The Bicycle Industry And Its Growth Drivers- Indian vs. Global Industry

Submitted By:Tanvi Gambhir (F10055)Sonia Maria Scolt (F10111)Tanu George (F10117)Alix Gerbet (F10121)

ContentsCHAPTER 1: The Global Bicycle Industry..........................................................4

1.1 The Global Bicycle Market......................................................................5

1.2 Global Growth- History...........................................................................6

1.3 Major Global Players...............................................................................7

1.4 Global Bicycle Trends:............................................................................9

1.4 Global Growth Drivers:.........................................................................10

1.4.1 Increasing concern for environment...............................................11

1.4.2 Affordability and Economic Development......................................11

1.4.3 Innovation in the Bicycle Industry..................................................12

1.4.4 Government Initiatives and Promotional Events............................14

1.4.5 Rise in Gasoline Prices....................................................................14

1.5 Future Prospects: Global Bicycle Industry............................................17

CHAPTER 2: The Indian Context.....................................................................18

2.1 Indian Bicycle Industry- History............................................................18

2.2 Indian Bicycle Industry – Present..........................................................19

2.3 Major Indian Players.............................................................................20

2.4 Indian Industry Trends..........................................................................21

2.5 Indian Growth Drivers...........................................................................23

2.5.1 Demand in rural India and small towns..........................................24

2.5.2 Lucrative Children and Teenager segment....................................24

2.5.3 Government Schemes....................................................................25

2.5.4 Promotional Events........................................................................26

2.6 Challenges Faced by the Indian Bicycle Industry.................................27

2.7 Future Prospects- Indian Context.........................................................29

CHAPTER 1: The Global Bicycle Industry

A popular means of transportation in various areas of the world today, the

bicycle actually evolved from a little wooden horse with a fixed front wheel,

in France in the 1790's. This model was improved in Germany in 1817, by

Baron Karl von Drais. The model for the modern bike was the "safety

bicycle", invented in England in the early 1880's, with a chain, sprocket

driving rear wheel and equal sized wheels. The years that followed saw the

further development of the bicycle with pneumatic tires, two and three

speed hub gears, and the derailleur gears, which was the last major

innovation of bicycle design until the 1970's. Bicycles today offer more than

just the simple pleasure of cycling. From fitness and trekking to racing,

bicycles today cover a much broader spectrum of activities than in the days

of their predecessors.

The industry’s high point, in terms of unit sales, was the so-called "bike

boom" in the 1970s. The boom ended suddenly when the industry reached a

rapid saturation point and did not have breadth of product choices to sustain

sales levels.

Today, the industry has a much stronger foundation, with an estimated 2,000

companies involved in manufacturing and distributing cycling products to

retailers, and approximately 150 different bicycle brand names to choose

from. A wider variety of product is being sold to a wider range of consumers

than ever before. Since the "boom," no part of the bicycle has remained

unchanged, with fundamental improvements in design and materials being

the norm throughout the industry.

Today’s quality bicycles are more comfortable than ever before, the

components more function-specific and reliable, and new and exciting

features are introduced regularly. This allows professional retailers many

options to match the right bike to each consumer — male or female, big or

little, frequent or infrequent rider, and status-conscious or not.

As an example of the actual diversity of bicycle sold, please find below

the details of the bicycle sales in US from 2005-2010.

1.1 The Global Bicycle Market

The Global Bicycles Market is expected to exceed US$77.7 billion by 2015

(according to a New Report by Global Industry Analysts, Inc.) Moreover, the

global market has registered a 4% growth in 2010. According to the NPD

group, the global sales totalled 137 billion bicycles in 2010.

1.2 Global Growth- History

The global production of bikes increased dramatically beginning in the early

1970s. After nearly doubling from 1950 to about 1970, worldwide bike

production grew by a factor of six from just over 20 million units in 1970 to

130 million units by 2007. The following graph depicts the same:

1.3 Major Global Players

Although bicycles are produced in dozens of countries, the top five

producers- China, India, the European Union, Taiwan, and Japan - are

responsible for 87% of global production.

China: China alone had some 58 percent of the global market in 2004. The following year, 2005, was a record year for the production of bicycles in China with a 16% increase in the production of bicycles and E-Bikes to a total of 80,430,000 units produced, of which about 65% were exported. The People’s Republic of China makes two out of every three units made globally. That is a huge 66%. Moreover, 86% of the bicycles sold in the US are imports from China.

