Market Insight: Bicycle Industry

LightCastle Analytics Wing
October 11, 2015
Market Insight: Bicycle Industry

The bicycle industry has experienced tremendous growth in the recent years. This expansion can be traced to two factors. Firstly, bicycles provide a quick and easy way around the unbearable traffic jam in major cities. Secondly, the rise of some community groups, like BDCyclists, has specially contributed to transforming riding a bicycle into a trend. This blog will highlight some of the key findings of LightCastle Data’s survey on the bicycle industry.

Bicycle industry is our single most successful light engineering export industry, and its success has largely been linked to GSP protection in exporting to the EU and penalty imposed on the world’s largest bicycle manufacturer, China. The expiration of the penalty in 2016 can expose us to extreme competition, especially since Bangladeshi exporters bear a 30-50% higher lead time and 10-20% higher price than Chinese exporters due to the lack of parts and components suppliers. Despite bearing the third best growth rate (20.79% in 2014), average value per unit dropped by about 6.57%, while China’s and Cambodia’s average value per unit increased by 46.28% and 9.93% respectively.

Currently, the bicycle industry is comprised of 3 major active manufacturers. Meghna Group is our largest bicycle manufacturer and exporter (90%). Meghna Group has about 9 factories, including 2 for handling exports, 2 for meeting local demand and 5 to produce bicycle components. They currently produce six types of bicycles. Alita Bangladesh is a Taiwan based company but one of our largest bicycle exporters. Pran – RFL Group is the latest entry with a manufacturing capacity of 500,000 bicycles annually.

The needs of the cyclists are met by some major local retailers who are shaping the bicycle demand of this generation. Lion Cycle Store sells its own brands like Core and Nekro (manufactured in China), and also imports Trek, Ghost, Merida, Upland, etc. Besides being the local retailer of Meghna Group, CycleLife Exclusive also sells its own brands called Veloce and Prince. It also sells imports named Elswick and Mizany. G.S. Impex is one of the largest local imported bicycle retailers in Bangladesh. It imports brands like Kellys, Totem, Scott etc. There are numerous other retailers, including some well-known names like Master Wheels, The Bike House, Exit Bicycles, and Bicycle Shop BD etc.

But the local manufacturers and the retailers have failed to produce brand loyal customers. Most respondents chose to switch their brands, if a new model comes in market with increased feature, or if price increases. People ranked performance and durability as top purchasing influencing factors, but the market is also quite price sensitive. Recommendation from friends and family and social media had the most reach, followed by store website and recommendation from store salesman. Most cyclists would like new cycles after at least 12 months, and most would have a budget between BDT 10,000 and BDT 50,000 at the time of purchase. Many cyclists are part of cycling groups. The biggest cycling community BDCyclists has promoted bicycles’ impact on creating an unpolluted environment and their contribution toward the riders’ maintaining sound health. Currently, their Facebook page has almost 55,000 members which it gained in less than 5 years, and they actively take part in rallies and weekly rides.

Local bicycle industry shows promising opportunities for entrants to successfully capture market share within shorter time via effective marketing schemes aimed towards the target population. But entering the industry will also require a good level of investment, owing to other countries’ cost advantages, lack of local suppliers, longer lead time, and already existing large firms in the country.

The research was conducted by Md Sifat Bin Raquib, a Junior Associate of LightCastle Partners.
This is a preliminary market research. If you wish to take a deeper look, please ping us at [email protected]

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WRITTEN BY: LightCastle Analytics Wing

At LightCastle, we take a systemic and data-driven approach to create opportunities for growth and impact. We are an international management consulting firm which creates systemic and data-driven opportunities for growth and impact in emerging markets. By collaborating with development partners and leveraging the power of the private sector, we strive to boost economies, inspire businesses, and change lives at scale.

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