Baltik Vairas sees a great shortage of bicycles: prices will rise, those who want to buy should not wait

In the context of the COVID-19 pandemic, Baltik Vairas has become one of the success stories. It has already been announced that it reached 75 million last year. The company expects to grow this year to 130 million euros. euros.

Company manager Ž. Dubos Delfi says there are many challenges in meeting pent-up demand – the supply of parts remains limited, more important than price, but how to get them. The bicycle shortage, which started last spring, will continue this year and probably next.

“I would advise buyers not to wait or think too much. If you find something you like, buy it because the market is unlikely to be satisfied and full of bicycles this year. Even in 2022 it is doubtful that we bicycle and parts manufacturers “We can catch up with the increased demand for capacity. At the moment, probably the only possible advice is to make a decision as soon as possible, because it may be too late,” says Ž. Dubos.

You have no doubt that bike prices will also go up – the market is under mutual pressure, both due to limited supply and extremely high demand.

“Definitely yes. As much for the growth of components as for the increase of 5 times in the logistics costs of the Far East. Both, of course, due to the lack of bicycles. The market itself dictates that prices will rise. Everything, both the components and the logistics, becomes more expensive and the shortage also increases prices, ”says Ž. Dubos.

It’s hard to say how much prices might change at this point.

Suppose it should be up to 10 percent more expensive. But how do you rate the fact that you will no longer receive discounts in stores or will they be minimal? I think this should also be seen as an increase in the price of the product ”, explains the guide.

Today, Baltik Vaire has around 550 employees, fifty more than a year ago. The average salary before taxes is € 1,456 before taxes (about € 932 “in hand”).

What happened in the bicycle market?

The director of Baltik Vairas does not predict a rapid stabilization of the market; it is very likely that in 2022 manufacturers will only meet demand and the bicycle market will return to normal in 2023. After all, factories are still running at partial capacity due to a lack of components.

“It just came to my attention then. As far as the market itself is concerned, it’s probably all channels where the market is positive and demand for bicycles is huge, driven primarily by the COVID-19 pandemic. There are several reasons for why. One is that the bicycle is becoming more and more popular, even in countries where it is not used as a regular vehicle, because it is safe compared to public transport, ”says Ž. Dubos.

Another reason Europeans have suddenly started to appreciate pedals is that they can no longer go on vacation abroad and look for opportunities to spend their free time there.

“Cycling is becoming an even more popular means of leisure. This is accelerated by the fact that sports clubs are closed and people still want to pour their energy somewhere. And again, the bicycle is becoming one of the safe sports media, ”says Ž. Dubos.

In recent years, electric bikes have become extremely popular, allowing you to commute to work without much physical effort.

“All these trends have come together and the demand has grown very strongly. It is difficult to even assess how strong the demand has grown, because there is simply a lack of bicycles on the market ”, says the director of Baltik Vairo.

According to him, no one had previously predicted the growth of current demand for bicycles in the market, while the pandemic severely affected bicycle component manufacturers and assemblers: a lot of production time was lost during the quarantine, causing a large shortage.

“It just came to our notice then. We have orders – production is fully supplied almost until the end of 2022”, – comments Ž. Dubos.

Virtually all of Baltik Vairo’s products go to Germany, the Netherlands and Denmark, and the company sells less than 1 percent of the bikes in Lithuania.

“It’s an extremely small amount, less than 1 percent, it could be 0.1 percent. And it’s only decreasing every year,” explained Ž. Dubos.

Do not look at the prices of the components, it is important to go to production

The main challenge for Baltik Vairo in the future is managing the supply of components.

“The logistical problems are well known to all: and the lack of containers to carry, it is difficult to find a place on board, probably no one talks about prices anymore, because this is the second priority. At least not the first for sure. The most important thing is to make sure that production takes place. In the last two weeks alone, there have been several negative global and local events that have affected production ”, Ž. Dubos.

He claims that the Šiauliai plant was also affected by the closure of the Suez Canal and customs problems, when the movement of goods on the Belarusian border was blocked due to technical disturbances.

“Although we should be happy with the large orders, the challenges are so great that it is already difficult to evaluate something and plan ahead, because every day there is more and more news,” says Ž. Dubos.

Test all employees periodically

The pandemic caused many production challenges for Baltik Vaira: in the past, a large part of the employees had to be isolated due to cases of illness.

“At the end of November, until mid-December, we practically worked at half capacity, because we simply had to isolate entire shifts due to one case or another. But we found a solution to test employees 100%. Depending on the situation, every week or two, and we extract asymptomatic cases that spread the disease, ”says Ž. Dubos.

It ensures that there is a separate medical point in the company where internal tests are carried out, in order to control the situation as much as possible.

“I can mention such a number that during the peak, as soon as we started testing employees, we found 15 asymptomatic cases in the company that were spreading the virus. We had 500 employees, after the dismissal of the administration there were about 400 employees, and after testing them, there were 15 asymptomatic cases ”, assured the manager.

This year it promises to produce 120 thousand. electric bikes

Baltik Vairas announced in January that it intends to invest 1.5 million LTL this year. euros and reach 400 thousand. the scale of bicycle production, now Ž. Dubos says it can be difficult to reach the goal.

“Because we did not work at full capacity at the beginning of the year due to interruptions in the supply chain and new challenges are being reached, such as the blockade of the Suez Canal, the interruption of the customs system, it will be very difficult to reach the planned 400,000 bicycles. “says Ž. Dubos.

However, this year it is expected to produce more than 120 thousand electric bicycles alone.

“We invested in electric bike lines during the pandemic; we planned to fully charge them in two years, but we were already fully charged before we started, and we have orders planned for this year. If last year we produced around 33 thousand. Mi. Bikes, this one. we will produce more than 120 thousand bicycles a year, and that trend continues, ”says Ž. Dubos.

The company continues to invest in the transition from the production of traditional to electric bicycles, processes are optimized and the relocation of the center of excellence to Germany is also announced.

“We are investing in laboratory equipment, we are looking for a lot of people, we are preparing for further development. “We are investing heavily in IT solutions and will soon begin to implement a new business management system, we are already implementing a document management system. Ž. Dubos.

The factory produces bicycles of international brands, but to reveal them Ž. Dubosas can’t, he just mentions that they are widely known to everyone: after turning the wheel, the bikes return to Lithuania as foreign products.

“The company’s strategy is not to develop our brand, but to develop where we feel strong, that is, in production and product development,” says Ž. Dubos.

Explain that the factory paints the frames, produces the wheels, and assembles the bikes from the components.

“The business and production model is the same as in the automotive industry: suppliers transport components and we assemble”, Ž. Dubos.

The leader shares predictions that by 2030, bicycle sales in Europe should increase from the current 20 million. units, up to 30 million. The market share of conventional bicycles will be deducted by power plants, which currently sell around 3-4 million. units per year.

“Other bicycle-like vehicles will also appear, which will also be used to deliver small loads to city centers,” says Ž. Dubos.

Baltik Vairas is indirectly owned by KJK Sports, a Luxembourg-based holding company that runs active leisure equipment companies.