The UK bike industry was one of the sectors that had a ‘good pandemic’. With people taking to two wheels in lockdown, sales of bicycles in the UK were up by 60% last year reported the Guardian.
However, since the UK-EU trade deal was sealed at the end of 2020, there have been concerns the cycling boom could go flat as the industry wrestles with new regulations around imports and exports.
Rules of Origin issue
According to Road.cc, the UK bike sector has been hit by a post-transition and Covid-19 combination of new paperwork and delays.
Although bikes are built in the UK, many are imported, often from the Far East, as are the majority of bike components which come from Asia, Europe and America.
Even if a bike is assembled in the UK, for it be classified as British within the terms of the UK-EU trade deal, it needs to consist of at least 70% British materials and parts.
If a bike doesn’t meet this threshold, then it is subject to 14% duty tariffs or 4% for framesets when selling into the EU. Products coming into the UK from Europe which don’t meet the required percentage of European origin are also subjected to these tariffs.
If a frame is Asian-made, with components from manufacturers such as Shimano and Sram, which do not originate from the UK or EU, it is almost impossible to reach the required percentage.
Lost sales
Gloucester bike brand Quella has said that it could lose 30% of its sales this year, Punchline reports. With frames and components built in China and Taiwan, it faces 14% tariffs on each sale, with some duty up to 45%.
“We just cannot sell to wholesalers at our current rate, it is just not sustainable,” said founder Mike Mellor.
The BBC reports Ipswich-based bike shop Elmy Cycles owner Steve Grimwood saying Brexit “is affecting the whole industry”.
Some of his European suppliers, such as Bianchi and Ridley, either suspended shipping until the middle of January or factored in 5% to 10% price increases to cover extra costs.
Another European supplier, Dutch Bike Bits, took the decision to stop selling to the UK at the beginning of the year, reports the BBC. The specialist company ships to any country in the world apart from the UK due to post-transition customs administration and taxes.
VAT switch
A further complication arises for bikes sold online direct to consumers. From 1 January, VAT is being collected at the point of sale rather than at the point of importation.
This means that overseas retailers sending goods to the UK are expected to register for UK VAT and account for it to HMRC if the sale value is less than €150 (£135).
The new VAT rules have hit customers of UK bike brands such as Ribble, which has waived the 14% tariff for European customers who bought bikes between 1-17 January this year, Road.cc reports.
The company has now clarified pricing on its website to highlight the additional costs that EU customers will face.
Wait longer, pay more
German manufacturer Canyon, which sells direct to consumers, paused sales to the UK before Christmas, reports Road.cc, but has now resumed bike sales to parts of the UK after working to smooth out the process of importing.
However, UK customers will pay more than their European counterparts due to additional costs associated with the increase in import duties when sending products from the EU to the UK.