4%
Apr 2023
37,656
216,028
17.4%
May 2023
31,613
272,576
11.6%
Jun 2023
52,733
253,823
20.8%
Jul 2023
56,053
311,869
18.0%
Shipping Manifest Import Data by Month 2023
This data falls in line with the annualized information presented by Steve Frothingham in Bicycle Retailer and Industry News. The article is full of interesting information and insights. The data used for that report is more precise than the shipping manifest data we present here, but almost entirely misses electric bikes, due to the way they are categorized.
A recent webinar hosted by the NBDA had Bob Margevicius, Executive Vice President of Specialized Bicycle Components, on to explain some of the supply context. In the webinar, Bob referenced how the product we are receiving now into the US were ordered upwards of 12 months ago. Since then lead times have plummeted, but it will take some time before we will see a normalization of supply. He pegs the inventory in the US at ~14 months worth of sales.
June shipping manifest data reverses some of the shifts seen in May, with increased Ebike imports and slightly declined traditional imports. Nonetheless, traditional bike imports continue to be at elevated levels, putting strain on a market struggling with sell through constraints. For those paying attention to wholesale inventories reported by People for Bikes, and publicized by Bicycle Retailer, this pain will be little surprise.
As we can see from the following chart, the ratio of Ebike to traditional bicycles on shipping manifests appear to be converging on 20%. We will likely continue to see fluctuations in both the absolute quantity of imports and the ratio of Ebikes as the industry struggles to work through the inventory challenges currently faced throughout the US.
