The difficulties facing seemingly all corners of the cycling industry in 2023 appear to show no signs of relenting, with Shimano today reporting a 17.7 percent fall in sales of bicycle components for the first half of the year and a 40 percent drop in operating profit.
Following a record year in 2022, the Japanese brand’s predicted slowdown for 2023 has proved even sharper than expected. According to today’s report, net sales in the brand’s bicycle division fell to ¥205 billion (around £1.1 billion), while the company’s operating profit fell by around £230 million (39.5 percent).
Shimano, the world’s largest manufacturer of bike components, says the figures – which have forced the company to revise its forecasts downwards for the second financial quarter in a row after a sluggish start to 2023 – are a result of “weak” demand for its products in key markets across the world.
> Shimano’s first quarter sales worse than expected despite already lowered projections
In Europe, the company says, demand for complete bikes was “somewhat low” and industry inventories “remained high”, a result Shimano claims is partly due to “unfavourable weather conditions in early spring”.
A similar story appears to be the case in the North American market, where Shimano says “retail sales of completed bicycles remained weak and market inventories were at a consistently high level”.
“Sluggish sales” in its Asian, Oceanian, and Central and South American markets, meanwhile, were attributed to a lack of consumer confidence due to rising inflation, with interest in bikes nevertheless remaining “firm”.
The company also noted that the continuing production cutbacks at factories are making it “difficult” to absorb the rise in manufacturing costs.
> Shimano’s cycling sales hit record high despite slowing demand
After recording a record revenue of £3.2 billion in 2022, two consecutive quarters of falling sales this year has again prompted Shimano to revise its forecasts for 2023. The Osaka-based brand now says it is expecting sales of ¥450 billion (£2.48 billion) for the year, which would mark a 40 percent fall on its 2022 sales. That figure is also down from the ¥460 billion (£2.53 billion) forecast at the end of the first quarter, which itself was below the ¥500 billion in sales expected at the start of the year.
These downward trends were reflected on the Tokyo stock market, where Shimano’s shares fell by 3.8 percent on Wednesday, after dropping by 5.8 percent when the figures were initially released.
However, Shimano remains confident about the long-term success of the cycling industry, as it experiences a slowdown in the wake of the Covid-19 lockdown-influenced boom of recent years.
“Although the strong interest in bicycles cooled down as progress was made toward recovery to pre-Covid-19 day-to-day routines, interest in bicycles continued as a long-term trend,” the company said in a statement today.
> Will Shimano CUES ease future bike industry supply chain dilemmas? Unified groupsets will “reduce inventory needs and simplifies the servicing process” says components giant
The cooling demand, delayed fulfilment, and high inventory levels cited by Shimano have affected nearly all sections of the bike industry during a difficult 2023.
Last week, UK-based distributor FLi ceased trading with immediate effect, with director Colin Williams citing the impact of Brexit, the complexities and restrictions surrounding UK and EU trading, and the difficulties facing the industry in the post-Covid lockdown period as the main reasons behind the distributor’s demise.
> “If you voted for Brexit, please realise this is 90% because of your decision”: UK cycle distributor FLi ceases trading
Meanwhile in May, Livingston-based distributor 2pure entered administration, just months after the company announced that it was restructuring to focus solely on the cycling industry, following what it described as a “highly volatile” 2022 caused by macro-economic events in the wake of the Covid-19 pandemic and Russia’s invasion of Ukraine.
And in March, Moore Large, the leading UK distributor for well-known brands such as Tern Bicycles, Lake, Forme, ETC, Emmelle, and MeThree, entered liquidation, leading to its £35 million product inventory being auctioned off.
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45 comments
Wow, you ride some serious miles, then you will probably need some replacement parts, but I believe the average cyclist cannot outlast the shimano components.
On your STI issue, couldn't you use other 10speed shifters even maybe from Microshift? I would try researching that before putting my hand deeply into my pockets, I have some crazy combination of MTB road transmission, and mysteriously it works.
Yes, give Shimano (and some others) their due: they produce stuff that's generally well-made, resilient and long lasting. Yet even these good parts can and do wear.
When they do, it would be advantageous to the user (and the planet) if a replacement could be bought or the original fixed with a spare replacement part. But the spares provision is overwhelmed by the new! improved! marketing that makes newer stuff incompatable with older stuff.