China alone accounts for a large share of the growth in the world bicycle

market. From 1949-1979 during the first three decades of Communist rule,

people in China aspired to own three durable goods: a wristwatch, a bicycle,

and a sewing machine. According to the website Chinability, by 1981, there

were 135.9 bicycles per 100 households in urban areas. Though even that

level of bike ownership left ample room for growing demand with a market

penetration of 45 percent on the individual level for a family of three. In rural

areas a year earlier in 1980, there were still only 36.9 bicycles per 100

households. As a clear sign of the pace of China’s rapid economic growth, it

took just four more years until 1984 for bike ownership in rural China to

reach a level of one bicycle per household. In addition to economic

development enabling higher rates of market penetration, rising per capita

incomes also give up-and-coming Chinese the means and motivation to

replace old bikes with better, new models. One result of Chinese residents’

move up the economic ladder and bicycle food chain has been strong growth

in the world market for so-called e-bikes.

Asia Pacific: Asia-Pacific dominates the bicycles market worldwide. The region

represents the largest as well as fastest growing market for bicycles in the

world, exhibiting a Compound Annual Growth Rate (CARG) of more than

6.0%.

Europe: The European bicycles market is supported by several city

governments that laid out bike-friendly roads to encourage cycling. With

growing demand, many large cities in Europe including Barcelona and Paris

initiated programs such as bicycle loan facility.

United States: The US represents other prominent market for bicycles, where

they are primarily used for recreational purposes. The U.S. bicycle industry

generated $6 billion in sales in 2010. The size of the industry has remained

remarkably stable since 2003, with sales between $5.8 billion and $6.1

billion each year

Adult bicycles represent the largest product group in the

global bicycles market. Sales of adult bicycles are projected to reach

US$29.2 billion in 2012. In terms of growth, sports bicycles represent the

fastest growing product group, registering a CAGR of more than 6.0% over

the analysis period.

Please find bellow a sum up of the world players in bicycle market in

2007.

1.4 Global Bicycle Trends:

Bicycles provide three distinct advantages that include price, performance

and environment protection. Bicycles are considered as environment-friendly

products and the latest electric-power bicycles are recognized worldwide as

a ‘green transport vehicle.’ The bicycle industry moved forward in terms of

product quality, production automation and techniques by introducing,

absorbing and comprehending sophisticated equipment and technologies

available globally.

However, the role of bicycle that was once deemed as an indispensable item

has come down drastically during the past decades because of significant

improvements in living standards of people across the world. In recent times,

bicycles have become less important in day-to-day life, potentially leading to

fading out of most of the demand thereby resulting in major transformation

in the industry. But compared to other products of the past that faded out of

consumer’s life, bicycles continues to exist in the market with newer

concept, getting new development arena in a different era.

1.4 Global Growth Drivers:

The global economic recession had an adverse impact on the bicycle

revenues worldwide. The market, nevertheless, is expected to recover in

2012 and post substantial growth in ensuing years, driven primarily by

1) Eco-friendly characteristics

2) Innovation in Bicycle Industry.

3) Surging popularity of cycling as a leisure activity and increased

affordability.

4) Governments support across the world is also aiding bicycle industry

through various bicycle promotion projects and policies: For example,

in India, an event called Cycle India 2010 gave a big boost to this

sector. It was a week-long charity event that witnessed worldwide

participation. The event started on January 3, 2010 from Mysore and

ended on January 10, 2010 in Hyderabad.

5) Finally, sharp increase in gasoline prices is also compelling people

to adopt cycling for commuting short distances in cities.

Each of these factors has been dealt with, in detail, in the following section

1.4.1 Increasing concern for environment

At least part of the increase in world bike production is due to an increasing

concern for the environment. Since 1970, considerable progress has been

made in advancing climate change science and convincing public opinion

that global warming and environmental degradation are relevant problems

for most of the world’s people. And, bicycles, owing to their eco-friendly

nature, have been promoted heavily as alternatives tackling the existing

environmental issues.

