Letter from America: Who Is This New Bike Market Dominator?

Santa Fe, New Mexico, USA

It’s fair to say Pon Holdings BV’s decision to snap up Dorel’s bike biz sent a risible ripple through the executive ranks at major brands – Trek, Specialized, Giant, Accell and a few others.

What could this audacious US$810 million (A$1.089 billion) move by a Dutch conglomerate mean for future market share among the industry’s top brands? Let me hazard a two-word guess: Nothing good. Pon is a 41-year-old company that’s built around two key principles – moving people and moving stuff.

Although privately held, it reports revenues of US$8.5 billion (A$11.3 billion). Of that, including Pon’s purchase of Dorel, its estimated cycling revenue will top US $2.9 billion (A$3.86 billion). That puts Pon among the top five bicycle suppliers in the world, or so the company says.

It also has manufacturing chops which, outside of Giant, means most top US suppliers must rely on third-party factories in a world where vertical integration seems to be the trend. And Pon’s purchase of Mike’s Bikes, which apparently sent Mike Sinyard into apoplexy, signifies that Pon is super-serious about the US market.

What you may not know: Pon is one of the three largest bicycle manufacturers in Europe via its ownership of Derby Cycle AG, publicly traded on the Frankfurt Stock Exchange. Derby enjoys a 14% market share in Germany with its Kalkhoff, Raleigh (Germany), Focus, Rixe and Univega brands.

Prior to its purchase of Dorel, Pon brands included Santa Cruz and its sister brand, Juliana, Cervelo, Gazelle, Union (a 100-year-old Dutch brand), and Urban Arrow, a cargo bike being sold into the booming cargo bike market.

With the purchase of Dorel’s bike division, it added Cannondale, Schwinn, Mongoose and GT, as well as Brazil’s Caloi brand and factory, to its portfolio. Besides that, Pon also owns Dorel’s Charge and KidTrax brands and its online sales system.

The Dutch company has its own carbon wheel brand, Reserve, and a P&A company, BBBcycling.com.

Pon also owns Bike Mobility Services (BMS), supplying bikes for employers and their employees through Lease a Bike, BusinessBike, Movelo and FietsNED, taking advantage of European tax incentives to get people on bikes and out of cars. BMS is built on a system of dealers and others connected digitally to some 20,000 companies with more than 150,000 people riding bikes through its programs.

And it has a mobile bicycle repair business as well. And finally, it owns a retail outlet in Amsterdam, Ride Out, as well as its recent purchase of Mike’s Bikes, a 12-store chain, which also included Public Bikes, its urban line.

Just a few more factoids: Pon Bike had more than 2,400 employees and sold some 800,000 units last year, with e-bikes around 70% of its sales. With the addition of Dorel, estimates are Dorel will add some 500,000 units from its Sports Group and more than 4 million units from Dorel’s mass-market division. And Pon has an eye on expanding its retail footprint. E-mopeds? E-scooters? I have this nagging feeling that I’ve missed something!

Wait, there’s more: When it comes to autos, Pon is no slouch. Pon cut its teeth in 1947 on the humble Volkswagen when Ben Pon Sr began importing them to the Netherlands. And it was his son, Ben Jr, who launched Pon Holdings in 1980. Today, Pon is the Netherlands’ leading car importer and does a fair amount of business in the US.

For you motorheads out there, and you know who you are, Pon bought Houston’s indiGO Auto Group in 2020 after several years of partial ownership. Brands sold or leased by indiGO, at its exclusive locations, include Porsche, Lamborghini, McLaren, Jaguar, Ferrari, Aston Martin, Bentley, Rolls Royce, BMW, Audi and, of course, Volkswagen.

And this just in: Pon has struck a deal – collaborating with the Volkswagen Group and Attestor Limited (a London asset manager) – to snap up Europcar. Anyone who’s travelled to Europe and rented a car most likely did so through Europcar. The deal, when it closes, will value Europcar at about $3.4 billion (A$3.7 billion). VW will be the majority shareholder.

Sadly, there’s not enough space to go into Pon’s logistics chops, engineering, its Caterpillar connection, its marine division and other stuff. But you get the picture. It’s a big company – 14,000 employees with international clout gunning to get bigger. Keep an eye on future tie-ups between Volkswagen and Pon.

What does it all mean? Let’s start at the top. The company’s boss, Janus Smalbraak, has been Pon’s CEO for 11 years. And in the world of global conglomerates, that’s a lengthy tenure for a 53-year-old who, as luck would have it, is an attorney who’s also burnished his resume with an MBA.

It’s fair to say that under Smalbraak, Pon executives are driving the company toward connected mobility. It’s about offering ‘multi-mobility’ to its customers, whether it’s cars, bikes, scooters, bike-share or other mobility services.

Smalbraak refers to Pon as an “international mobility group”. Sounds a bit fuzzy, a little PR fluff perhaps. But dig into the company’s profile and an emerging strategy views the notion of enhancing ‘individual’ transportation as critical to its long-term success. Rent a car from Europcar and toss in an e-bike for those congested city centres.

Build out a retail base and tailor bicycle inventory for local customers, or service Pon-owned bike-share programs.

Pon views the globe’s fast-growing urbanisation (big cities get bigger and more congested) as significant. It views efforts to hold the line on global warming, the need for improved sustainability and a transition to electrified zero-emission mobility as core to its future.

Much of this works best in western Europe right now where transportation – planes, trains, automobiles and bikes – closely link key urban centres. In the US? Not so much. But what Pon has is scale, as digital entrepreneurs like to say. And that scale, with access to capital, particularly in Europe, should give Trek, Specialized and other big company executives pause as they ponder their future in the bicycle industry.