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New bikes, and the creeping cost of entry to our favorite sport

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New bikes, and the creeping cost of entry to our favorite sport

Old 04-02-21, 09:01 AM
  #76  
Kapusta
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First off, the current situation is affected by the COVID-related supply chain issues, pushing used bike prices through the roof and eliminating any incentive for retailers to give discounts. So lets put that aside and look at what things were like pre-COVID.

Of course, even pre-COVID, there may have been a temporary spike in prices due to tariffs. We will see if/when that issue gets resolved.

That said...

This complaint about the rising cost of the sport gets raised.... Every. Single. Year. As long as I have been on internet bike forums (~22 years) this complaint has persisted..

But here is the thing: Once you adjust for inflation, and the fact that most non-BSO components generally work better than they used to, I never find it turns out to be true. I've done this research too many times to count over the past 15 years, and it always comes out the same.

Sure, some particular brands or specific models might be riding a wave of popularity and push up prices of certain items, but on the whole, the cost of entry never really goes up. So maybe Specialized or Santa Cruz find they have the cache to raise their prices, but then someone like Bikes Direct or Canyon comes along and undercuts the price.

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Old 04-02-21, 09:09 AM
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Originally Posted by MRT2
Didn't the 70s bike boom turn into the bike bust a few years later?
It wasn't horrible, but this is definitely why companies that have been in the business for a while are not rushing to expand. They can remember 2 years ago.

Not sure how it's germane to your thread though. The economy wasn't great in the years following the bike boom and bike prices certainly never went down.

Another factor that will probably push up prices is interest in ebikes. I think in the future, commuter and possibly hybrid sales will be ebike sales.
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Old 04-02-21, 09:26 AM
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Originally Posted by unterhausen
It wasn't horrible, but this is definitely why companies that have been in the business for a while are not rushing to expand. They can remember 2 years ago.

Not sure how it's germane to your thread though. The economy wasn't great in the years following the bike boom and bike prices certainly never went down.

Another factor that will probably push up prices is interest in ebikes. I think in the future, commuter and possibly hybrid sales will be ebike sales.
You are right about that and the prices will go way up. Between aging boomers and Millenials who might buy them as commuters, it could transform the market. Especially if they come down in price, and weight.
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Old 04-02-21, 10:15 AM
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I have to laugh at these threads, regardless of what the product or activity. It is always about unreasonably higher prices.

But in these threads no one seems to complain about their soaring investment returns. Or how much they sold their house for so they can relocate to a slower paced location. No one talks about their concern that their 401 is making too much and that might cause higher prices for others.

It is always company/corporate greed and never personal greed.

John

Edit added: And let’s not even talk about the used bike pandemic market where $500 can buy you and old $150 bike with worn components.

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Old 04-02-21, 10:24 AM
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Originally Posted by 70sSanO
I have to laugh at these threads, regardless of what the product or activity. It is always about unreasonably higher prices.

But in these threads no one seems to complain about their soaring investment returns. Or how much they sold their house for so they can relocate to a slower paced location. No one talks about their concern that their 401 is making too much and that might cause higher prices for others.

It is always company/corporate greed and never personal greed.

John
The person looking for a basic bike isn't counting all the extra money from his or her 401k and investments.
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Old 04-02-21, 10:30 AM
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Originally Posted by MRT2
The person looking for a basic bike isn't counting all the extra money from his or her 401k and investments.
No... but you are. And you don’t care how it effects that person looking for a basic bike.

John
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Old 04-02-21, 10:45 AM
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Originally Posted by MRT2
The person looking for a basic bike isn't counting all the extra money from his or her 401k and investments.
You sure claim to know a lot about everyone and what they are thinking. Several people I know who mind their investments have asked me about basic bikes because they are looking to ride casually and don’t want to spend money on something they don’t need. My cousin is one example, and she’s a well-off veterinarian.

Time to update the iggy list.
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Old 04-02-21, 10:55 AM
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Originally Posted by MRT2
$700 for a bike with Tourney level components is a rip off. Even Tourney at a $500 price point isn't great, IMO. I am sorry but Specialized is just being greedy. And while I get it that the consumers maybe don't know, I think what they are doing is pushing people up to higher price points. My thought is, they could offer better quality, with a different trade off. Better drivetrain components at the entry level. Better Wheels and tires at the next level. If you need to save money, go with V brakes rather than discs. That is my thought.
I don't see Specialized pricing any different than Trek or anyone else. And if they are, a little thing called competition will take care of it in short order. Either they're all greedy or other factors are at play.

The cost of raw materials is constantly increasing. Aluminum is a good example. It's not just metals. Wood has increased in cost by over 100% in the last year. Good thing we aren't riding wooden bicycles!
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Old 04-02-21, 11:42 AM
  #84  
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I don't think the inflation rate of the USA is particularly relevant to that of bikes. The inflation rate of places like China and Taiwan would be more relevant.
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Old 04-02-21, 12:59 PM
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Originally Posted by MRT2
The person looking for a basic bike isn't counting all the extra money from his or her 401k and investments.
My household income is low six figures, and our net worth is low seven figures...And my commuter bike cost about $600. And plenty of people in my peer group have asked me about entry-level bikes. indy's post, below, seems pretty spot-on.

