The bicycle industry, like many other sectors, is facing unprecedented challenges.

The pandemic, which initially triggered a surge in demand, has left us with significant procurement and supply chain issues that continue to affect the industry today.

The challenges of the supply chain after the pandemic

The bicycle industry experienced remarkable growth during the early phase of the pandemic. In Germany alone, over 5 million bikes were sold in 2020. However, this demand soon outstripped supply, which led to bottlenecks. By 2021, the market had begun to stabilise, but the damage had already been done: Overstocking became a new challenge, and the industry faced an overstock of around 3 million bikes at the beginning of 2024.

This situation can be traced back to the so-called ‘whip effect’, in which initial bottlenecks led to over-ordering at every level of the supply chain. Retailers anxious to secure products placed large orders, which in turn prompted brands and distributors to do the same with their suppliers. This overcompensation has now led to an oversupply, which has caused financial burdens and led to significant reductions in production capacity.

Current challenges: Inventory, demand and capacity

Current challenges: Inventory, demand and capacity

  1. Inventory: Overstocks remain a significant problem, with high inventories of finished bicycles and raw materials. This is expected to continue until at least the end of 2025.
  2. Demand: Demand has fallen significantly since its peak in 2020 and has stabilised at around 4 million bikes per year. This decline has led to widespread cancellations and financial difficulties throughout the supply chain.
  3. Capacity: Production capacity has been greatly reduced as companies are shifting to other sector This means that even if demand increases, it will be difficult to increase production quickly.

Despite these problems, it should be noted that lead times for most products have returned to pre-pandemic levels. However, certain components such as frames and forks continue to have long delivery times, which requires careful demand forecasting and planning.

Impact of price trends and geopolitics

While raw material prices have fallen significantly – aluminium, iron, plastic and oil have fallen by 30-40% since their peak in 2022 – other costs have risen. Freight costs from Asia have multiplied, driven by political instability and longer transit times. These increased costs place an additional burden on the already strained supply chain and make it clear that while local production or nearshoring may seem attractive, the bicycle industry’s dependence on Asian suppliers remains strong and nearshoring initiatives will not provide a solution in the short term.

Strategic solutions: Planning, relationships and innovation

In view of these challenges, it is crucial that companies in the bicycle industry adopt a more strategic approach:

  1. Data-based planning: Companies have a wealth of data on sales, inventories and demand. However, this data is underutilised. Implementing real-time data sharing between retailers and suppliers and advanced forecasting tools can help to make more accurate predictions and decisions.
  2. Strengthening customer-supplier relationships: Long-term relationships based on trust and reliability are more resilient in times of crisis. Prioritising these relationships over short-term profits can help stabilise supply chains and improve overall efficiency.
  3. Review of product life cycles: The industry tends to present new product lines every year, even if only minimal changes are made. A shift to longer product lifecycles linked to real innovation could reduce pressure on inventories and increase profitability.

The bicycle industry has repeatedly overcome considerable challenges in the past.

As innovative as the industry is towards the customer, developing ever better products and presenting smart solutions for users down to the smallest niche, many companies are just as backward when it comes to internal state-of-the-art processes, tools and techniques to make their own business resilient, efficient and profitable in the long term.

For those who are interested in deepening our solutions and putting them into practice, I am available for discussion and co-operation.