1.4.2 Affordability and Economic Development

Rather than an Eco Indicator of efforts at environmental conservation, the

dramatic rise in the global demand for bicycles is as much or more a function

and sign of the rapid economic development that has occurred around the

world since 1970. At a tiny fraction of the price of cars, bicycles become

affordable to much larger portions of the populations of developing countries

long before cars do. As of 2009, private car ownership in China remained at

just 26 million units in a country of 1.3 billion people with a long-standing

one-child policy.

The timing of the sharp increase and divergence in bike and car production

aligns well with a particularly productive time in the world’s economic

development. Over the period 1970-2009, the average increase in the

Human Development Index (HDI), which correlates closely with per capita

income levels, for countries around the world was a healthy 44 percent.

1.4.3 Innovation in the Bicycle Industry

In addition to economic development, new trends in popular culture and

innovations in the bike industry are other important drivers of the growth in

world bike production that seem to have limited environmental connections

in most cases.

Schwinn Sting-Ray – The introduction of the Schwinn Sting-Ray and

other so-called “wheelie bikes” with large front wheels and banana-

style seats kicked off a boom period in the popularity of biking in the

U.S. during the 1960s.

European-style derailleur-equipped “Sport Bikes” – The availability

of lightweight, smooth-shifting European-style road bikes also helped

fuel America’s renewed interest in biking and “Bike Boom” of the latter

60’s and early 70’s.

BMX dirt bikes – In the 1970s in the U.S., BMX dirt bikes and racing

became popular as teenagers sought to imitate professional motocross

racers popularized by the movie On Any Sunday. The BMX movement

lasted a decade and accounted for one-third of all bikes sold in the U.S.

in 1982.

Mountain bikes and extreme adventure sports – During the

1970s in California, Joe Breeze, Gary Fisher, Charlie Keller, and Tom

Ritchey were the leading figures in the development of modern

mountain bikes. In 1979, Fisher and Keller started the Mountain Bikes

Company using Ritchey frames. By a year later in 1980, they were

awash in sales of their new high-end, off-road bikes. In 1983, Fisher

founded Gary Fisher Mountain Bikes and the National Off-Road Bicycle

Association. In 1993, Trek Bicycle Corporation acquired Fisher

mountain bikes. (To learn more about the history of mountain biking,

check out the documentary Klunkerz: A Film About Mountain Bikes.

Homemade creations called “Klunkers” that adventurous types used to

bomb down rough mountain fire roads were the precursors to modern

mountain bikes.)

Hybrid bikes – Hybrid bicycles are a more recent iteration that

combine features of road bikes and mountain bikes. Hybrid bikes are

purpose-built to suit the needs of commuters, shoppers, and casual

bike riders. They are designed to be more comfortable and rider-

friendly than their more specialized mountain and road bike cousins.

Lance Armstrong and the Tour de France – The colorful stories

around Lance Armstrong’s domination of the world’s most famous bike

race inspired a whole new generation of Lance followers and weekend

bike warriors. After recovering from cancer, Armstrong went on to win

the grueling 21-day, 2,000-plus mile tour six consecutive years from

1999 to 2005.

1.4.4 Government Initiatives and Promotional Events

In recent years, many world cities have been promoting biking as a way to

help alleviate troublesome traffic congestion, air pollution, and other

environmental ills related to increasing urbanization. From 2006 to 2010, the

city of Amsterdam in the Netherlands, which boasts some of the world’s

highest cycling rates, planned to invest more than $160 million in bicycle

paths, parking, and safety. In Copenhagen, Denmark, where 36 percent of

commuters biked to work by 2006, the city planned to invest $200 million in

bike facilities between 2006 and 2024. In Freiburg, Germany, 70 percent of

local trips are made by bike or public transit or on foot thanks to regular,

annual investments in bicycling infrastructure dating back to 1976. In

Australia, the state of Victoria, which is home to Melbourne, the country’s

second largest city, amended planning laws to require all new large buildings

to provide bike parking and other facilities such as lockers and showers. As

of 2008, the 50 largest U.S. cities had plans in place to double their bicycle

and pedestrian routes.

1.4.5 Rise in Gasoline Prices

The rise in gasoline and fuel prices has triggered the sudden surge in

demand for e-bikes. E-bikes use a battery-powered electric motor to assist

riders with pedaling. They can typically go as fast as 15 to 20 miles per hour

(24 to 32 km/h) or more. Depending on the country, e-bikes are often

classified as bicycles and not subject to the level of regulation or laws that

can restrict the ownership and operation of cars and other motor vehicles.