Even Shimano must find it difficult to justify the ongoing manufacture of potential spare or replacement parts for older gruopsets, since the originals (as you mention) do last a long time. This fact added to the fashion cycle changing standards means that the market for spares becomes tiny, making their manufacture a costly nuisance for the maker - and perhaps the price of such a rare-spare outrageous.
However, needing a spare STI brifter that one can no longer obtain also obsoletes other related and still functional components of a groupset. That's very wasteful.
*cough* Ultegra cranks *cough*
An exception proving the rule, perhaps?
Since 2008, all the gubbins on me various bikes (seven of them) have been Shimano. (Used to be Suntour but they went bust and all the old racing bikes with it on got sold). Since becoming Shimano'd up, I can't recall any of their bits going clanky. Well, one 2008 STI RH lever that went a bit funny for a month but then righted itself. Probably a cable gremlin that went orf elsewhere after a bit.
Even the wear parts (chains, brake blocks, etc.) take their time getting worn.
I started to cycle commute 35 years ago, using a basic 15 speed mountain bike; I upgraded to 21 speed in the 90's, buying a couple of quality cromoly framed bikes and have stuck with those 7 speed bikes ever since, although I've swapped out the 3 speed cranks for 1 x cranks; Shimano stopped making the high end 7 speed stuff, no demand, but keep churning out their lower end shifters, cassettes, etc., from their Malaysian and Indonesian factories; quality is very acceptable.
I think the idea that companies change things to be incompatible for the sake of profit is a little jaded.
In product development, backward compatability is a millstone which stops you being able to innovate. If 2023 Shimano stuff was backward compatible with 2013 shimano stuff it wouldnt be fundamentally, step change, better than the 2013 product, just gradual improvement. As things stand, the current systems are much better than the older systems partly because they aren't cross compatible.
They should continue to support the older products in my opinion but to keep the top of the line compatible with the older product just serves to make the top of the line worse than it could be.
I haven't bought either a Dyson hoover or an Apple phone for this very reason of designed and wantonly deliberate obsolescence of accessories.
Maybe things have changed since my personal boycot of those brands, but the lesson is that a pissed off customer who resents being so blatantly gouged holds a grudge for a long time.
In some instances this is correct but in others there would be little or no detriment in ensuring backwards capability.
Take SRAM AXS and the original eTap. Would it have been that difficult to have the AXS stuff also support the eTap standard?
When AXS makes the jump to 13 speed that could easily be offered as a firmware upgrade for the existing 12 speed stuff leaving existing users just needing to upgrade chain, cogs etc.
That would be an incredible thing for SRAM to do from a sustainability perspective. Will they? I won't hold my breath.
On the basis that their Wireless Blips have non-replaceable cells and are essentially a consumable, I'm going to stick my neck out and say no.
How would that be incredible for sustainability compared to just continuing to make 12 speed chains and cassettes? You make the choice to replace your perfectly functional drivetrain with the New Shiny Thing. Its not on them not to produce a better product so you can feel like you still have the best thing.
What you are describing is exactly the type of backwards compatibility millstone that stifles development.
How does it stifle development?
It's better for sustainability as people will be able to upgrade without needing to buy new equipment.
You may sneer at those who choose to upgrade but plenty of people do, isn't it better for them to be able to do so in a more sustainable way?
I can see that for some changes and am not upset that my rim brake cables won't work on hydraulic discs - they're clearly different, and the latter do have clear benefits in many situations.
But is the same true for chainsets/rings, freehubs, BBs and rear derailleurs - are they "much better" with each compatibility-breaking change?
I wonder how much of it is exploiting the increase in wealthy but credulous customers - the presence of whom has also attracted new suppliers, leading to an increasing plethora of standards for the likes of BBs at any one time, as well as compatibility issues over the years.
I don't agree with you. Of course they change the groupset design to be incompatible with previous ones for profit reasons. It isn't backward to ensure that next generation groupsets are fully compatible with all groupsets in the range, which they used to be. The reason for this is simple. Companies such as Shimano are run by accountants, if they can change a part in a lever which is plastic instead of alloy, they don't care if they don't last as long, because they have worked out how much more annual profit thay can make by saving 16p on every lever produced. And if they outlast warranty period, but not much longer, they will sell more levers.
That's all very well but when are they launching the new grx di2 12 speed?
Yes, I really need that! At least until 13 speed arrives.
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