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Shimano suffers huge fall in sales, down a quarter in first months of 2024 amid continued bike industry troubles

Despite insisting "interest in bicycles remained high as a long-term trend", Shimano reported a drop in sales of 22.6 per cent in the first quarter of the year ...

Shimano has reported another significant fall in sales figures, with net sales down 22.6 per cent in the first quarter of 2024 amid predictions its annual sales in Europe could contract by more than £170 million this year.

The Q1 figures for the Japanese bicycle components giant show a challenging start to 2024, with net sales falling by almost a quarter compared with the same period last year, sliding to JP¥76,090 million (£397 million), while operating income dropped by more than half (52.7 per cent) to £55 million.

2023 Dauphine Shimano neutral service 52-36T - 1.jpeg

Consequently, Shimano's outlook for the entire year expects sales to fall to JP¥325,000 million (£1.7 billion) from JP¥364,700 million (£1.9 billion), Bike Europe reports, with the European market likely to be hit hardest, sales expected to drop from JP¥186,600 million (£969 million) to JP¥153,000 million (£797 million), a decrease of more than £170 million.

> Shimano patents hint at fully wireless groupsets

The communication around the figures remains consistent as Shimano repeated its message of previous financial reports by stating that "overall interest in bicycles remained high as a long-term trend".

Recognising the ongoing challenges in the cycling industry, the components manufacturer said: "On the other hand, supply and demand adjustments continued, and market inventories remained high globally."

It is not just cycling that has been hit, Shimano reporting that its other markets such as its fishing equipment sales, were also down, the company as a whole posting a decrease in net sales of 20.2 per cent compared with the same period in 2023, down to £524 million with an overall operating income of £70 million.

2022 Handsling A1R0evo Shimano Ultegra Di2 R8100 - crank.jpg

The German, Dutch and Belgian bike market was seen as strong, whereas other European countries are still said to be battling high inventories due to a cooling in customer confidence because of inflation and a challenging economic picture. Likewise, the North American market experienced a softening in demand coupled with high inventories.

A similar picture was painted for the Asian and Oceanian markets, as well as those of Central and South America, inflation and economic uncertainty blamed for impacting sales.

China is listed as the major exception to the global picture, a boom in interest resulting in more desirable inventory levels and higher sales.

Adding further concerning context, Shimano's low first quarter sales are in comparison to those of the same time period last year that were themselves down 17 per cent on 2022.

> Is now the best time ever to buy a bike? What cycling industry turbulence and deep discounting could mean for you

A similar 17.7 per cent decrease in sales was, in July, reported for the first half of 2023. Come the autumn and the headline-grabbing crankset recall was in full swing, Shimano recalling Hollowtech II models, including two generations of the popular Ultegra and Dura-Ace cranksets totalling 760,000 cranksets, and affecting over 2.8 million worldwide.

Investigating Shimano’s snapping cranksets Sept 2023

> Investigating Shimano's snapping cranksets: What happened, unanswered questions and an engineer's report

The seemingly never-ending cycle of negative news rolled on, Shimano saying the cycling market remains "weak" as it again reported bicycle component sales dropped by a quarter during the opening nine months of 2023.

Shortly after, the company was allegedly hit by a massive ransomware attack threatening to release confidential data, before an investigation suggested that workers at its Malaysian supplier were subjected to "slavery-like" exploitation.

The new year began with the news that Shimano's financial report for 2023 showed it had lost £93 million in sales from its crank inspection programme and total sales were down 30 per cent on previous year. However, it is worth pointing out that despite the financial blow, labelled in the accounts as "extraordinary losses", and further reduction in bicycle-related sales, Shimano still posted a £322 million profit in 2023.

Dan is the road.cc news editor and has spent the past four years writing stories and features, as well as (hopefully) keeping you entertained on the live blog. Having previously written about nearly every other sport under the sun for the Express, and the weird and wonderful world of non-league football for the Non-League Paper, Dan joined road.cc in 2020. Come the weekend you'll find him labouring up a hill, probably with a mouth full of jelly babies, or making a bonk-induced trip to a south of England petrol station... in search of more jelly babies.

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6 comments

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Fursty Ferret | 4 weeks ago
3 likes

I'd like to think that in addition to the very well exposed supply chain argument made by Patrick, the simply outrageous price of Shimano components coupled with the longevity issues and even the pettiness around Hammerhead showing shifting information on the Karoo, their business practices have turned around and bitten them in the arse.

Avatar
Patrick9-32 | 1 month ago
8 likes

2020/2021: Bike companies place large orders to attempt to fill pandemic orders which go unfulfilled due to massive lead times. Leaving many bike companies struggling to keep up with demand.

2022/2023: Bike companies try to cancel those orders as they are no longer needed due to shrinking demand and this is denied by shimano so they are forced to take large overstocks. Bike companies do not place more orders.

2024: Bike companies still have more shimano products than they need even though demand at consumer levels is stabilising, they do not order more shimano products. 

Avatar
Jimnm replied to Patrick9-32 | 1 month ago
4 likes

Perhaps they need to reduce prices dramatically and try to rely on turnover to make a profit. Bikes are more expensive than some motor vehicles.There's no justification for that, only corporate profiteering. Once you overprice the public vote with their feet and the demise of your business will soon follow. 

Avatar
Patrick9-32 replied to Jimnm | 4 weeks ago
1 like

Jimnm wrote:

Perhaps they need to reduce prices dramatically and try to rely on turnover to make a profit. Bikes are more expensive than some motor vehicles.There's no justification for that, only corporate profiteering. Once you overprice the public vote with their feet and the demise of your business will soon follow. 

Reducing prices dramatically on stock you have paid full price for means making a loss, margins in the bike industry are slim. You can't increase turnover numbers unless you have both the consumer demand and the supply from people like Shimano to make it happen, when there was enough consumer demand to sell more bikes bike brands couldn't get the stock to sell. 

Current demand for discounts from consumers is completely understandable in the current economby but it is also why we are seeing so many small brands going under over the last year and we will see a lot more in 2024 thanks to companies the size of Specialized who can afford to run 50% discounts pushing the prices down while costs remain high. 

If you have your eye on a bike from a small brand, either buy it now, or keep your eye out for a bankruptcy clearance sale...

 

Avatar
Patrick9-32 replied to Jimnm | 4 weeks ago
2 likes

Jimnm wrote:

Perhaps they need to reduce prices dramatically and try to rely on turnover to make a profit. Bikes are more expensive than some motor vehicles.There's no justification for that, only corporate profiteering. Once you overprice the public vote with their feet and the demise of your business will soon follow. 

*bursts back into the room hours after the conversation has moved on*

And another thing. How many bike brands are there? at least a hundred notable ones I would guess? If it was as simple as "just charge less money and you will make more money" why is nobody doing that and just destroying all of the other brands who are "profiteering" by selling an equivalent product for a lot less money?

Even the direct to consumer brands end up being close to the same price as the traditional bike shop brands. 

Bikes end up costing about the same amount from so many different brands because that's what it costs to pay your overheads, build the bikes, market, sell and support the customer, not because of some giant international conspiracy to make your hobby slightly more expensive. 

Avatar
Sriracha replied to Patrick9-32 | 1 month ago
0 likes

Shimano were castigated for not bringing on new factories to meet pandemic demand, thus gumming up the supply chain. Their argument at the time was that the demand would not last and they'd be left saddled with idle brand new factories. Seems they were right, although maybe it was a self-fulfilling prophesy.

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