KLAIPEDA - Gas prices are at a record-high: 4.65 litas (1.31 euros) per liter in Lithuania. That spike is partly fueling the increase in peddle power.
In the Soviet times, Siauliai, a Lithuanian city in the north, was largely known for its bicycle factory Vairas. After Lithuania regained its independence, the factory went through tumultuous times. Its pending bankruptcy was staved off by German Panther International GmbH (Panther Group), one of the largest bicycle makers in Europe, which acquired the company. With the acquisition, 90 percent of its production now goes to the West, while less than 10 percent reaches local bicycle stores.
“Already in winter we started feeling a rising demand for our bikes. Though we roll off the conveyor nearly 2,500 units daily, we can hardly catch up with the demand,” says Ramundas Jundulas, JSC Baltic Vairas Production and Technology head. He emphasizes that bicycle manufacturing is very susceptible to constantly fluctuating prices of raw materials. “However, we try not to hike up our bike prices. I reckon our turnover will grow by 11 percent this season. It is a really good result after the slump in 2008 and 2009,” he says.
The bicycle maker points out that most people are price-conscious and seek moderately-priced bicycles. He also notices certain substantial changes in consumer behavior – an increasing demand for more expensive and better quality bicycles. “The trend is just shaping up. Obviously, it has been prompted by the trends in the West, where pedal pushers do not scrimp on their bikes,” the Baltic Vairas head maintains.
Most bike sellers assert that the trend has already reached Lithuania. “A few years ago, bike buyers sought bikes in the range of 300-400 litas. This year, most people tend to pay as much as twice that. The understanding that a bicycle, a means of transport, has to be of good quality has been here,” Viktoras Simonavicius, owner of a bicycle store in Klaipeda, admitted to The Baltic Times.
If you are looking to buy a bicycle in Klaipeda, a seaport city in the west, there are around 15 bicycle stores in the city of 160,000 residents that offer plenty bikes of different brands and price ranges.
What kind of bike to buy? A 2,000-plus litas Easton, a feather-light bicycle from a specialized bicycle store, or a discounted 300-plus litas bike from a Maxima store? Simonavicius grins, maintaining the purchase is up to everyone’s financial capabilities and expectations coming from the bike.
“Nevertheless, those who expect to ride a 300-litas bike for ten years are deeply mistaken. I am aware of many examples when frugal buyers spend quite more for repairs than their bike costs,” the bike seller says.
He maintains that the bicycle’s frame makes up the bulk of its price. “All frames may look similar; however, they are usually made of different materials. Cheap steel frames are heavy and their reliability is doubtful. Therefore, that kind of bike will not cost too much. Certainly, some bikes, like the Free Ride, the so-called street and urban bikes, also have steel frames, but they cost roughly 800 litas,” the seller explained. He maintains that aluminum-framed bikes are usually on the highest tip of the price range. “Many potential bicycle buyers wrongly assume that aluminum frames are frail and fragile, as if those aluminum wires break easily if bent. One should have in mind that aluminum frames are not made 100 percent of the material, as they consist of a blend of aluminum and other metals. As a rule, the quantity of aluminum is engraved on each bike’s frame. The more aluminum, the more expensive the bicycle will be. Some bike frames are being made of titanium and carbon fibers. These kinds of frames are especially tenacious, hard and easy, but they are very expensive,” Simonavicius pointed out.
According to him, the second facet determining a bike’s price is the type of front forks the bicycle has. “It is naive to expect a cheap bike to have good-quality and security-providing front forks. Five hundred-plus-or-minus litas bikes have neither a fork regulation mechanism, nor Lock-Out systems,” the bike store owner says matter-of-factly.
High-quality bike front forks, like a Marzocchi, Manitou, Fox or DT Swiss, he says, cost from 900 to 5,000 litas or more. “In bicycles with this type of front fork, the hardness and softness of the bike forks are regulated according to the bicyclist’s weight, blowing in a certain amount of air,” he reveals. If a bike is with full suspension, the ultimate bike price will be higher.
The country of origin, the bike expert claims, also considerably influences the bike’s price. He warns not to expect to buy all American, Italian or German bicycles in an exclusive bicycle store.
