“Weak demand” in Europe and US sees Giant’s profits fall by 49%, as Merida’s profits drop by 26%

“Weak demand” for entry and mid-level road bikes in Europe and the United States has been citied as Giant and Merida, two of Taiwan’s top three bicycle manufacturers, reported significant slumps in their pre-tax profits in recent months.

Giant Group, which in December last year provoked consternation throughout the bike industry by postponing payments to its suppliers amidst concerns over falling demand and rising inventory levels, reported a pre-tax profit of TW$1.51 billion (£38.2 million) for the third quarter of 2023, a drop of 49 percent compared to the same period in 2022, while toral revenue and net profit also fell by 25 and 45 percent, respectively.

Despite sky-rocketing sales in China, which have risen by 70 percent in 2023, a lag in demand for entry and mid-level products in the European and US markets prompted a 12.4 percent sales drop, and a fall in net profit of 45 percent, between January and September – compared to the 14 percent growth in sales Giant experienced during the first three quarters last year, despite facing an in increase in the cost of raw materials, logistics, and labour.

> Giant postpones payments to suppliers due to falling demand, rising inventory levels, and market “headwinds”

“The weak demand from the US and Europe markets on the entry to mid-level products and the high inventories within the distribution network resulted in the decline in sales,” Giant, the world’s largest bicycle manufacturer, said in a statement issued on the Taiwan Stock Exchange.

“This year inventory reductions in both the US and Europe markets were slower than expected which affected sales performance for Giant’s OB sales in both the US and Europe markets for the first three quarters.”

> Shimano bike component sales fall by 18% as company cites “weak” demand for products

The company also says it has experienced a “slowdown in consumer demand” for e-bike products, which have made up almost a third of all sales so far this year, though it continues to predict long-term growth in the market, with success in China “compensating” for the slump in Europe and the US.

“Short term market outlook, the bicycle industry would continue to face challenges with inventory reduction as well as the business risks arise from the global economy,” Giant said.

“However, demand for performance level products in the US and Europe remain strong and the cycling trend in China will continue to support sales growth.”

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Meanwhile, Taiwan’s second-largest bicycle manufacturer Merida reported sales of TW$22.53 billion (£570 million) during the first three quarters of 2023, down 14.6 percent compared to the same period last year, while pre-tax profit fell by 25.5 percent.

The reports from Taiwan continue what has been a difficult year for the global bike industry, with sales and profits falling across the board and several distributors shutting up shop, culminating in Wiggle Chain Reaction’s shock collapse into administration last month, following the withdrawal of funding from its parent company.