Originally Posted by indyfabz
You sure claim to know a lot about everyone and what they are thinking. Several people I know who mind their investments have asked me about basic bikes because they are looking to ride casually and don’t want to spend money on something they don’t need. My cousin is one example, and she’s a well-off veterinarian.

Time to update the iggy list.
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Old 04-02-21, 01:53 PM
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Originally Posted by Steamer
I don't think the inflation rate of the USA is particularly relevant to that of bikes. The inflation rate of places like China and Taiwan would be more relevant.
Inflation does not happen to a country, it happens to a currency.

Inflation rate of the US dollar is very much relevant when buying in US dollars.
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Old 04-02-21, 02:04 PM
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Originally Posted by Kapusta
Inflation does not happen to a country, it happens to a currency.

Inflation rate of the US dollar is very much relevant when buying in US dollars.
This would be correct -- sort of. Higher inflation for the US$ means a lower exchange rate, which means it'll take more US$ to buy the number of New Taiwan Dollars needed to obtain that bike, or bike frame, or whatever. But in real terms (adjusted for inflation), it's a wash, since each dollar is worth less.

Reverse the logic for inflation of the New Taiwan Dollar, with the same net result in real terms.

In other words, flexible exchange rates should make all of these scenarios moot...As long as a few assumptions are met.
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Old 04-02-21, 02:12 PM
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For perspective, folks who are truly agitated by the price of bikes should take a look at the RV market this past year.
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Old 04-02-21, 02:56 PM
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Originally Posted by Koyote
This would be correct -- sort of. Higher inflation for the US$ means a lower exchange rate, which means it'll take more US$ to buy the number of New Taiwan Dollars needed to obtain that bike, or bike frame, or whatever. But in real terms (adjusted for inflation), it's a wash, since each dollar is worth less.

Reverse the logic for inflation of the New Taiwan Dollar, with the same net result in real terms.

In other words, flexible exchange rates should make all of these scenarios moot...As long as a few assumptions are met.
I think the rapidly rising standard of living in countries that produce bike stuff is making the cost of such things higher here. 65-70% of the price your shop charges for a bike is the price they pay the manufacturer. Much of that cost is the actual cost of production. Much of the cost of production is the labor rate in the country of manufacture.
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Old 04-02-21, 03:10 PM
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Originally Posted by Steamer
I think the rapidly rising standard of living in countries that produce bike stuff is making the cost of such things higher here. 65-70% of the price your shop charges for a bike is the price they pay the manufacturer. Much of that cost is the actual cost of production. Much of the cost of production is the labor rate in the country of manufacture.
Yes, that is correct. What you are describing is rising living standards and rising real wages -- not inflation.
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Old 04-02-21, 03:37 PM
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Originally Posted by Koyote
This would be correct -- sort of. Higher inflation for the US$ means a lower exchange rate, which means it'll take more US$ to buy the number of New Taiwan Dollars needed to obtain that bike, or bike frame, or whatever. But in real terms (adjusted for inflation), it's a wash, since each dollar is worth less.

Reverse the logic for inflation of the New Taiwan Dollar, with the same net result in real terms.

In other words, flexible exchange rates should make all of these scenarios moot...As long as a few assumptions are met.
This is a bit of a tangent. Yes, exchange rates (which can be affected by differing rates of inflation) can result in up or down fluctuations of prices.

However, assuming both currencies are experiencing inflation over time (and nearly all healthy currencies do) the prices of things still trends up.

If the question is how much a bike from Taiwan cost in US dollars in 2010 vs 2020, then assuming that at least one of those currencies has experienced inflation, and neither has deflated, the price is going to be higher in 2020.

The US and China have both has positive inflation for the past 10 years. Taiwan has has positive inflation all but two, and those only slightly negative.

The differences in inflation rates for the US dollar and whatever Taiwan uses will affect how MUCH the prices increase.
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Old 04-02-21, 03:44 PM
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Originally Posted by unterhausen
Prices are going to be going up, as much as 25%, maybe more. It's pretty clear that the bike companies are scrambling to get parts, and that generally means they will have to cut corners and pay extra. So the retail prices are going up as a result. If anyone was around for the '70s bike boom, this is reminiscent of those times, with some shops selling at above retail and finding customers to buy. And the quality of some of those bikes was quite poor as compared to the same models before the boom.
I would be in 100% agreeance IF the backorders, out of stock, & low inventory wasn't a real thing. The price went up, yet the parts are not procurable I'd like to think the retailers for bicycle parts are pushing the manufacturers to meet the demand, but I don't think it's happening like that on average.
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Old 04-02-21, 03:57 PM
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Originally Posted by Troul
I would be in 100% agreeance IF the backorders, out of stock, & low inventory wasn't a real thing. The price went up, yet the parts are not procurable I'd like to think the retailers for bicycle parts are pushing the manufacturers to meet the demand, but I don't think it's happening like that on average.
I think you perfectly demonstrate in this comment how economic theory fails to properly model reality. I imagine if even a very large bike retailer tried some to pressure a bike company, the person at the company would laugh and hang up.

