money How coronavirus is leading to a spike in bike demand
Trek Bicycle CEO & President John Burke joins Yahoo Finance’s Zack Guzman to break down how the coronavirus is impacting bike demand, as many Americans are staying at home during the outbreak.
Video Transcript
ZACK GUZMAN: Welcome back to live coverage here on Yahoo Finance. I'm Zack Guzman. Right now we still have the Dow off more than 2%, though it has rebounded slightly off those session lows we hit about two hours ago. We'll continue to track those moves and bring you the latest on that front.
Meantime, we are watching more Americans in the way that they're traveling and working out in this coronavirus crisis. As people turn away from subway travel and car transport, we've seen an increase in the sale of bicycles across the country, some bike stores reporting a nearly 1000% jump to bicycle sales as this crisis continues.
For more on that, I want to chat with a man who's been running a pretty large bike company you might have heard of before. Started at Trek Bicycle in 1984. Sales back then were about $20 million. Now, Trek doing well over a billion dollars in sales in over 100 countries. We're joined by the CEO and president of Trek Bicycle, John Burke, on the show.
Mr. Burke, I appreciate you taking the time. I also understand you're an author of a new book called "The Presidential Playbook 2020," some ideas-- they're nonpartisan ideas-- on how to save America. We're going to dig into those topics in just a sec. But first wanted to start with what we're seeing on the bike front, because 1000% percent jumps for people selling bikes is pretty insane to get into. So what are you seeing on the demand front right now for bikes?
JOHN BURKE: Well, thanks for having me. We're seeing large demand not just in the US, but we're seeing it all over the world. And especially with COVID-19, people stuck inside, people want to get outside. People want to get active. People don't have sporting events to go to. And then you put transportation in it, and people are finding out that the bicycle really is a simple solution to a lot of different things. So you know, bike retailers across the country are seeing a huge increase, and so are we.
ZACK GUZMAN: How hard has it been to keep up with that demand? Because we've seen industry after industry struggle. I mean, I can't even get a set of dumbbells around here-- not possible. Our executive producer on the show complains all the time. He's been trying to get a bike. How have you guys been keeping up with pumping the bikes out to meet all the demand out there?
JOHN BURKE: We're struggling a little bit. Our sales are way up. Lead times are a little bit longer. But we plan on having a big year in 2020. Before COVID-19 struck, we were-- you know, January, February, first part of March, we were having an awesome year. And you know, some time middle of April, things just went off the charts. And we've been struggling, but there's still a lot of Treks out at Trek retailers. And people still have bikes to sell.
ZACK GUZMAN: Yeah, on that production front, I mean, how have you had to shift things around to meet the capacity demand here? And I guess how quickly caught were you by all this? Because basically-- I mean, we saw it playing out in China, but a lot of people just didn't expect things to get so bad here.
JOHN BURKE: I mean, I'd love to tell you I saw it. I didn't. You know, we're sitting here. You know, and COVID-19 really shut down about 80% of the retailers in Europe. It shut down about 25% of the retailers in the US. And we thought we were going to have, you know, a demand problem. And all of a sudden, you know, somewhere around April 10, somebody hit a switch, and sales just went through the roof. And now, all of a sudden, you know, it's a supply issue. And--
ZACK GUZMAN: Yeah.
JOHN BURKE: --it's unbelievable to see the amount of people out riding bikes today.
ZACK GUZMAN: Well, the shift, too, has been pretty impressive when we think-- I mean, I've been riding a city bike here in New York. But I mean, that has been increasingly looked at. I understand one of the points in your new book highlights some of the issues there on that front when we think about gasoline prices being low and opportunities now to kind of shift the focus on there when you think about bicycle transport. In your book, "Presidential Playbook 2020," you highlight pushing to raise the gasoline tax rate now. Why do you think that that's such an important issue?
JOHN BURKE: Well, I think one of the things, you know, we do in America is we come up with ideas and then we don't pay for them. And you know, Congress has been debating a transportation bill for over 15 years. And our transportation system in the richest country in the world is rated a D plus. And you get what you pay for.
And you know, if you take a look, the gas tax hasn't been raised since 1993. We just don't have the funds. And you know, our transportation system is in horrible condition. In the "Presidential Playbook," I lay out what the transportation system could look like. And if we just increase the gas tax, you'd have the money. You could pay for the system. You'd create millions of really well-paying jobs. And you'd have a transportation system that could really fuel the economy for the next 50 years.
ZACK GUZMAN: Yeah, no, I mean, it's a very interesting idea at a time where we are seeing gas prices low. You would think people might be more open to it. But John Burke, Trek Bicycle CEO and president, appreciate you taking the time.
JOHN BURKE: All right. Thanks for having me.
