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news
Brexit.pngThe Brexit effect? Imports of bikes to UK fell sharply in 2016
Imports of bicycles to the UK fell sharply during 2016, in what could be an early sign of the effects of last June’s referendum vote to leave the European Union on the cycle trade - and the potential impact on prices for British consumers.
The figures, which come from Her Majesty’s Revenue & Customs (HMRC), reveal that unit imports fell by nearly 11 per cent during the year to 3.1 million, down from 3.5 million in 2015.
In terms of value, imports held up rather better, falling 1.5 per cent from £389 million to £383 million, which Bike Europe – which describes the decline in volume as “unexpected” – says suggests that premium products are outperforming the market as a whole.
It’s too early to attribute the decline to the prospect of the country leaving the EU, with six months left of the year when the referendum happened and distributors and retailers having already placed orders for bikes that would have arrived in the second half of the year and businesses typically hedging against currency movements.
However, there have been indications from within the trade that market conditions are difficult, and with Prime Minister Theresa May planning next week to trigger Article 50 to begin the formal process of leaving the world’s biggest trading bloc and apparently set on a ‘Hard Brexit’ tough times could lie ahead.
Evans Cycles warned in a blog post on its website earlier this month that while currency hedging had offset some of the potential price rise caused by the fall in sterling against the dollar in the aftermath of June’s vote, future increases are inevitable.
The retailer, which has more than 60 branches around the country, also pointed out something we have already flagged up here at road.cc – that some brands are re-specifying their bikes, so while a particular model may appear not to have changed in price, it will now come with cheaper components as they look to keep offering products at specific key price points.
> Beat Brexit price rises with a 2016 bargain
The blog post on the Evans Cycles site also highlights some other factors that will have affected prices to UK consumers.
Those include the strengthening of the Japanese Yen against the Dollar at a time Sterling was weakening against the US currency – increasing the cost of Shimano-equipped bikes – and the effect of tariffs and taxes which, because they are added as a percentage to a base price that has itself risen, will increase further the final price.
Tandem Group, owner of brands including Dawes and Claud Butler, will not report its 2016 financial results until next month, but it said in a recent trading statement that it expects revenue to be down 26 per cent on the previous year within its bicycles and mobility division.
Factors besides the referendum result are in play here – notably, a restructuring of the division, which included making some staff redundant, and the absence of promotional activity during the period compared to the prior year.
But the company added that “margins were under pressure during the second half of the year as a result of sterling weakness and increased import duty on some of our products” and that “to compensate for this we implemented a price increase in the latter part of the year,” it had “negotiated better buying prices with suppliers and where this could not be achieved, re-sourced to new factories.”
Meanwhile Halfords, the UK’s largest bike retailer, cautioned in its interim results statement last November: “As an importer of goods, the Sterling devaluation brings input cost headwinds for the Group.
“However we do have a number of mitigation opportunities including working with suppliers, price, cost/process efficiencies and alternative product sourcing,” Halfords added.
All of which means that the price of bicycles to consumers in the UK is likely to continue to head upwards, to which needs to be added the current uncertainty over what our future trading relationship with fellow EU member states and other countries around the world will be.
There’s the wider economic picture to look at, too. Wage growth is low and inflation on the rise, chiefly as a result of those exchange rate fluctuations, which could lead to the Bank of England increasing its base rate from the current historically low level.
To the average buyer, that’s likely to mean less money to spend on your next bicycle – assuming you don’t forgo the purchase altogether, and for retailers and distributors alike, that will mean fewer units sold and greater pressure on margins.
And as for Bike Europe's observation that the higher end of the market has proved more resilient during 2016, it's anyone's guess as to whether that will be sustained as highly-paid jobs in financial services and other industries head abroad in anticipation of the UK severing ties with the EU.
It’s not bad news for everyone in the industry, however – as a UK-based manufacturer, Brompton, which is growing sales rapidly in markets such as the United States and Far East, benefits from Sterling’s weakness.
In January, CEO Will Butler-Adams said that the company, which has invested in a new factory in Greenford to significantly ramp up capacity and which exports 80 per cent of the folding bikes it makes, had been able to reduce prices in overseas markets by 7 per cent since the referendum, making it more competitive abroad.
> Brompton profits hit in 2015/16 as company invests for growth
Simon joined road.cc as news editor in 2009 and is now the site’s community editor, acting as a link between the team producing the content and our readers. A law and languages graduate, published translator and former retail analyst, he has reported on issues as diverse as cycling-related court cases, anti-doping investigations, the latest developments in the bike industry and the sport’s biggest races. Now back in London full-time after 15 years living in Oxford and Cambridge, he loves cycling along the Thames but misses having his former riding buddy, Elodie the miniature schnauzer, in the basket in front of him.
Latest Comments
- chrisonabike 1 sec ago
May need insurance, tax and a licence. No problem with the lights though.
- Simon E 15 min 54 sec ago
Yes, they look just like the Lezyne Zecto model. My club bought a couple of sets from the LBS for our midweek TTs so if someone turns up without...
- Hirsute 2 hours 47 min ago
If you can't see a %^$&ing large tractor what ^%$£"!*ing hope is there that you will see a cyclist ?...