“A sheer majority of well-known bicycle makers, in order to decrease their production costs, have relocated their factories to Asia. For example, bikes of such famous brands like Merida, Giant, Connandale and Colnago are being made in Taiwan. No one should question the quality of those bikes – it is superb, as the most-recognized bike brands invest huge money in choosing the best materials and supervise quality. If these bicycles were made in Italy, Germany or the United States, where the companies are headquartered, they would cost at least twice more,” Simonavicius emphasized.
The bike seller notes that even Lithuanian bicycle maker Baltic Vairas does not make bike frames in Lithuania. “The company receives them, as well as other major parts, straight from Asia. Baltic Vairas only assembles bikes in Lithuania, sticks on the label Panther and exports most of them to Western Europe, especially Germany,” the store owner revealed. Baltic Vairas, like other major bike manufacturers, he emphasizes, performs design, modeling and testing at the main headquarters.
So will a ride on a 400-litas bike and a 2,000-litas bike differ a lot? Simonavicius asserts convincingly that the difference is staggering. “It is like comparing a ride in a Soviet-era Moskvich car and a brand new BMW. In the latter, the ride is smooth, enjoyable and self-esteem rewarding. A ride on a cheap bike will be exhausting, prone to troubles and foul-ups. Oh, yes, it will be squeaking and screeching. Is that what you want to show off to your girlfriend or new boss, who you may bump into on your ride?
“A cheap bike will require a considerable amount of repairs. It is unavoidable. I know some bike store owners who rake in most profits from bike repairs,” the bicycle seller acknowledged.
Ramunas Siugzda, director and co-owner of Alytus and Kaunas-based bicycle stores 2 Ratai (Two Wheels), has been in the business for 14 years. “I have hardly felt the downturn. The real downturn has come for me now. It is due not as much to the decreased people’s purchasing power, as much as to the staggering levels of emigration – most young, active and bicycle sports-and-leisure-oriented people have left Lithuania.
Besides, stolen and semi-legally brought in bikes from Schengen countries have glutted the Lithuanian bike market, distorting it,” Siugzda infers. He also notes that second-hand and stolen bike Internet sales strangle bicycle sales in conventional stores. “One day, just out of curiosity, I put three words - I buy bike - in the Google search engine. To my astonishment, the search yielded over 700 bike sale-related advertisements,” the bike store owner said.
He acknowledges that he fights with desperation every time he enters a Kaunas market. “Days ago, those market bike sellers would take up a small section of it. Nowadays, they have encroached onto vast adjacent spaces, offering literally thousands of varieties of bikes. Some luxurious bikes that I see are in quite decent shape, but they cost way under their market price. Obviously, they are either stolen or brought in, evading taxes,” the bike seller notes. He says that some market bike sellers have stepped ahead in meeting bike buyers’ requests – a pledge to bring in a certain bike from abroad. Oh, yes, most likely, a stolen one.
Recently, Lithuania’s Bicycle Business Association, unifying mostly luxury-brand bike sellers, was founded. According to Siugzda, it includes 50 bike sellers so far. “I am a local bicycle seller. People still buy bikes in my two stores; however, the sales are considerably worse than last year,” the 2 Ratai owner acknowledged. However, he was quick to add, “Bike sales are down, but bike accessories and bike part sales are flying.” He explains this by the prevailing trend of buying second-hand bikes. “These bikes, as a rule, break often. Also, people want to improve their second-hand bikes. I heard some bike store owners manage to do well just providing bike repairs and selling accessories,” Siugzda relates.
The bike seller often catches himself wondering about the origin of many seemingly brand-less bikes out on the streets. “Although I call myself a bike expert, I fail to recognize many bikes,” he says. He guesses they are smuggled into the country from non-EU countries. In this case, bike importers, he says, have to pay the so-called anti-dumping taxes along with other duties, which, ultimately, hike up the final price. “I strongly suspect those un-branded bikes are part of an illicit activity,” the man contemplates.
Asked about the most hip bike brands in Lithuania, the store owner says that Panther bikes take up the bulk of the market. “It is because Baltic Vairas, the Lithuanian and German joint venture, produces this brand of bicycles,” he explains. In the popularity rankings, he says, Focus is a runner-up.