Electric bicycles, or “e-bikes,” have accounted for a large portion of more

recent growth in world bike demand and output, with production doubling

from 2004 to 21 million units in 2007

Electric bikes require less work on the part of riders and make it easier to

negotiate inclines, tolerate biking in hot weather, and, generally, bike under

other more strenuous conditions. They also make biking more accessible to

many countries’ growing populations of aging residents. According to Hu

Guang, Deputy General Manager of leading Chinese e-bike manufacturer,

Xinri (which means “new day” in Chinese), “Motorcycles are too dangerous,

cars are too expensive, public transportation is too crowded, and pedal bikes

leave you too tired. So people buy e-bikes.” Hopefully, some buyers also

have other motivations, but the environment is still notably absent from this

explanation.

In 2008, China bought 21 million e-bikes, compared with 9.4 million autos. In

2009, China had about four times as many e-bikes on the road as cars. As of

early 2010, there were estimated to be a total of about 120 million e-bikes

on China’s streets and bike paths. In 2009, about 60 percent of Taiwanese

Giant Manufacturing’s 300,000 e-bike shipments went to mainland China.

In Germany, sales of e-bikes nearly tripled in 2007. Analysts forecasted 2010

sales of roughly one million e-bikes in Europe and 300,000 e-bikes in the

U.S., about doubling the number sold in the U.S. in 2009. E-bike sales have

also been growing rapidly in the Netherlands and India.

Like other bicycles, e-bikes are an attractive alternative to cars in more ways

than one. In addition to carrying far lower price tags and facilitating mobility

in crowded urban areas, they also cost far less to operate and keep on the

road.

It’s an unlikely coincidence that the divergence of bike and car production

occurred just about the time of the 1972-73 Arab oil embargo that led to a

dramatic and sustained increase in gas prices. Several sources point to a

direct, eye-opening correlation between energy costs and motorized vehicle

usage. The chart below from Jim Puplava’s Captain’s Log shows the interesting

relationship between vehicle miles traveled and oil prices.

The oil crisis also led to a pronounced reduction in car and engine sizes in

the U.S.

1.5 Future Prospects: Global Bicycle Industry

The outlook for the future in bicycles is very positive, though stability is the

story of the recent past. The bicycle industry is a seasonal business that

can be impacted by unusual weather, as well as an industry that relies on

discretionary spending impacted by economic conditions. Industry sales of

bicycles seem to be stable as well as accessories and service. Moreover, as

explained, trends related to the green movement, environmental

sustainability, the need to address health problems related to inactivity, and

higher gas prices also bode well for the future of human-powered

transportation.

CHAPTER 2: The Indian Context

2.1 Indian Bicycle Industry- History

Bicycle was first seen in India in the year 1890. Import of cycles, however,

started only in 1905 and continued for more than 50 years. Complete ban on

imports was announced by the Government in July, 1953, but cycle kept on

simmering in the country till 1961. In 1890, the selling price of an imported

bicycle was around Rs. 45/-; in 1917, during the First World War, the price

jumped to Rs. 500/- but dropped considerably, month by month and came

down to Rs. 35/- or so (U. K. makes) to Rs. 15/- or so (Japanese models).

It would be interesting to note that in 1919, five persons in Punjab imported

cycles and used them on The Mall, Simla. These included one Bishop, two

military men and two contractors. Under special permission of the Governor,

they were allowed to use cycles on 'The Mall' only for one hour a day. They

imported B.S.A. Cross Bar Cycle from U.K. and that destined one hour would

be watched by hundreds of people every day. Later, a firm was formed under

the name of Singh & Co. with shops on Railway Road, Jalandhar and Bazaar

Vakillan, Hoshiarpur, which imported bicycles in the year 1930 onwards.

2.2 Indian Bicycle Industry – Present

With an annual turnover of more than 12 million bicycles, the bicycle

industry is one of the established industries in India. The country's position is

that of the second largest bicycle manufacturer in the world, next only to

China. India has seen a tremendous increase in the number of bicycle

manufacturers and bicycle exporters in the recent past. Today, the Indian

bicycle manufacturing and bicycle spares industry is well accepted and is

also widely recognized for its quality standards in international markets.

