Giant delays supplier payments due to falling demand

The current economic situation coupled with a decline in bike sales after the post-pandemic boom has led Giant, the world's largest bike manufacturer, to ask its suppliers for a postponement in payments while the situation normalizes and they sell off accumulated inventories.

Turbulent times for the bike industry

The situation of the bicycle market in recent years is far from calm. Since the pandemic hiatus in 2020 the cycling industry has been in a constant maelstrom of emotions where forecasts are as optimistic as they are negative. The pandemic hiatus brought the market to a halt with many launches having to be delayed and manufacturing volumes adjusted.

This was followed by a real boom of people, who had been locked up at home for months, interested in sport in general and cycling in particular, which brought the fragility of the distribution networks to the light. Even so, practically all brands saw their sales skyrocket during this period.

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Now the inflationary situation generated by the war in Ukraine is once again hitting the market, making production more expensive, together with the drop in demand after the post-pandemic peak, which has caught some manufacturers with warehouses full of products to sell and others that have not yet managed to recover normality in distribution.

In short, a madness that has left us confused about what will be the trend in the near future in the bike market. A few moments that are being weathered by companies in better or worse ways and that have come to affect such huge firms as Giant, the world's leading manufacturer of bicycles.

Giant sent a letter a few days ago to its suppliers requesting a delay in payments of 45 extra days for all orders placed during the period between December 2022 and March next year. According to sources from the brand itself, the reason for requesting this measure was the slowdown in the market during the winter months and the need to sell the large amount of product accumulated in its inventories in order to be able to meet payments.

In any case, according to the brand, this is a preventive measure aimed at protecting against risks while stressing that the company's operations and economic situation remain completely normal.

A situation that is motivated by the decline in sales during the first three thirds of 2022 and that, as far as sport bikes are concerned, has been quantified at 14% less for the Taiwanese company.

Problems in the distribution networks and the accumulation of products in warehouses have become the Achilles heel of many brands in the sector over the last few months, such as the German firm Rose, which accumulated up to 45,000 bicycles in stock, many of which could not be disposed of due to the lack of supply of materials for their assembly. A situation to which they have sought to find a way out with a 15% price reduction.

However, other brands, such as Merida, have said they have not been affected by the situation, pointing out that the boom in demand after the pandemic, which was mostly focused on the lower-middle segment, whose decline now fills the stores, represents only a small fraction of the company's turnover.

In any case, the lack of definition dominates the bike market, something that also affects the final consumer who is thinking of changing bikes and hesitates whether to buy now, fearing that prices will continue to rise as they have been doing in recent times or, on the contrary, hopes to wait a little while for the brands to offer their products more economically in view of the drop in sales and the accumulation of product.