What Brexit means for bicycles

As the clocks chimed in 2021, the 11-month Brexit transition period drew to a close, marking the end of the long road to the UK’s separation from the European Union. And barely had the New Year champagne bottles hit the recycling bins than stories began to appear about the impacts of leaving our closest and largest trading partner.

The cycling world was no exception. Brooks saddles, we were told, were no longer available in their nation where they have been manufactured for 150 years, because the company’s distributor is in Italy. Other reports related how the Sheffield-based bike brand Cotic suspended sales to Europe because the regulations over what constituted a “British-made” bike were too complicated to untangle. Sales in the other direction were affected too: in protest at what it described as “ludicrous” VAT rules imposed by the British government, one online bike shop based in the Netherlands pointedly said that “we ship to every country in the world... except the UK”.

The truth, as often, was less dramatic than these early headlines suggested. As the dust settled, it emerged that Brexit was not going to be the end of cycling life as we knew it. Brooks quickly clarified that although sales through its own website were affected, it had its own UK distributor which would still happily sell us those classic leather perches, EU or no EU. By the middle of January, Cotic had sifted through the relevant bits of the 1,200-page trade deal and sales to Europe were back up and running – albeit with a 14% import duty making the company’s bikes €350-€600 more expensive for EU customers.

True, Dutchbikebits.com still isn’t selling to Britain, but there is no shortage of European retailers that will – even though the new VAT rules mean that they are now obliged to collect UK VAT at the point of sale on shipments costing less than £135. (For more expensive orders, duty and tax are generally collected by the delivery company, but the rules on what is payable are complex.)

Double impact

Trying to assess the impact of Brexit on the bicycle industry is greatly complicated by the coronavirus pandemic, which has had both positive and negative effects on cycling over the past year. The quieter roads of lockdown, coupled with glorious weather and the fact that exercise was one of the few reasons we could get outdoors, led to a much-heralded bike boom in spring and summer 2020 – a phenomenon that was further boosted by investment in temporary infrastructure to allow safer active travel.

However, there was also an enormous economic impact. While bicycle shops were allowed to remain open as essential businesses, some saw their customers stay away, either through fear of venturing onto the high street, or because their income had dropped. Demand soared for bikes – and for components as people fixed up neglected machines – just as supply dried up. Production dropped as factories in the Far East and elsewhere were hit by the pandemic, meaning that even before the looming Brexit deadline, many shops were struggling to fill orders.

The Bicycle Association recently published the first monthly post-Brexit trade figures for the UK bike industry. These come with several caveats – apart from the coronavirus effect, they may also be distorted by changes in the way exports to the EU are recorded, and the Bicycle Association warns the data should not be taken as an indicator for longer trends. Nevertheless, they make interesting reading.

The value of bicycle exports from the UK to the EU fell by 60% year on year from January 2020 to January 2021, while exports to the rest of the world rose by 61%

Figures: Bicycle Association

The value of bicycle exports from the UK to the EU fell by 60% year on year from January 2020 to January 2021, while exports to the rest of the world rose by 61%. Import figures showed a similarly dramatic turnaround, with those from the EU falling by 59% while those from the rest of the world rose by 57%.

The picture will become clearer once more data is available; the Bicycle Association plans to provide more analysis once figures for the first quarter are published in May. For now, it says that attributing all these changes to Brexit would be “premature”.

How British is British?

But isn’t Brexit meant to give a boost to British firms, by allowing the government to set tariffs and protect trade from foreign competition? And didn’t the government negotiate a free trade agreement with the EU? In theory yes, but in today’s globalised world things are often not that simple. Take the example of Bird Cycleworks, a British mountain-bike brand based in Hampshire. The frames are designed in Britain, but, like many other British brands, they are built in Taiwan and then shipped to the UK, where they are assembled using a variety of components from different countries.

However, the “rules of origin” requirements in the EU trade agreement allow no more than 45% of the value of a product to come from parts sourced outside the EU or UK, otherwise the product is liable to duty if it is sold in the EU - which presents a problem in cases like this.

“I was disappointed to discover that the ‘free trade’ deal was actually far from that,” says Dan Hodge, co-founder of Bird. “The requirements now mean that all our bikes attract a 14% import duty into the EU, while our framesets attract a 4.7% duty. This is a far cry from the previous trading relationship we enjoyed as part of the EU. The UK government website was noticeably lacking in information – in the end we had to use the EU website to find out the details on the rules of origin requirements.

Hodge says it is still too early to assess the financial impact of Brexit on his company. “Previously we sold around 30% of our bikes into the EU, and it is the end customer who has to pay the 14% import duties. I'm sure that this will be putting some potential customers off, which will mean lost sales. We haven't had any financial issues from Brexit on our incoming stock because not much has changed on that front. Most of our stock comes from the far east so we're already dealing with customs duties on import there.”

Supply and demand

In fact, the biggest issue Bird has faced – like many others in the industry, has been supply shortages. “Component stock is a problem at the moment, but I can't attribute that to Brexit,” Hodge says. “Coronavirus has resulted in huge demand for bikes and as a result the lead times on parts has increased significantly. The change in the market as a result of coronavirus makes Brexit look like a minor issue by comparison.”

The lack of stock has also been a problem for bike shops. Eamon McConvey owns McConvey Cycles, a family business in Belfast, and says coronavirus, not Brexit, has been the big challenge. “For us Brexit isn’t really a problem,” he says. “We have unfettered access to the Republic with the Northern Ireland protocol, and we can also send goods to the mainland UK with no documentation, although that’s not the case for people shipping the other way, from Great Britain to Northern Ireland. It is really difficult to get stock at the moment, but that’s not to do with Brexit."

McConvey also points out that prices of bikes and components has gone up across the board, but again it is hard to say how much of this is due to Brexit. At least some of the increases can be attributed to transport costs from manufacturing sites in the Far East, with reports in December that the cost of sending a shipping container from China to Europe had quadrupled.

Reduced supply means that many shops cannot get hold of nearly as many bikes as they would normally – leading to frustration as there are such high levels of demand. McConvey took the decision to stop selling bicycles online in order to preserve some stock for local customers. “At this time of year I’d normally have 600 bikes in stock,” he says. “This year I’ve got six.”

Thinking positive

The full implications of Brexit will likely not become clear until the overshadowing effects of the pandemic fade – and it’s likely that problems will soon be ironed out. As McConvey says: “If there’s a will there’s a way, when money is to be made.”

The continued restrictions on international travel could also combine with a Brexit-fuelled sense of national pride to provide a boost for the homegrown cycle industry, with more people choosing to take holidays and tours in the UK. We can all do our bit to support local bike shops and cycle-friendly cafés and accommodation.

And those complex rules on exports to the EU should encourage companies to use British products, and manufacture in Britain where possible. Dan Hodge, at Bird, acknowledges this and is working to make his bikes more British. “For example right now one of our frames is classed as a Taiwan product,” he explains. “But if we only source the welded parts from Taiwan then get all the small parts (pivot axles, linkages etc) made here in the UK then after we assemble the frame it has sufficient UK added value to count as a UK product, which means the complete bike will also qualify for zero tariffs into the EU.

“We're also looking at complete frame production here in the UK but have a lot of work to do to make that commercially viable. So one positive is it is driving us to support UK manufacturing more, which I think is a good thing regardless of whether you are pro or anti Brexit.”

Main photograph: Creative Commons, Peters Picture; flic.kr/p/2fhLCjW