Shimano warns of a possible price increase due to the war in the Middle East

Shimano has warned that it could implement a slight price increase on some of its components starting in August as a result of rising production costs stemming from the war in the Middle East. 

Shimano anticipates a slight price increase due to rising production costs

In the information published by Bicycleretailer.com, the Japanese company explains that the direct impact of the conflict on its sales is very limited, but that the consequences on the supply chain are indeed increasing manufacturing costs.

Although much of Shimano's analysis refers to the situation in the U.S. market —especially due to the effect of tariffs and consumption— the factors justifying this possible increase are of a global nature. The rise in raw material prices, the cost of seeking alternative suppliers, and the increase in maritime and air transport costs affect the entire industry, so it is reasonable to expect that this pressure on costs will eventually be passed on, to a greater or lesser extent, to different international markets.

A very contained increase, far from the scenario experienced after the pandemic

Shimano's message is far from anticipating a new period of sharp price increases like the one the sector suffered during the crisis caused by Covid-19. In fact, the company expects to pass on only a portion of the increase in its costs to the final price of the components.

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According to the financial forecasts presented by the manufacturer, the expected increase amounts to approximately 1% on the sales of the cycling division during the second half of the year, a very moderate figure that aims to partially offset the rise in manufacturing costs.

The company estimates that the impact of rising raw material costs and price increase requests from its suppliers will result in about 4 billion yen in additional costs during the second half of the fiscal year. Of that amount, Shimano expects to recover around 2 billion yen through the price adjustment that would begin to be applied during the month of August.

Raw materials and transport, main culprits

Shimano explains that the conflict in the Middle East has little direct influence on its revenue, as sales in that region represent less than 1% of its business. However, it is having much more significant indirect effects.

The manufacturer points out three main factors behind the increase in costs:

• The rise in raw material prices
• The need to secure alternative supplies
• The increase in maritime and air transport rates

Therefore, all signs point to consumers potentially starting to see slight adjustments in the price of some Shimano components in the coming months, although, for now, the manufacturer conveys a message of calm and is very far from the scenario of sharp increases and supply issues that the sector experienced after the Covid-19 pandemic.