Biking through the crisis
The Brazilian bicycle industry sees prospects for higher sales and production in the near future, as a result of a culture shift and of improved infrastructure for bikers.
São Paulo – Brazilian industrial production is declining, but there is an industry that bets on a rebound in the near future, despite the negative outlook of the domestic economy: bicycles. According to the vice president of the Brazilian Association of Motorcycle, Moped, and Bicycle Manufacturers (Abraciclo), Eduardo Musa, 3.6 million bikes were made from January to November, down 10% from a year ago. The number of units made is dropping at least since 2009, but the products have grown more sophisticated and expensive, and this has maintained revenues.
“Revenues have grown constantly [in the past few years],” Musa told ANBA this Tuesday (Dec 8) following a press conference held by Abraciclo in São Paulo to disclose the motorcycle and bicycle industries’ 2015 results. “And this year [revenues] remained flat,” he added.
According to him, recession has hit the industry, but its impact was cushioned by factors such as improved urban infrastructure for bikers, with the building of bike paths in cities like São Paulo, increased support from civil society and governments, and changes in consumer profile and habits.
This change in profile has been underway for quite some time. Twenty years ago, Brazil produced some 6 million bikes a year. Most of them, however, were simple models used by the low-income population as their only transportation option. As income grew, these demographics grew able to afford motorcycles and cars, so bicycles, industry insiders believe, started being sought by wealthier people who were interested in alternative urban mobility solutions, were looking for leisure and sports options and had an environmental concern.
According to Abraciclo’s executive director José Eduardo Gonçalves, this means that instead of the old Barra Forte model, a heavy, all-purpose bike that was ubiquitous in Brazil’s backlands, coastline and city outskirts, the demand today is for higher value-added models with aluminum frames, gears, cutting-edge design, suspension and other gadgets.
“People used to ride bikes out of a lack of transportation options; now they ride them out of choice,” said Henrique Ribeiro, the director of Sense, a manufacturer of electrical and conventional bikes operating out of industry hub Polo Industrial de Manaus (PIM).
The trend picked up steam as additional infrastructure paved the way for improved coexistence of bikers and drivers, such as the bike lanes built in the past few years in São Paulo, the biggest city in the country.
A recent poll by Associação dos Ciclistas Urbanos de São Paulo (Ciclocidade), São Paulo’s urban bikers association, which works to advertise bicycle usage, shows that in the city’s downtown area, where most of the bike lanes are, 40% of respondents said they have been riding their bikes on a regular basis for at least a year. 1,800 people took the poll.
“They are an important set of new bikers,” said Ciclocidade director Daniel Guth. “I’m not sure whether these people have bought new bikes, fixed their old ones, or switched, but there’s a growing demand that’s fueled by the bike paths,” he added.
The poll also shows the factors that led people to opt for the bicycle, and there are more than those mentioned by industry people. According to Guth, the three primary reasons are speed, convenience and reduced spending; a healthier lifestyle and quality of life only come in fourth.
“[The number of people who] say that (choosing bicycles) changes the world, or that it’s better for the environment, was close to zero,” said the director. In other words, the reasons are quite pragmatic, like escaping traffic jams, avoiding parking hassles and saving cash.
The industry is betting this demand will grow, and the numbers look that way. Although domestic production went down this year, the number of units made at the Zona Franca de Manaus hub is going up. According to Abraciclo, 613,747 bikes were made there this year, up 5.1% from a year ago.
Some of this added production came from new plants going online at the hub. Sense, which is owned by the Minas Gerais-state based conglomerate Lagoa, for one, began operating in the second half of 2014. Houston, based in Piauí, went into operation in January 2015. The Isapa group, a parts distributor that’s been an industry player for 50-plus years, acquired a majority stake in Ox Bike in December 2014 and is also producing at the hub, under the brand Oggi.
“We have injected capital in order to improve production,” Isapa executive Isacco Douek told ANBA. “The outlook is extremely positive. As long as the economy doesn’t spoil things for us, in two or three years’ time [the national industry will grow]. That is why we have made an investment,” added Ribeiro, of Sense.
To Eduardo Musa, who’s also president of Caloi, Brazil’s leading manufacturer, the economic crisis itself encourages people to look for cheaper transportation, and the shift in cultural perception of bicycles, encouraged by the new bike paths, should breed more visible effects as of next year. “We have hit bottom by now, it couldn’t possibly get worse than this,” he stressed.
The outlook of bike manufacturers can be seen as a solace in a sea of negativity. According to Rafael Fagundes Gagnin, an economist at the Institute of Studies for Industrial Development (Iedi), recession has engulfed most of industry in Brazil, with basic needs and staples usually performing the least worst.
“The food, cosmetics, cleaning and personal hygiene industries show lower rates [of decline in output], but they are beginning to feel the impact of a lasting crisis,” he said. Other examples include the extractive industries, such as ore and oil, and raw materials like wood and pulp.
Read more on the bicycle industry and the outlook for exports in the link below.
*Translated by Gabriel Pomerancblum