Mon, Mar 06, 2000 page19

• Some like to pedal, some ride

  POWER PEDALER The trend is yet to kick off, but Taiwan's largest bicycle maker has already entered the market with a new wave of powered push bikes

  • By David Frazier / CONTRIBUTING REPORTER FOR TAIPEI TIMES
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  The idea began in 1996 at the Chiang Kai-shek Memorial Airport, as King Liu, president of the nation's largest bicycle manufacturer, watched the conveyor sidewalks ferry travellers to their destination.

  "Some like to walk, and some like to ride," Liu observed.

  So, too, was the case with bicyclists: Some like to pedal, and some like to ride.

  The realization led Liu to conclude that there just might be something to the "pedelec" trend, which was just starting to gain speed in the bicycle industry.

  The term, which was actually coined in 1998, refers to bicycles that combine a bicyclist's physical exertion along with supplemental propulsion -- from an electric source -- thus allowing riders to exercise their legs or just take it easy.

  Japan's Yamaha introduced the world's first pedelec in 1994. Last year, Liu's firm, Giant Manufacturing Company with NT$11.8 billion in sales, came out with its own pedelec, which it calls "Lafree."

  According to company officials, the "Lafree" is the result of a two year research and development program that Liu initiated.

  But while old-fashioned, pedal-it-yourself bicycles remain Giant's core business, the company does see big opportunities in the electric bike business.

  In 1997, Japan bought roughly 200,000 electric bicycles. Future sales worldwide are expected to take off with "the increasing global demand for environmentally friendly products," Giant officials said.

  In addition, because Taiwan is one of the top exporters of bicycles, the nation is well positioned to supply the world with pedelecs should bicyclists want to relax their legs and just take it easy.

  Practical solution

  "People in big cities don't necessarily have long commutes," said Tsai Hsue-liang, a spokesperson at Taiwanese bicycle maker Merida. "But road space and parking is limited, and pollution is a problem."

  This reality explains in part why automakers such as Mercedes-Benz, BMW and Honda have gotten in on the action, each developing their own versions of electric bicycles.

  Last March, EV Global Motors, a new company formed by one-time Chrysler head Lee Iacocca, rolled out its first electric two-wheeler in the US. Ford Motor Company followed with its new "Think" brand in January.

  "Car companies are realizing that dense urban areas have new transportation needs," Tsai said.

  Merida, the nation's second-largest bicycle manufacturer after Giant, was the first of Taiwan's 20 or so electric bike makers to produce pedelecs on a significant scale. In 1996, the company unveiled its PC500 model.

  But accustomed to original equipment manufacturing (OEM)sales, which account for about 70 percent of its business, Merida quickly found that marketing a self-branded electric bike on a global scale was a monumental task.

  To date, Merida has managed to sell roughly 3,000 bikes per year, well short of its 10,000-units-per year goal which, according to one company source, must be achieved in order for production to be profitable.

  Still, while electric bike sales have yet to take off, Merida does expect it to be a lucrative business somewhere down the road.

  "Because electric bicycles are more expensive products, they also offer the benefit of higher margins -- around 20 to 25 percent more than a regular bike," Tsai said.

  Having produced at least 16 million bicycles last year in plants on both sides of the Taiwan Strait, the nation's bicycle industry is certainly capable of producing high quality pedelecs on a massive scale.

  Taiwan manufacturers make bikes for everyone from Wal-Mart to elite companies such as Trek, GT, and Cannondale, usually through OEM or original design manufacturing (ODM) agreements.

  While not adventurously innovative, Giant's "Lafree" combines many of the tried and true features of its competitors and predecessors.

  The bicycle, which sells for US$999 abroad and roughly NT$19,000 at home, is powered by a 12 volt lead acid battery. That gives it a range of about 45km.

  A fixed magnet DC motor provides 400 watts of assistance at speeds up to 30km per hour; the "Lafree" can also take on grades as steep as 15 degrees with minimal leg work from its rider.

  The bike's main distinguishing feature, however, is a throttle that allows riders to control just how much of an electric boost they want. Few other bikes offer this kind of control, but Giant included the feature in keeping with Liu's "some like to walk, some like to ride" philosophy.

  Tracy Tsai, of Giant's marketing division, said the power assisted bike was targeted toward riders between 30 and 55, as elderly riders tend to prefer vehicles that provide 100 percent propulsion.

  Like Merida, however, Tsai concedes that Giant's sales haven't been as high as hoped.

  Despite attendance at international bike shows where Lafree was consistently acclaimed, Giant managed to sell just 6,000 units in the bike's first nine months. The figure was half the company's initial goal of 12,000.

  "There were two main problems," Tsai said: "The massive scope of the marketing, and shifting consumer mentality over to a new product."

  But design may also have been part of the problem. One US trade magazine said "Lafree's unusual-looking frame and its styling may not be in step with American tastes -- and the demo bike's screaming yellow color received a resounding thumbs-down."

  Auto sector help

  But to rev up idle sales, Giant is turning to none other than the automotive sector for help.

  The company worked out a deal with Renault late last year. Then in January, Ford said Giant would manufacturer the US car company's "Think" line of electric bicycles.

  Under agreements with Giant, both Renault and Ford will handle marketing and sales of Giant's electric bikes under their respective brand names. Both have also modified the vehicle's design to match the preferences of their home markets.

  "Car companies are so big," Tsai said of the auto alliances. "They have sales outlets all over the world, larger advertising budgets and product building capabilities."

  This year, sales are forecast to hit 30,000, which Giant spokesperson Irene Chen called "a conservative estimate."

  "If sales go smoothly for Ford and sales go smoothly for Renault, it could be as much as 50,000," Chen said.

  But even if the prediction proves correct, pedelec sales would account for just 3 percent to 4 percent of Giant's revenues this year. However, Chen notes that electric bikes are still relatively new and that Giant "is very optimistic about continued future growth."

  Giant also has other relationships that could eventually blossom into OEM deals and further drive sales.

  Three years ago, the company invested US$1 million in Iacocca's EV Global project. Giant remains an investor, even though the two companies are now competitors.

  Also three years ago, Giant hooked up with Toyota for a promotion in the UK. Under the alliance, Giant furnished new Toyota buyers with traditional mountain bikes.

  While these deals could potentially add up to many happy riders in the future, the happiest one to date has been Giant's president, Liu.

  "He's been riding one to work every day for the last six months," Tsai said of her boss. "He's always talking about how great it is, and how he's never felt healthier in his whole life."

  It wasn't known, however, whether Liu liked to pedal, or if he liked to ride.
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