Mon, Jan 15, 2018 page16

• Giant, Merida revenues fall due to slow sales in China

  • By Kuo Chia-erh / Staff reporter
  • • 
    • 
    • 

  The nation’s two major bicycle makers, Giant Manufacturing Co Ltd (巨大機械) and Merida Industry Co (美利達), on Thursday posted annual declines in revenue for last year, due to slow sales in China.

  Giant, Taiwan’s largest bicycle manufacturer, reported that last year’s sales dropped 3.8 percent year-on-year to NT$54.83 billion (US$1.85 billion), while Merida’s revenue fell 2.08 percent to NT$22.35 billion.

  The two companies blamed the gloomy performance on falling revenue in China, despite a bike-sharing boom there.

  China’s bike-sharing market grew rapidly in the first half of last year, but the sector underwent consolidation in the second half, with small firms exiting the market one after another.

  While the bike-sharing business outlook remains positive, the market has seen decelerating growth, and is dominated by Mobike Technology Co (摩拜科技) and Ofo Inc (共享單車) in tier-one and tier-two cities in China.

  Against this backdrop, bicycle manufacturers might need to focus on operating and management costs, compared with an emphasis on volume in the past, Capital Securities Corp (群益證券) said in a note on Wednesday.

  After three years of double-digit declines in sales, China accounts for only 15 percent of Giant’s total sales, compared with a peak of 27 percent in 2014, Citigroup Global Markets Inc said in a note on Jan. 7.

  “Shared bikes have greatly eroded demand for commuter bicycles in China, while the demand for recreational bikes remains muted due to sluggish demand for recreational bikes,” Citigroup said.

  Giant said most Chinese commuters still prefer low-priced models, whereas the company’s major offerings are high-end products, such as road bikes and touring bikes, with higher average selling prices (ASPs).

  However, growing demand for electric bicycles in Europe offered a silver lining for Giant and Merida, as they have seen increased market penetration there.

  Giant declined to provide shipment figures for its electric bicycles in Europe, saying only that sales of e-bikes grew by nearly 40 percent in Europe during the first half of last year.

  Citigroup estimated that Giant’s high-end e-bike sales in Europe might have increased by up to 35 percent annually to about 80,000 units last year, with an ASP of above US$1,500 against a blended ASP of US$360 to US$370 for traditional bikes.

  “Total e-bike sales are estimated to account for 9 percent of Giant’s 2017 revenues and we forecast Giant’s high-end e-bike shipment will grow at [a] 30 percent-35 percent compound annual growth rate [in] 2016-19,” Citigroup said.

  Merida’s electric bicycle exports to Europe rose by 56 percent on an annual basis in the first three quarters of last year, with a total shipment of 65,000 units, the company said.

  Overall, global e-bike sales volume rose by 58.6 percent year-on-year in 2016 and rose by 31.29 percent annually from the first quarter to the third quarter of last year, Capital said.

  “Global e-bike sales are forecast to continue growing by 20 percent to 30 percent year-on-year in 2018,” Capital said.

  The strong growth momentum in electric bicycles is expected to lend support to local manufacturers in the coming years, Taiwan Bicycle Exporters’ Association (台灣自行車公會) secretary-general Gina Chang (張蕙娟) said last month, adding that technological thresholds for e-bikes are higher than those for traditional models.

  In the first 10 months of last year, Taiwan’s electric bicycle exports totaled US$196 million, up 70.83 percent from the US$115 million a year earlier, association data showed.
• Most Popular

  • 1

    Mbappe lifts Madrid past Osasuna in La Liga opener

  • 2

    Taiwan wins Little League world title

  • 3

    US eyeing TSMC stake, minister says

  • 4

    Life expectancy in Taiwan increases

  • 5

    Bayern dominate in Bundesliga opener