Most bicycle components, spares and bicycle

accessories in India, except for free wheels and single

piece bicycle hubs, are manufactured by the Small

Scale Sector (SSIs), while the large scale units are

permitted to manufacture bicycle frames, chains and

rims for captive consumption. Manufacture and

export of complete bicycles fall within the purview of

the Organized Sector.

The size of the Indian bicycle industry stands at US

$1.2 billion. The number of units (finished bicycles

including all segments) produced is around 12 million,

according to an industry source. Of this, the number

of units exported annually is about two to three

million, which points to a huge demand in the

domestic market. According to figures from the

Engineering Exports Promotion Council, in 2007-08

India exported bicycles and components worth US

$185.42 million.

The Indian bicycle industry is currently in the midst of

making endeavors for enhanced and increased

bicycle exports since the scope for export of Indian

manufactured bicycles in the international market is

significant.

2.3 Major Indian Players

The Indian bicycle market comprises four major

players—Hero, TI, Avon, and Atlas—who also export

to the Middle East, Africa, the US and Latin America.

Most of the big players started operations between

Some Quick Facts-

India is the second largest manufacturer of bicycles in the world with 12 million units annually.

In value term that is US $1.2 billion

Global bicycle production is around 130 million units. Thus, India produces a little over 9% of the world’s bicycles.

Hero Cycles is the largest bicycle manufacturer in the world.

Major exports from India are to the Middle East, Africa, the US, and Latin America.

A bicycle dealer in Patna, Bihar, sells around 10,000 bicycles in a month.

the mid-1940s to mid-1950s. The oldest and the largest one, Hero Cycles

from the stables of the Hero Group, started as early as 1944, but stabilized

its production only after 1956. It has a 48% market share in the Indian

bicycle industry. An annual sales volume of over 4.8 million has made it the

largest bicycle manufacturer in the world. Hero Cycles rolls out around

18,500 units every day.

  Hero Cycles TI Cycles Avon Cycles Atlas CyclesStarted 1944 1949 1948 1951Brand(s) Hero BSA,

HerculesAvon, Buke, Apsara

Atlas

Production(million units)

4.9 2.8 1.7 1.2

2.4 Indian Industry Trends

Driven by the perennial demand in rural areas, favorable government

schemes and a booming children’s segment, the bicycle industry is on a roll.

Summer vacation in schools and colleges across India is also another boom

time for bicycle retailers. For instance, in a big city like Delhi, a retailer, on

an average, sells 250 bicycles during the months of April, May and June.

These are mostly in the children and teenager segment that for long has

been a money-spinner for bicycle manufacturers. The sales figure in this

segment could even touch the 500 mark, depending upon various schemes

and discounts to lure customers. Add to this the standard bicycles, women’s

bicycles, mountain terrain bicycles (MTBs), and so on, and you have a

market large enough to be considered a huge opportunity.

Within the bicycle industry, the standard model—which is recognized as the

one usually driven by the labor class —dominates with a share of around

50%. This segment still has a huge potential for growth as this basic model is

hugely popular. This is because this model is still used

for commuting and transporting goods.

On the other hand, in urban areas there has been a

shift of preference from standard models to other

types, with urban consumers using a bicycle more as a

means of fitness and recreation. “Today people,

especially urban adults, are becoming more and more

aware of the consequences of global warming, health

issues, pollution, and so on. As a result, it is observed

that they are taking to greener modes of

transportation like bicycles and electric scooters.

Hence, there has been a considerable shift in the

perception of bicycles from a mode of commuting to a

recreation/personal mobility solution.

New Age Markets are also evolving in the country.

Some popular bicycles that have caught the interest of

this market are Electric bicycles, Fitness machines like

exercycles and Innovative sports bicycles.

An exercycle is an exercise bicycle with saddle, pedals

and some form of handle bars arranged as on a

bicycle, but is used as an exercise equipment rather

than transportation. It is basically used for general

fitness, cardiovascular exercise, during trainings for

cycle events etc. Major bicycle manufacturers like Hero

Cycles, TI Cycles and Avon also manufacture a fitness

range. Electric bicycles (e-bikes) are also catching on

in the cities. Avon is actively involved in its production.

“The spares market is estimated to be larger than the cycles. With the growth in specials category with gears, the demand for accessories will grow and will be an opportunity area in future.”

-Raghuram, Senior Vice President, Bicycles and Fitness, TI Cycles, the bicycle manufacturing arm of the Murugappa Group.