You can't build or expand a factory overnight, and to the extent that manufacturers are trying to increase production, they are having supply problems of their own. It's a bit surprising to me that the extremely high demand means that bike shops are under stress and a significant number of them will fail due to a lack of merchandise to sell. Dealers have very little leverage and the bike companies don't have all that much leverage with their manufacturers. And the manufacturers may not have that much leverage with material suppliers. And transportation is a real problem right now as well.

At least we haven't had the kind of increases seen in the wood industry, where it everything doubled. At least not yet.
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Old 04-02-21, 04:04 PM
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Originally Posted by WhyFi
I bought my first road bike in 2010, after extensive hand-wringing and coming to understand the market pricing. Adjusting for inflation, you're now getting better bikes for less money.

But yeah - down with Big Bike!
I got my first bike in 2012, a specialized allez 105. Full aluminium. Rim brakes
It was $600 on clearance.. With a 1 year warranty from the local shop around the corner from me

Theres nothing even remotely close to that nowadays. Even used bikes are insanely high priced. I feel lucky that I snagged a used roubaix ultegra for $1200 in Dec 2019!
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Old 04-02-21, 04:08 PM
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It's good that cycling is a hobby for most of us. If we can't get the bike we want right now, it won't hurt us to wait a year. Shortages of toilet paper and coffee are a whole 'nother thing.
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Old 04-02-21, 04:09 PM
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Originally Posted by Kapusta
This is a bit of a tangent. Yes, exchange rates (which can be affected by differing rates of inflation) can result in up or down fluctuations of prices.

However, assuming both currencies are experiencing inflation over time (and nearly all healthy currencies do) the prices of things still trends up.

If the question is how much a bike from Taiwan cost in US dollars in 2010 vs 2020, then assuming that at least one of those currencies has experienced inflation, and neither has deflated, the price is going to be higher in 2020.

The US and China have both has positive inflation for the past 10 years. Taiwan has has positive inflation all but two, and those only slightly negative.

The differences in inflation rates for the US dollar and whatever Taiwan uses will affect how MUCH the prices increase.
It'd be easier to follow your argument if you specified when (whether) you are discussing nominal vs real prices, since that distinction is elemental in this case.
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Old 04-02-21, 04:15 PM
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Originally Posted by unterhausen
I think you perfectly demonstrate in this comment how economic theory fails to properly model reality. I imagine if even a very large bike retailer tried some to pressure a bike company, the person at the company would laugh and hang up.

You can't build or expand a factory overnight, and to the extent that manufacturers are trying to increase production, they are having supply problems of their own. It's a bit surprising to me that the extremely high demand means that bike shops are under stress and a significant number of them will fail due to a lack of merchandise to sell. Dealers have very little leverage and the bike companies don't have all that much leverage with their manufacturers. And the manufacturers may not have that much leverage with material suppliers. And transportation is a real problem right now as well.

At least we haven't had the kind of increases seen in the wood industry, where it everything doubled. At least not yet.
I assure you that economic theory has properly modeled this reality (exactly the phenomena you outlined) since at least 1890, when Alfred Marshall published Principles of Economics, which is the first real econ text.

Pretty much every economics text written since then has included this content… It’s standard fare in any introductory microeconomics course.

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Old 04-02-21, 04:23 PM
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Originally Posted by Troul
I think you may have took me incorrectly. My post was to highlight that the lack of supplies with the increased prices & the need for parts are not jiving. The supply is not available to justify the higher prices for parts. In a normal market when supply is not available, the price goes unchanged. The invoice is flagged as backordered & the price being paid remains. In some cases I've had retailers upgrade my order to express shipping for free when the item is backordered.
Over a longer term, though, in a “normal market“ a shortage (which is what you are describing) definitely results in rising prices.

I don’t spend a lot of time in bike shops or perusing online bike sellers, but it seems like this is exactly what has been happening over the past year.
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Old 04-02-21, 04:25 PM
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Originally Posted by unterhausen
I think you perfectly demonstrate in this comment how economic theory fails to properly model reality. I imagine if even a very large bike retailer tried some to pressure a bike company, the person at the company would laugh and hang up.

You can't build or expand a factory overnight, and to the extent that manufacturers are trying to increase production, they are having supply problems of their own. It's a bit surprising to me that the extremely high demand means that bike shops are under stress and a significant number of them will fail due to a lack of merchandise to sell. Dealers have very little leverage and the bike companies don't have all that much leverage with their manufacturers. And the manufacturers may not have that much leverage with material suppliers. And transportation is a real problem right now as well.

At least we haven't had the kind of increases seen in the wood industry, where it everything doubled. At least not yet.

Cement has already caught on. A slight increase would be reflective to the economy, but that is not the case with cement. Almost at the same price hike.
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Old 04-02-21, 04:45 PM
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Originally Posted by Koyote
It'd be easier to follow your argument if you specified when (whether) you are discussing nominal vs real prices, since that distinction is elemental in this case.
I am talking nominal.

Because when people talk about how much prices for bikes have gone up, they are also almost always talking nominal.

Last edited by Kapusta; 04-02-21 at 04:49 PM.
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