Accell Group recently shared business and financial updates with shareholders and business partners outlining its most recent performance, the recall status of the Babboe Cargo Bike and repair operation, and progress in executing the One Accell strategy.
However, the news reports surrounding the Babboe recall and its pace have created financial, legal and other woes for the parent company.
Babboe Recall and Repair Operation
Accell Group reported that the logistical operation is fully operational in 11 countries, covering 95 percent of the volume sold, with costs fully covered through financial support from shareholders.
Babboe recalled two of its 14 bike models, but sales were suspended for all models, including e-bikes, after an investigation found hairline cracks could appear in the frame of some of the bikes, causing them to sag, according to multiple press reports in Europe and the UK.
A statement on Babboe’s Instagram page, dated February 24, reads, “We understand you would like more clarity about your Babboe carrier bike. We are currently working hard on a solution and expect to come up with a new update next week. We understand that we ask much patience from you and that the situation is causing a lot of inconvenience. We sincerely apologize for that.”
Accell said that over 7,000 cargo bikes have reportedly been picked up from customers for replacement, and the available stock of almost 800 bikes had been delivered to customers by its June report. Over 2,700 bikes were reportedly inspected.
“We are now starting the new production of replacement cargo bikes to accelerate the replacement rate,” Accell noted. “Inspections and upgrades of the bikes not subject to the recall have also started in most countries. We aim to have concluded this process by the end of the year when we can also fully resume selling Babboe bikes to new customers.”
In mid-June, Dutch News reported that Babboe had replaced just 500 bikes in the three months since it began recalling 22,000 bikes because of safety issues. The report said the company had collected just 6,000 bikes from owners in the Netherlands and Germany.
“We know we ask a lot of patience from our cargo bike users,” Accell wrote in its June 26 report to shareholders and customers. “We have scaled up our efforts and resources, improved our administrative processes and are doing what we can to provide our customers with timely updates. Our priority remains to get our customers safely back on the road again.”
Babboe has reportedly offered customers a replacement bike or a voucher if their vehicle is over five years old in a recall operation that is expected to cost Accell Group tens of millions of euros, according to estimates in the Dutch News report.
The Dutch News report also said disgruntled owners reportedly had to wait four weeks for their bikes to be collected and another month or longer for a replacement to be delivered. Customers also reportedly accused Babboe of profiteering by issuing replacement vouchers for older models that can only be spent on the company’s website, where the prices are higher than those offered by discount retailers.
Following several media reports about the situation at Babboe in February, Accell said it launched an in-depth internal investigation over allegations that the company tried to cover up the flaws.
“As previously communicated, we want to get to the bottom of this and find out what led to this situation. Quality and safety always come first,” Accell wrote in a March 28 media statement. “It is important to us that signals from employees and customers are taken seriously and lead to the right actions. This should have been done more quickly and better in the past. Since February, we have been in close contact with the Dutch Food and Consumer Product Safety Authority (NVWA) to provide them with the necessary information to prove the safety of our bikes and are working hard to organize a recall.
“On March 28, the NVWA informed us that a criminal investigation would be opened into the actions of Babboe in recent years. It goes without saying that Babboe is cooperating with this investigation. If the signals reported in the media are true, we strongly disapprove of them and distance ourselves from them. In the meantime, our policy and way of working is that we actively and transparently cooperate with the NVWA investigation. This is in line with the values we stand for,” Accell concluded.
One Accell
The company said that the key points in its strategy are decreasing inventories, strict cost management and optimizing its production network. All its brands benefit from an integrated European platform, including joint stock management.
“We are also investing in innovations, our omnichannel and city-first approach and developing a subscription model offering our customers ongoing services. This is how we move the company forward and bring great innovation to life,” Accell wrote in its report summary.
Outlook
Although the past period’s results were said to reflect a market in which conditions are not yet improving, Accell said the long-term outlook for the business remains positive.
“We gradually decreased stock levels since year-end as we return to a more normal trading environment,” the company said. “While destocking at dealers continued in the beginning of this year, it is encouraging to see sales to customers in our key markets increased again. For example, in the Netherlands, one of our biggest markets, we reached 24 percent market share in April, the highest since 2020.”
As part of the company’s last update, it confirmed that Accell is in compliance with all its payment obligations in its financing arrangements. We have received material support from its shareholders, and it benefits from a long-dated debt profile.
“We have now set out to secure a more sustainable capital structure for the long term which will require the support of our key stakeholders,” Accrell said. “A revised fit-for-purpose capital structure and increased liquidity will allow us to create a stable operating platform to execute and accelerate on our business strategy.”
Accell said, “it is well-positioned to capitalize on favorable long-term fundamentals, and it is our mission to craft the joy of cycling now and in the future.”
Image courtesy Babboe
