Auto & Transportation

According to recent statistics from the Brazilian Bicycle Industry Association (Aliança Bike), the total number of locally manufactured, fully imported and locally assembled bicycles nationwide will reach 6 million in 2020, an increase of 50% year-on-year. However, the strong growth of the market has brought about a problem, that is, the lack of raw materials and parts. This lack has affected the normal operation of the industry's production lines.

Brazil’s EXAME website reported on May 24 that bicycles have won more market space in the new crown virus pandemic. It can avoid crowds on buses or subways, can be used as a means of transportation for delivery services, and can provide exercise opportunities for people who do not want to go to the gym. Since March last year, bicycle markets around the world have experienced a sales boom, and this is also true in Brazil.

However, the world is currently facing the problem of insufficient supply of parts and raw materials, and Brazil relies on imports for most of the raw materials. Normally, domestic bicycle manufacturers will store enough spare parts and finished cars for two months. But now the inventory of these two kinds of goods can only support two weeks. Cyro Gazola, vice chairman of the association and president of Caloi, Brazil's largest bicycle factory, said: "Any supplier's delay may cause the entire process to get into trouble."

Cazzola pointed out that in the past 3 to 4 months, due to lack of parts, bicycle manufacturers had to interrupt the production line for 2 to 3 days on average every month. He said: "Without wheels and handlebars, we can't produce a bicycle." The executive said that due to restricted production activities, the current market demand for bicycles is 15% to 20% higher than the supply. According to his estimates, it will take 9 months to 1 year before the production rate can return to normal.

Association President Daniel Guth (Daniel Guth) said that the gap between supply and demand in the bicycle market is global, but it is particularly obvious in Brazil. There are two main reasons for this. On the one hand, under the pressure of increasing global demand, large suppliers are sorting orders in various markets, and prices have also increased. On the other hand, the rise in the exchange rate of the U.S. dollar to the real has led to an increase in the international prices of raw materials quoted in U.S. dollars. At the same time, the ocean freight prices also increased significantly last year.

The increase in prices was eventually transferred to consumers. In the 12-month period ending in April, the price of bicycles in Brazil increased by an average of nearly 20%, and the cost of bicycle repairs increased by an average of 16.2%. However, the official inflation rate during the same period was 6.76%.