Accessories like bicycle helmets, knee guards, elbow guards, sippers, shoes,

tires, bells, fancy baskets and carriers for women’s bicycles are also

increasingly being sought after.

2.5 Indian Growth Drivers

Some of the growth drivers for the Indian Bicycle Industry are:

Huge demand in rural India and small towns

Children’s segment

Government schemes for school-going poor children

Gaining popularity of Events that boost bicycle usage in India

Increasing health/fitness consciousness in urban areas

Requirements for zero-emission solutions for polluted traffic routes

India becoming a low-cost manufacturing hub

Higher density of suppliers and dealers

2.5.1 Demand in rural India and small towns

The demand in rural India and small towns is one of the biggest growth

drivers for the bicycle industry. To put this into figures: a distributor/supplier

of TI Cycles’ BSA and Hercules brand in Patna supplies more than 10,000

bicycles to all the nearby village areas, including the city on a monthly basis.

“With no roads in place, no affordability, the bicycle is the most preferred

option for commuting. One will hardly see motorcycles, scooters on the lanes

here,” says Vikas Kumar Binjrajka of VV Marketing, a bicycle dealer in the

Muzaffarpur town in Bihar. “Maximum demand is for standard bicycles here

as they are the most trusted models. An average price of every unit sold

here is around Rs 2,500. On the other hand, an average life of a bicycle is

three years. Hence, the demand for its spare parts is even more than the

bicycle itself,” he adds.

The rural market is far from saturation. It is believed that the replacement

market may generate annual sales of three million bicycles in the near

future.

2.5.2 Lucrative Children and Teenager segment

In the urban market, the children and teenager segment is growing very fast.

This segment has shown a healthy growth and is likely to continue growing

in the future too. The kids’ and teenagers’ segment is witnessing a robust

growth. The average price of a bicycle sold in the urban market is around Rs

4,000. Prices depend on suspension, gears, accessories, etc, which all kids

want in their bicycles.

2.5.3 Government Schemes

Government schemes are also helping in driving growth. Most state

governments have special schemes that involve gifting bicycles to people,

mostly children, in the economically weaker sections of the society. Such is

the impact on this industry that the government is one of the biggest

customers for bicycle manufacturers. State governments invite tenders for

supply of bicycles and the big players get to make the most of it.

The central and state governments are believed to have ordered around 1.5

million bicycles in 2008 to hand them over to poor children under various

social welfare schemes. An industry source estimates that the figure could

go up to 2.5 million units in 2009. States like Maharashtra, Madhya Pradesh,

Bihar and Jharkhand are among those suppling bicycles free of charge to

poor school-going children.

There are more such examples. According to the Pudducherry government,

Due to long distance and shortage of transport facilities, poor students are in

great need of bicycles to go to schools. By getting cycles, students need not

walk more and hence energy is saved and more time is available to

concentrate on studies and the students can also reach the school in time.

By using the cycles, more work may be attended [to] in a shorter time. Thus,

a new scheme was formulated to distribute free cycles. In a year

approximately 10,500 cycles (each cycle of Rs 1,385) are supplied to the

boys and girls studying in IX standard in government and government-aided

schools.

The Assam government has made a provision for Rs 24 crore in 2008-09 for

providing bicycles to about one lakh girl students living below the poverty

line. The Haryana government has supplied bicycles to certain schools under

the Sarv Shiksha Abhiyan scheme. The bicycles are to be provided free of

charge to those girl students who have to walk more than 2 km to school.

The Tamil Nadu government also runs schemes to encourage higher

education among the Scheduled Castes/Scheduled Tribes, Scheduled Caste

converted Christians studying in classes XI and XII in government and

government-aided schools, under which free bicycles are distributed to

students.

Despite the slowdown, the bicycle industry is booming, thanks to

government tenders for more bicycles. Even the second-tier suppliers and

smaller vendors supplying to the big four are full with orders.

2.5.4 Promotional Events

Bicycle events also boost sales for the Industry. Several events are being

organized across the country to increase awareness about the use of

bicycles. For example, every Republic Day, an annual cycle rally is organized

in Pune by the Pune Cantonment Block Congress Sports Committee in

association with the Ekta Mitr Mandal, a self-help group. It is a 22-lap cycle

race with people participating from all over the world.

