Is there a bicycle price bubble?

Hi everyone!

I would just like to start a debate over bicycle prices.
Top range bikes cost as much as a small car or very nice motorbike. I live in Europe this can mean something in the order of 12000 Euro or arround 14000 dollar.
Medium range bikes go from 4000 to 6000 euro (5k to 7 k in dollar).
Bottom range bikes are 1500 to 2500 euro (2k to 3k in dollar).
What are bike brands offering:

  • electronic shifting? (10-12 years old technology),

  • frame technology is the same for the last 15 years at least. Sure there is a lot of yada yada on aero gains, lightness and stiffness, but I am nevertheless skeptical lets be honest Pogacar would have won the Tour de France in any reputable brand 6.8kg bike built in Ultegra.

  • disc brakes are being pushed more from the supply side than as a response from market demand.

It is completely obvious that as long as people are willing to pay, prices will and should stay as they are.

I understand the current shortage of bikes due to COVID and supply chain disruptions is likely to keep the prices up for a while
However, given the fact that as of late everyone is buying a bike it is likely that in no time the second hand market will be flooded with great deals.

My question is, will the demand keep up with these outrageous prices that increase year over year? Are we witnessing a bicycle bubble?

I would love to hear opinions on both sides of the spectrum.
Cheers!

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Consider the “people” who are most willing to pay, and you know where to lay blame for prices.

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Local bike shops are mostly selling “bottom bottom” range bikes. The past month I’ve been having work done on my bike, and all 5 times I walked in and within 20 minutes someone came into the store and purchased a $500-$700 (400-600 euro) bike before I left. Those bikes are flying off the shelves.

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Why is people in quotes: are those with disposable income not human? Prices go as high as people are willing to pay, this is basic economics, same thing that makes antique paintings that look like something a 6 year old would draw worth hundreds of millions of dollars

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you got your ranges wrong…

it’s more like this:
ridiculous unnecessary expensive bikes 8000-12000 Euro
High End bikes go from 3500 to 8000 euro
Medium range bikes are 1500 to 3500 euro
Low end bikes cost 500-1500 euro

really, you don’t need anything above 5k
really a 1800 dollar bike with 105 does everything you need it to do.

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I accept your ranges :slight_smile:

I agree with this partially, strictly speaking you are right. But myself I have Ultegra Di2 and see the beauty of some tech, developments for which I would agree to pay a bit more.

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  • Disagree. Wireless SRAM setups are clearly “new” and were not present until the last couple of years. Beyond that, we have seen a refinement of the performance of these electronic groups.
  • Also, since these types of groups are commonly restricted to the top and upper-mid level prices, that does not factor into the low and mid level pricing.
  • Part 2 directly contradicts Part 1. There are real and statistically provable difference in bikes between then and now. People can debate the effectiveness of the changes, but simple scales and wind tunnel data clearly show that todays bikes are lighter and more aerodynamic than bikes from 10-15 years ago.
  • A common complaint, but one that I don’t see affecting pricing to a notable degree these days. With the expansion of their application, they have attained a ubiquity to be effectively equal rim brake options with respect to pricing.
  • Econ 101 for Capitalism.
  • Again, at least partly answering your own question. There are real and substantial limits to current production and availability. This has a real impact on pricing, just like any other industry.
  • That is a likely outcome in the next year or so. But I fail to see how that impact the price of new bikes at this time. It may impact things in the years to come, as people look to snag deals on those bikes vs buying new, but that is irrelevant speculation for today’s pricing.
  • If people want to buy new bikes, and are willing to pay, then ‘Yes’.

  • I question the “outrageous” tag to pricing. I’d love to see a statistical comparison of bikes 5 year increments, from the past 15 years, with inflation factored in. From the top of my questionable memory, The increases we see look to my eyes as “reasonable”. Inflation can have a real impact over that scale, and we often overlook it because it is relatively small in our daily and yearly progression. It’s only when taking a much broader look that we see the real impact.

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I think bike tech has been stagnant up until the last couple of years.
Now that all this shiny new stuff is out we all feel like we need it. The marketing doesn’t help…

Mechanical bike tech has had SO LONG to mature and trickle down tech has made things super cheap. We arent there yet with AXS or di2

This is mostly due to economies of scale and there aren’t any economy cars that are being made with carbon fiber.
Carbon fiber is hugely labor intensive so you aren’t able to defray to costs per unit like you are with metals and plastics where most of the cost is upfront in machining and molds.
Second, you just don’t sell as many bikes as you do cars. So you aren’t able to distribute the R&D and manufacturing costs across as many units sold.

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So you doubt margins are crazy?
However labour intensive Carbon Fiber might be, a fraction of material is needed for a bicycle vs a car and a motorbike.

Some quick inflation research, for a 15 year gap from today: https://www.usinflationcalculator.com/
(I apologize for USD only, but short on time.)

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This is absolutely not true…the change to disc brakes has been driven almost entirely by consumers. Starting around 2016, when suppliers were offering bikes in both disc and rim brakes, consumers overwhelmingly were choosing discs and many dealers were left with no choice but to fire sale the rim brake bikes. That trend only escalated in the following years.

I can tell you without a doubt that margins are not “crazy”. Having spent 10 years doing product development work in the bike business, I know for a fact how tight margins are across the board…from suppliers to dealers. The factories are probably making decent margin (there is reason the factory bosses are driving S500’s… :stuck_out_tongue_winking_eye:), but given the high-level of competition out there, they all keep each other fairly honest in terms of pricing.

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  • Considering that I have access to the prices my LBS pays, and I see the profit margin within bikes and accessories… yes, I doubt they are crazy.

I will tell you that local shop guys are not making money hand over fist with respect to margin. Volume is insane this year, but margins are largely the same as the prior 5 years that I have seen.

I can’t speak for the manufacturer side, but when looking at the relative scale of prices and increases, I also don’t see most bike makers rolling in dough like Scrooge McDuck.

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Rubbish.

Giant sells more than 6 million bikes/$2 billion worth a year and their top of the line still rings in at $12,000.

They can’t wash that retail price across 6+ million units?

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One of Giant’s biggest markets is the Chinese domestic market…and they aren’t buying oodles of CF bikes. If anything, it is the exact opposite scenario…it is the other regions / higher end bikes that are carrying the water to offset the lower margin / massive volume bikes being sold to the Chinese market.

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They should?

Not if they want to keep making $2 bil/yr. :wink:

That said, nice to see so many bikes being put into circulation. Hi end jobbies are def a niche market.

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Part of what gets lost in the bikes vs cars vs motorcycle comparisons is that the bikes numbers are split between literally hundreds of different models, from a super cheap $400 to super crazy $10k+ range. And that’s just models, without recognizing size runs of likely 4-7 sizes per model and spec.

That is a matrix that blows up in exponential ways that the auto and moto industry simply doesn’t handle. Most of the volume probably lives in the $1k-$5k range, and the bell curve flows from there (total guess with no research, but related to what I see sold in our area.

So I think there are some very tricky differences when comparing industries like this at the pure surface level.

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selling 2 Billion a year. :wink:

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One of the biggest challenges the bike industry faces is SKU proliferation…One bike model can represent up to 10-12 different SKU’s if you offer two colors. Now, if you are a full line supplier like Trek or Giant, factor that across road, mountain, hybrid, gravel, recreational, kids bikes, etc.

You quickly get into the multiple of thousands of SKU’s…quite honestly, it is one of the biggest reason why you have closeouts every year…it is impossible to accurately forecast that many SKU’s with relative low volumes.

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