The bicycle entrepreneur notices that certain bike brands serve as specific marks of certain social groups. “For example, snobbish and cocky well-to-do youngsters, as a rule, cannot see their life without a German Cube bike. Indeed, the bike has an excellent exterior, superb technical features and, certainly, an impressive price-tag,” Siugzda grins.
However, he stresses, the trends come and go. Nevertheless, he asserts, pedal-pushers tend to pick up a more expensive quality bike this season. “Besides, bike buyers have become very bike-savvy. Like that bald and scrawny suit-wearing sexagenarian, who recently walked into my store and asked me such hi-tech questions that left me bewildered, wondering whether he was an executive of a major bike brand,” the bike seller chuckled.
He admitted to The Baltic Times that he often ponders reshuffling his business. “If I was to start a bike business today, I would go to a Western European country, buy hundreds of second-hand bikes, bring them back here, refurbish them and put them on sale in purposely established discount-bike stores. In addition, I would open a bike-repair and accessories center, similar to an auto-repair shop. I feel an itch from the excitement. No doubt, it would pay off, however, my bank loans hold me back,” Siugzda confessed.
He still misses the years of 2002-2003, when he would go to China in a cavalcade of trucks and bring back to Lithuania thousands of Chinese-made bikes. “I would set a very small mark-up for those bikes and sell them at a very moderate price here. The sales were flying. Regrettably, the European Union has passed stringent anti-dumping and other tax-tightening laws, which all have cut off the golden vein,” the businessman remembered.
Rytis Paulikaitis, a bike store Vasare owner, chimes in Siugzda’s reasoning, asserting that people buy mostly “very expensive bikes or worn-out second-hand ones.”
“Though, generally, the downturn has not hit our bike sales a lot, we started seeing some nice pickup this season. We have more walk-ins and more sales. It is a good sign,” Paulikaitis says. He acknowledges, however, that stolen bikes, mostly brought from Western Europe, choke the legal bike business. “There are tons of bikes that are either stolen or brought in from non-EU countries, mostly Asia, evading anti-dumping and other taxes. The abundance of the bikes kills law-abiding bike market players,” he asserts.
The bike seller says that, in terms of bike types, city-comfort and trekking bikes prevail on Lithuanian roads. “Had we mountainous regions, like in Switzerland or Italy, we would have a lot more mountain bikes,” he says. However, the seller admits, the youth prefer mountain bikes. “Particularly MTB type bikes,” the Vasare owner notes.
He is convinced that the bicycle market has not reached its potentials in Lithuania yet. “Ireland is somewhat similar to Lithuania in its population size. However, the bike prevalence is incomparably higher there than in Lithuania. Therefore, the bike business is set to grow in Lithuania,” the entrepreneur concluded to The Baltic Times.
However, Egidijus Ivanauskas, the Geras Dviratis (Good Bike) store manager in Vilnius, disagrees with his counterparts Paulikaitis and Siugzda over the crisis’ little effects on the business. “Those who brag of a good bike business must be out of touch with it,” he says, admitting to a 15 percent bike sales slump, compared to 2010. “Facing the crucial crisis-time dilemma – whether to buy a bicycle or something else – nine out of ten residents will do the latter,” Ivanauskas says.
Like his above-mentioned counterparts, the Geras Dviratis manager acknowledges that stolen bike sales “kill the legal business.”
“When I look through Internet bike sale advertisements, I can gauge that 60-70 percent of the bikes are stolen. Most people do not even hide that they ride a stolen bike. I can hardly fight the feeling that it is a part of the prestige to own a stolen item in Lithuania,” the bike store manager scoffs.
Geras Dviratis stores sell different brands of bikes, however, Giant, Merida and President bikes prevail. “We were selling Baltic Vairas’ Panther bikes as well, but recently we axed the deal, as the company’s price policy is incompatible with our suggested retail price policy,” Ivanauskas maintains.
He says that “competition is comparably little among bike sellers.” Certainly, I disregard the black bike market’s ominous impact,” he adds. The bike store manager believes that the market has not exhausted its limits yet and is bound towards growth. “We still have to catch up with our closest neighbors, Estonia and Latvia, where, statistically, the bike prevalence is a lot bigger. Estonians envied our Lithuanian bike stores ten years ago. However, powered by the Scandinavian neighbors, they have outraced us. I say they are beyond reach for many years to come. There is much to think about for us in Lithuania,” the store manager noted.