The 11-speed Hollowtech road crankset recall is set to cost Shimano $18.5 million (£14.6 million), the Japanese component giant's 2023 financial report has revealed.
Shimano launched a global 'free inspection program' available for the 2.8 million 11-speed Hollowtech II road cranks that were sold between 2012 and 2019 last September, due to "potential fall and injury hazards to consumers".
All cranksets produced between June 1, 2012 and June 30, 2019 needed to be inspected, with Shimano saying last year that it "expects only a very small percentage of these cranksets will need to be replaced".
760,000 cranksets were recalled in the USA and Canada after a reported 4,519 incidents of cranksets separating. This has resulted in six reported injuries, “including bone fractures, joint displacement and lacerations”, according to the United States Consumer Product Safety Commission.
Shimano's 2023 report details costs incurred for inspecting "some bonded 11-speed Hollowtech II road cranksets produced by the Company on and before June 30, 2019 show[ing] bonding separation and delamination, which may produce gap and clearance".
It continues: "The Shimano Group therefore recorded expenses associated with free inspection and replacement. The amount of loss recorded includes provision for free inspection and replacement, as reasonably estimated based on information currently available to the Company."
These losses are detailed as 2,762 million Japanese yen, which works out at about $18,486,673, or £14,598,551, as of exchange rates on Tuesday.
People with an affected crankset were advised to contact an authorized Shimano dealer.
In a statement at the time, Shimano's European arm said: "Reports received by Shimano indicate that the bonded parts of the crank arm could separate and break.
"To remedy this situation, Shimano will have any applicable crankset inspected. Shimano will replace any crank arm that fails the inspection process.
"This inspection is designed to determine whether the crank arms show a possible bonding separation issue and to swiftly remove any possible safety hazard to our consumers. Not all Ultegra and Dura-Ace cranksets need to be inspected. Only cranksets produced between June 1, 2012, up to and including June 30, 2019, need to be inspected.
"Shimano will replace any cranksets that fail the inspection process free of charge."
Profits tumble in challenging year
Shimano's report for 2023's financial year, which was published on Tuesday, revealed a year-on-year decline of 24.6% in revenue and a 52.3% drop in net profit.
Net sales decreased 29.5% from the previous year to JPY 364,679 million ($2.4 billion/£1.9 billion).
“Although the booming popularity of bicycles cooled down, interest in bicycles continued to be high as a long-term trend,” the report reads. "On the other hand, market inventories generally remained high, despite ongoing supply and demand adjustments.
"Overseas, in the European market, the strong interest in bicycles continued in our major market, namely, Germany and Benelux countries, and retail sales of completed bicycles were strong. On the other hand, in other countries, consumer demand waned on account of inflation and an economic slowdown, and market inventories remained at high levels."
Over-supply and under-demand tally with what Cycling Weekly has reported on the bike business in the UK, where a new report from the Bicycle Association this month said that it would take at least until 2025 for the British bike industry to correct itself.
Shimano expects further downward trends for 2024. It expects a further decrease in revenue by 10.8%, with the European market shouldering the biggest part of this decline; it also predicts a decrease in sales by 18% compared to last year.
Meanwhile, "retail sales of completed bicycles remained weak" in North America, partly "due to a reaction from the cycling boom". Net sales were down 22.5% between 2022 and 2023 in North America, but this covers all of Shimano's business, which also includes fishing tech.
Cycling Weekly contacted Shimano on Tuesday for a response, and will update this story when one is received.
