Merida increasing average selling price of its bicycles

Merida Industry Co (美利達), the nation's No. 2 bicycle maker, is aiming to increase its products' average selling price (ASP) to above US$400 this year, company executives said yesterday. Last year, the ASP was US$383.

The increase is attributable to the production of more higher-end bikes, William Jeng (鄭文祥), the company's senior vice president of marketing affairs, told reporters during a facility tour.

The company's ASP has been steadily improving since it branched into the brand name business in 1987, he said, adding that the ASP was US$306 in 2004 and just US$243 in the year before that.

"We will not boost production quantity as it will drive our ASP down due to stiff competition," he said.

By sponsoring major international cycling competitions, Merida's bikes have gained attention among cyclists and bicycle magazines. This has bolstered its brand recognition among consumers, who are willing to pay for higher-priced Merida bikes, he said.

In view of the rising threat from Chinese rivals, who produce much cheaper bikes in massive volumes, Taiwanese makers, led by Giant Inc (巨大機械), have been attempting to boost their ASP by differentiating and upgrading their product lines.

The two-wheelers made by Taiwanese companies averaged US$199.6 per unit last year, a huge jump from only US$109 in 2000, according to statistics from the Taiwan Bicycle Exporters' Association (台灣區自行車公會).

This pushed total bicycle exports to US$918 million last year -- up from US$821 million five years ago -- though local makers only exported 4.6 million bikes last year, down from 7.53 million in 2000, the data showed.

By contrast, figures from the Chinese Bicycle Association (中國自行車協會) reveal that bicycle production there reached 53.57 million units last year, up nearly 40 percent from 32.86 million in 2000. But the ASP was a mere US$32.65 per unit last year.

However, to avoid missing out on the expanding Chinese cycling market, Merida is planning to set up a second production facility there, in addition to its current Shenzhen's plant, which is able to roll out 800,000 units a year.

"We are still looking for the right location to produce electric bikes, as 7 million of them sold in China last year," said Merida's president Michael Tseng (曾崧柱).

The company hopes sales for this year will increase by 5 percent to 10 percent from last year's US$253 million.

Sales during the first six months of this year remained flat, however, strong growth is expected in the second half due to seasonal factors, Jeng said.

Europe continues to be Merida's largest market, contributing 45 percent of total revenue, while the US commands 40 percent. Japan, Australia and others make up the remainder, he said.