- chrisonabike 3 hours 5 min ago
Well if you *can* interview the original riders at all surely they worked, at least?...
- David9694 3 hours 34 min ago
Live: Car plunges over wall and lands on beach rocks...
- biking59boomer 3 hours 40 min ago
Looks like yet another bike share service that's going to fold because of selfish idiots.
- quiff 7 hours 44 min ago
Fair point - I was restricting myself to pedal bikes. As I've never spent that kind of money on anything though (mortgage doesn't count), it's kind...
- brooksby 8 hours 47 min ago
And finally: I wonder how many of the "more than 3,000" signatures on that petition are actually locals, who live or work there (and are not just...
- Doug_D 10 hours 22 min ago
Another book suggestion - I can highly recommend "Lost Summers and Half-Forgotten Afternoons: A Mint Sauce collection" - a beautifully presented...
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49 comments
Good luck Bob Wheeler CX, may your frustrating quests for replacement parts be fruitful.
That's the thing. I'm actually a fan of its original intentions, and I think I could quite get behind a United States of Europe, along federal/state lines similar to the US.
But its current guise is a clumsy, bloated halfway house that betrays its origins and will never reach its ultimate goal.
In addition to the Greek debt situation, we've had a couple more crises that have been fluffed due to the total lack of unified response: the refugee crisis has left Greece and Italy sorting it out themselves, Merkel calling migrant queues to Germany and sod the countries along the way, and Sweden and Denmark reimposing border controls that they haven't had since god-knows when.
And Ukraine and Crimea... Embarrassment all-round.
The way I've read those 3 situations is that we're not even the sum of our parts in terms of clout and organisation, are nowhere near unity, and the EU values the project and institutions way above the lives of its citizens.
Am I a fan of that, and do I want more of it? No thanks.
Good idea, we're probably going to become a nation of foragers, make do and menders, unable to afford any worldly luxuries. Get the jump on the pre-owned market before the rest of us are forced to, the Good Life prophesy is coming true at last
I picked up a steel framed bike from the '90s the other day for 50 quid.
Bit of elbow grease and some new gumwall tyres, let's go.
I think Beezus had it the key difference: previous technological leaps have happened in in a more unequal world, where only a few countries were able to create the best jobs.
Griff's point about the jobs moving up the pyramid is a good one but I share some of unconstituted's concerns about this current move towards automation and the quality of the jobs being created in the UK in the current climate of globalisation. In financial services, jobs have been shipping out to India for a long time. But it is no longer the 'grunt' jobs: professional and management jobs are heading over there too, from UK companies (the way RBS is currently being slashed is a fucking scandal given the nation's stake in it).
Absolutely! All evidence for automation creating jobs ignores geographic and capability boundaries, and looks purely on a global basis - but I never said otherwise. Bigger tractors have removed farm labourer jobs, but we have more lawyers and accountants. Bank teller jobs have been lost in the UK, bank call centre jobs created in Mumbai. We need more people in bioscience, electronic engineering and software engineering in the UK than we can get, but that doesn't help the steel workers. Jobs in the West very much depend on meeting the need/price, otherwise you will be outsourced to a lower cost economy. (Note that those lower cost economies will still ask for your charity)
A four day week would have an amazing impact on the economy and culture. Less rushing around at the weekends, less traffic, less pollution, better work/life balance, moar bike riding. Even (where possible) granting the ability to work from home for one day a week would yield some of those benefits (particularly if you're a Hard Working Family and there's someone at home during the day already). Where it would hit though is personal services and trades - you're probably more likely to attempt jobs around the house yourself than GAMI if you're working 4 days a week.
As to Brexit, large tech firms like Microsoft and VMWare have already hiked prices by up to 22%. Same goes for IT hardware. That's stuff we have to import because there isn't (and won't be) a big enough challenger for Silicon Valley in this country. Those price hikes have to filter through.
Tourism sector is getting a right kicking and we'll see more stay-at-home holidays this year. Trump effect is having a direct and immediate effect on travel to 'murica and the weak pound is making two weeks in Benidorm look properly expensive. Australia and further afield out of reach of most people.
I am liking the way this discussion is now heading, slightly less tribal. Perhaps less entertaining but more informative and we seem to be moving forward.
While I am somewhat concerned about the warnings that AI will destroy much of the more "thinking" industries, my worries are slightly tempured by the knowledge that we were promised paperless offices 20 or more years ago, and we are only just starting to approach this.
I am continuing to wait with great anticipation all that extra leisure time we were also promised, and finding it difficult to square with the ranting of workers not shirkers.
Don't worry, if we all sulk really hard to show we believe in the EU, accentuate the negatives of any news, and make sure we do our damnedest to tie it to anything to with Brexit, all will be peachy because we'll be able to say WE TOLD YOU SO.
We told you so.
No, you told White Van Man and Express Reader and whichever other stereotype you think is incapable of thinking for themselves - and wrapped it in a healthy dollop of bullshit and total conjecture*
I saw through both campaigns, as, I suspect, most people on both sides did, and made my own mind up about how disgracefully the EU has treated Greece and its citizens (unemployment, suicide and AIDS rates through the roof) at the behest of German and French banks, among other things. 'You' told 'me' diddly squat about that.