In Chandigarh an annual cycle day is observed by holding a cycle rally. This

is organized by the Chandigarh Tourism Department in association with the

Society for Tourism and Entertainment Promotion.

A proposed event called Cycle India 2010 is also likely

to give a big boost to this sector. This will be a week-

long charity event that will witness worldwide

participation. The event will start on January 3, 2010

from Mysore and will end on January 10, 2010 in

Hyderabad.

Another growth driver is environmental awareness.

This is driving many in urban areas to choose bicycles

as a mode of transportation in the neighborhood. The

desire to adopt healthy lifestyles has also helped in

bolstering this market.

2.6 Challenges Faced by the Indian Bicycle Industry

The Indian bicycle industry is also facing some

challenges. The biggest dampener is the demand

for motor bikes. Changing socio-economic

patterns, increasing purchasing power along

with the available financing options, the middle

class, lower middle class, and also to some extent the

poor class has shifted their mode of commuting and

transport to motor bikes in urban areas. Even school

and college-goers prefer riding their own motor bikes

and scooters over a bicycle. The use of motor bikes

is increasing in the rural areas too with better

finance facilities and availability of these motor

bikes.

In big cities, the increasing number of

automobiles on congested road has made it

Ludhiana is the hub for bicycle manufacturing in India.

“More than 25,000 cycles per day are manufactured in Ludhiana alone. The city is home to over 1,500 factories making bicycles and components, providing employment to 0.25 million people and today it is a jewel in the crown of India’s industrial cities.”

-All India Cycle Manufacturers’ Association.

riskier and more difficult to ride bicycles. With no option of separate

cycling lanes, bicycle users in the urban areas face tremendous risks while

commuting. Also, it becomes easier and much more comfortable to ride a

motor bike than a bicycle in big cities where destinations are further away

than in villages.

People from villages and small towns are moving to metros and other cities

for work and this factor has translated in the long term to more people

switching over from using bicycles to motor bikes.

Sources in the industry say that shortage of funds is another problem in

this sector. Funding is not available to players who wish to expand their

production units. And even if it is available, it is at a very high cost.

Other difficulties at the global level include the competition from China,

besides rising steel and rubber prices.

To summarize, below mentioned are the major challenges the industry faces,

today:

Increasing demand/popularity of motor bikes

Increase in migration of people to cities

Long commutes to work in big cities

No dedicated cycling tracks in cities

High risk involved while commuting by bicycle

Low awareness of cycling as a sport in India

Lack of funds for expansion of infrastructural facilities

High costs involved in setting up better quality manufacturing units

Competition from China and other low-cost manufacturing destinations

Rising prices of raw material such as steel and rubber

2.7 Future Prospects- Indian Context

There are a lot of cycling enthusiasts in the country who are into serious

cycling. There has been a gap in the availability of performance bicycles in

the country for quite some time. TI Cycles has filled this gap by introducing

high-end bicycles from leading international bike manufacturers Bianchi and

Cannondale. Cannondale, a US-based sports bicycle manufacturer, has also

made an entry into the Indian market.

The super-luxury segment is now opening up for Indian customers. The

launch of the Rs. 2 Lakh bicycle by TI Cycles in partnership with Bianchi, an

Italian bicycle manufacturer, is a case in point. TI Cycles estimates the size

of this “super-premium” segment will help it rope in sales of over 5,000 units

annually. These high-end bicycles will range between Rs.17000 and Rs.2

Lakh per unit. Hi-tech engineering and use of expensive materials like

titanium and carbon fiber that absorb vibration, for a smooth ride, make

these bicycles expensive. The high-end accessories market is also up for

grabs. These include helmets, apparel and shoes.

It is expected that in times to come the bicycle industry is set to grow faster.

The replacement and the spare parts market will become a major growth

area. The accessories segment is also in for good times. However, demand in

rural areas is likely to stay stable, yet good enough to support the existing

growth. In urban areas, the leisure market is yet to be tapped fully and there

is huge potential here. The children and teenager segment is quite lucrative

as well.

The All India Cycle Manufacturers’ Association wants the government to

frame policies that popularize the use of cycles in cities and towns, keeping

in view the overcrowding of roads, increasing pollution due to auto vehicles

and increasing cost of imports – Congested and central areas in the cities

and towns should be declared as cycle areas and entry of vehicles should be

lawfully banned.