For Flyer boss Andreas Kessler, the weak e-bike market after the corona pandemic is a “valley of tears” that the entire industry has to endure. He wants to do a lot of things differently in the future.
Flyer electric bikes are no longer as popular as they were during the Corona pandemic. This applies to the entire industry.
Gaëtan Bally / Keystone
Andreas Kessler, after a surge in the pandemic, the e-bike industry is going through difficult times. Your company alone laid off a quarter of its employees in 2023, and there were further layoffs recently. How did the crisis come about?
The adjustments were economically necessary due to the difficult market situation. In general, the difficulties have to do with several factors. On the one hand, the market has developed less positively than expected – the already reduced sales expectations have not been fulfilled. Purchasing power in the Central European markets is rather weak and will not recover quickly. On the other hand, the supply chains are not as professionally set up as in the automotive industry, for example, and cannot react quickly enough to market changes. In Asia, the number of frames produced is sometimes written on blackboards with chalk.
Can we expect Western standards in low-wage countries?
In fact, we sometimes have too high expectations that frame manufacturers in particular cannot always meet – for example when it comes to color consistency or delivery reliability. There are also cultural differences and misunderstandings in the agreements.
The warehouses at Flyer and other e-bike manufacturers are full, and excess capacity in the high six-figure range wants to be reduced. How could this happen and what strategies can be used to resolve the situation?
We all rode this Corona wave with high demand and knew that it would be over at some point. But no one had the courage to be the first to go down – that would probably have been rejected by the owners or shareholders. You’re always smarter in hindsight. Now the goods have to be sold – sometimes with discounts at all levels – over the next few quarters until inventories are back to a healthy level.
Andreas Kessler, CEO Flyer.
PD
Growing up in the outdoor world
Andreas Kessler (59) has been running Flyer, which was founded in 1995, since 2016 after the business administration graduate worked for ten years at Odlo as CEO and at Mammut as international sales manager. Previously, he worked for ten years as Regional Sales Director (Asia) and Managing Director USA for the Swatch Group.
What needs to change in your company and others like it to be better prepared for a downturn in the future?
I think all of us in the industry need to learn the lesson that trees don’t grow to the sky. This can be avoided by communicating more closely and more on an equal footing, at all levels. And by becoming faster in decision-making, that is important for the sluggish supply chain. In the past there have been delivery times of up to 900 days, with limited options for canceling or at least postponing. When Corona and thus the enormous demand for bicycles was over, the ordered components came like an avalanche that almost crushed you. The result still concerns us today because there is much more of everything than can be sold.
What exactly is that about?
Primarily at the consumer. It covered its needs before and during Corona – not just with us. This was also seen in garden furniture or fitness equipment. Now people are investing more in travel and less in high-priced products. The geopolitical situation has also changed, the mood is depressed, there are layoffs, and as a result the wallet is no longer so loose.
What does this mean for premium providers, of which you are one?
The market has shrunk over the last 24 months. But it is now back to where we were in 2019. And in the premium sector, consumers are less price sensitive – this can also be seen in the watch industry, for example. Expensive products continue to be purchased. At the same time, we focus heavily on quality. Our e-bikes are developed, assembled and tested in Switzerland, because safety is also important when someone is traveling on two wheels at 30 to 50 km/h. Our strengths are also the demand for longevity and spare parts that will be available for a long time. They are also noticed and with them we differentiate ourselves from lower competitors.
What happens now to the numerous 2023 models that are not allowed to cannibalize the 2024 models – do they perhaps have to be donated, dismantled or even disposed of?
These options listed can only be implemented to a limited extent. What we do is: adjust structures internally, for example with job cuts or adjusted sales expectations. To do this, we canceled what was possible. We are now letting certain models run for a year or two longer. And we try to look for opportunities together with our dealers, such as offering discounts or working with currency here or there – not too much, as others do, but just enough to bring the goods onto the market. Because in our camp it is of no use to anyone. And unfortunately there are no solutions where the quota disappears with a snap. All players in our industry are currently having to go through this valley of tears. From our perspective, it will take around twelve to 18 months before we can return to normal. But one thing is also certain: price pressure will continue to rise.
How to prevent such a situation from happening again?
The measures mentioned work, even if they are painful. From a business perspective, they were necessary so that Flyer could continue to stay healthy. We will be thirty years old in 2025 and have an excellent public reputation. That supports.
What does this mean for your portfolio? In 2024 you launched four new models, and two more will be added next year. At the same time, Flyer is streamlining its range of drives or is planning new collaborations, for example in the area of networking, where it will soon be looking to join forces with Bosch again. . .
Let’s start at the beginning: Were six new models right during these difficult times? In retrospect you have to say: yes. Because developments continue. Dealers also like to order new products, and they sold very well – with a Pinion drive, for example, because there was great interest. That helped us. When it comes to drives, everything remains as it is at the moment – Panasonic still has over 50 percent, Bosch currently has around 40 percent of total sales, but that will turn in favor of Bosch in the next three or four years: demand in retail and the customers are there, and this drive can be brought into service almost anywhere in the world. Pinion comes in third because this is a high-end niche product in terms of price.
Keyword innovations: Where do you see the most important trends in the coming years?
One is certainly the issue of lightweight construction: range used to be the most important thing, but that has changed – not just for mountain bikes, but also in urban areas. The second big trend is digitalization and connectivity, which already exists in the car and motorcycle sectors, including theft protection and GPS tracking. When it comes to other features, I think you have to distinguish between sense and nonsense, but service messages or individual settings – more reach, less support – will certainly become more important. Trend number three is that everything is becoming much more compact and increasingly integrated: no more tangled cables on the handlebars or smaller motors that are hardly visible anymore. You already have to look twice at light e-bikes to recognize their electrification.
At the same time, you produce your own bicycle components such as lights, handlebar bridges and luggage racks under the Flyer One label – why is that?
We are convinced that this is important in order to differentiate yourself from the competition. Today, if you place two e-bikes from different manufacturers next to each other, they have become interchangeable: components such as the drive system, tires or saddles come from the same suppliers. If you manage to offer added value, that is a selling point, especially among premium manufacturers. So we will continue to do this – certainly not with 30 components, but where it makes sense.
Flyer has only ever built e-bikes, but not in all segments: Cargo no longer exists, the focus is clearly on tour and city bikes – will it stay that way?
The city and trekking sector generates two thirds of sales. That’s our DNA, that’s where we come from and that’s where we stay, rounded off with mountain bikes and crossover models.
Premium means longevity – you might think that Flyer is getting in its own way because customers are inevitably coming back less often. Or should you return to a healthy quota?
That’s exactly how it is. We want to cover certain segments and move away from the annual model. So there will be less frequent model changes, in the future only about every four years – previously it was every two to three years. Of course, you have to follow the development of the component manufacturers, but that doesn’t mean that you always have to have the latest and best equipment on board with all models. This approach helps enormously.
Does this apply to the entire industry? Will there be a concentration on respective strengths, perhaps a reduction in brands? Or is the offer becoming increasingly differentiated and fragmented?
There will definitely not be a reduction. In the medium and long term, once this dry spell is over, things actually look very positive for the e-bike industry. There will be consolidations here and there, some brands will disappear or be bought up. But a few new ones are also emerging. Especially in the automotive sector, there seems to be a lot of interest in gaining a foothold in our market: Bombardier and Porsche are developing engines, the latter for their own high-end e-bike, but ZF will also soon be presenting a completely new drive, joined by many newcomers such as DJI. This also shows that the trend towards e-bikes will continue. And with the strategy of manufacturing e-bikes in Switzerland, we are prepared for the challenges of the future.