*applicable to both campaigns.
Absolutely this.
I highly recommend 'Greece with Simon Reeve' to anyone with an interest in understanding other perspectives. Aired a year or two ago but prob on iplayer/ youtube etc.
For me, it was quite illuminating IRO the way the EU (and Greece's own political elite) utterly failed their population by railroading through and imposing the political ideals of the EU and the Euro despite complete incompatibility with the small, young, fragile economy that Greece is.
But the quality of debate on both sides was so poor that it seems many people are simply unwilling to open their minds to alternative views.
I was always massively suspicious of anyone not 'on the fence' in the debate, TBH. I agonised before voting, but I think many did not, as they held strong, partisan views on leaving or remaining. ~How you can be so certain about something with so many unknowns is beyond me!
Missed this first time round, and glad to see 700 at least agreeing with it. Should have been a real eye opener to the reality of the eurozone for everyone, but instead people got behind it. People were actually rooting for Germany to further impose hard sanctions on the Greeks. The people, not the scumbag political class who had driven Greece to ruin, but the actual victims of it all. People wanted Germany, at the behest of the banks, to further drive Greece's citizens into the ground.
They're 'lazy' and 'deserved it' apparently. The slurs came out, and Greeks needed what was coming to them. We all know what parallels can be drawn here.
The EU for all its good work as an institution is rotten at the core, but actually so are most europeans/brits. They talk about freedoms and ideals but when it comes to it, they're actually oppressive and punitive. I'd have loved a EU wide referendum on Greece's debt. Relief or not. Seeing the result of that would have helped me decide if I wanted anything to do with the rest of the eurozone when it came to our Brexit vote.
The other thing that grates me about the EU is how Brussels paraded Blair around after the Iraq war. Let him walk into a cosy, ironic job. Brussels is an alternate reality. That was a contemptuous fuck you from Brussels to anyone with an ounce of compassion.
I'd love to see it disbanded and reformed from the ground up in an ideal world.
Don't worry, if we all wish really hard, clap our hands to show we believe in Brexit, and climb aboard the fantasy world of us against the world that exists only inside leavers heads, all will be peachy.
@unconstituted: with you 100%...
until the last bit. There were other reasons to vote for Brexit other than 'getting rid of the forrins'.
Still a really good post and have greened it. I'd also throw Universal Basic Income into your mix, but I have no idea how to make that work in the UK on cost alone.
Oh yeah, and I agree with lots of the reasons. I'm a seasoned euroskeptic who was on the fence during the run up.
Last bit was definitely unfair to all the Vote Leave guys. But it will characterise a lot of the small mindedness goin around that I'm unhappy about so had to get my dig in
All of this, no £350m for the NHS and the bananas are still the same shape
Yeah but, you know, out of the tyranny of the EU dictatorship, closed borders, no more immigrantzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzz *yawn*
Im not sure there is anything but conjecture in this article.
Giant bikes seem a little more expensive this year yet Canyons are a fair bit cheaper... make of that what you will, yet both are and have always been extrodinarily better value than Specialized, Cannondale, Trek and others.
Trying to explain Brexit as the reason for any of this is hardly neat.
Specialised and Trek have both put their prices up in recent months a fair amount, and more than likely the rest will soon follow suit (or 'despec' their bikes as mentioned in the article).
Without Brexit this wouldn't have happened...in my opinion.
In the grand scheme of things this is potentially a minor issue of course.
Canyon's prices have rose significantly. I bought a Canyon Endurace CF 9.0 for £1500 last year (on sale, full price was £1750). The exact same bike is now £2000.
Canyon cited sterling's drop as the cause of their 2017 UK price rises.
http://www.cyclingweekly.com/news/product-news/bike-prices-set-to-rise-n...
Just wait for a few retailiers go into administration and do your shopping in the closing down sales #brexit
A few things i was looking to purchase have gone up in price i was looking at wheelsets but the ones i want have gone up nearly £100 since last summer so I'm kind of putting it off. I'm assuming it is brexit after having a couple of email from retailers saying they were raising prices because of the £.
It certainly makes you think about purchases...
Wide eyed optimism is pretty much all they have
I believe the article more than the over-optimisitc commenters telling us everything's going to be wonderful, in the face of the evidence.
I'm sure bringing the cost of bikes and components down with reduced tariffs etc is right at the top of the governments brexit to do list
And of course all Brexiteers are guaranteeing that tariffs will be exactly what they just predicted when we sort out deals out in god knows how many years.
These guarantees will be good as the £350m for the NHS which took 5mins to turn out to be balls.
Agree.
Don't worry bikes imported from Tiawan will be 15% cheaper at least once EU tariffs are removed. https://m.dutycalculator.com/dc/228447/sports-leisure/bikes-scooters/bik...
https://www.wto.org/english/res_e/booksp_e/discussion_papers_e.pdf
page 32,
Tarifs need to be agreed so in reality what they are is what they will be, and masively cutting could then kill the UK manufacturers such as Brompton and Pashley.
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