Dreww10

Thought this might make for interesting discussion.

MSRP on bikes and other parts, even at the higher end, seemed to have begun a downward slide in 2015 and has continued in 2016 with the 2017 models. Cannondale, for example, has priced their SuperSix Evo with Ultegra Di2 at $3,499...a bike spec that was ~$5,500 just 3-4 years ago. I bought a Tarmac in 2015 and the same model bike in the 2016 year model dropped $300, with similar percentage drops across their entire range. Other bike companies have followed suit, and you can really get a lot more for your money than you could just a handful of years ago. Zipp even dropped its wheel prices considerably earlier this year, putting pressure on the whole industry.

This is obviously great news for all of us, but is this a case of technology becoming cheaper to produce, or manufacturers realizing that discretionary income isn't as plentiful as it used to be, making hyper-inflated bikes tougher to sell in numbers? Obviously, this is a common thing with the electronics industry, but is this surprising for the cycling industry to see prices falling even on the latest and greatest?

D1andonlyDman

Perhaps the latest is not actually the greatest - marketing hype notwithstanding.

Booger1

Price of child/slave/prisoner labor is getting cheaper?

SquireBikesalot

Exchange rate, constantly improving manufacturing efficiency, probably exchange rate, a whole lot of OEM Cannondale parts. Di2 is going to continue to get closer to mechanical pricing, electronics always get significantly cheaper over time, just look at power meters.

Some bikes are going the other way, the current model year of my gravel bike got a 20% price hike and the only change was the tires which might justify maybe a 5% increase.

General Geoff

Economy of scale for manufacturing parts, and the constant drive to less handfitting/labor costs per bike.

My 2007 Cannondale F4 is only worth like $220 according to "official" sources, but honestly, the made-in-USA TIG welded aluminum frame alone represents more worth to me than that. I think Cdale stopped making most of their bike frames stateside around 2009 or 2010, sadly.

Mulberry20

Once a company starts making things in Asia, resale prices drop. I have a Serotta that was made in 2009 and I could easily get $2500 for it, easily. I paid $4500 for the whole build.

I could not fathom paying $4, $5, $6k or more for a massed produced, pre-built bike, including a carbon frame. It is like flushing money down the toilet. No matter what people say, there is no value in a carbon frame as it ages compared to Ti or steel and in some cases aluminum.

GravelMN

Competition from online direct marketers is a factor, I'm sure.

fietsbob

the race to the bottom seeks lower cost labor for factory siting,
and fully automated manufacturing of the parts,
often down the road from the assembly-Frame manufacturing shop.

OP is not even looking at sub $400 bikes, either..

Robert C

I have also noticed the prices, for cycling items, declining. I think it has more to do with the world, and particularly, the American, economy. Prices are very sticky (slow to move, particularly downward) that is part of why retailers, typically, lower prices through extended sales and rebates.

Yet the core of the cycle shoppers is not a small number of buyers for products carrying extreme markups, it is more evenly spread. What is happening is a fall in aggregate spending that has not recovered. Frankly, I hate the, "supply and demand," cry of the people who only took, at most, one economics class; but there is a basic demand side issue to consider.

There is also the problem of anchoring effect, people see discount retailers cycles and use that to create an expectation of price. People know a better bike will cost more; but there is still that "starting point," that has been established.

As you can see, I, pretty much, see this as a case where downward wage pressure is creating downward price pressure. It is an interesting micro case study.

Kedosto

Wait, what?

I'm trying to get my head around the notion that a $12,000 dollar bike is "cheaper" than, well, I don't know. You don't wanna know what I paid for my first brand new car. (Hint: It wasn't even HALF the price of one of these "cheaper" bikes)

Damn, I'm old.


-Kedosto

fietsbob

Capitalism tends to over supply into the market place, then expects advertising
to create the demand for the excess.


Upgrade threads, here, proves it Works.

SpeshulEd 

Ultegra Di2 hasn't been updated in years. Wait until the new version comes out, then price things again.

3-4 years ago when the bike was $5500, Ultegra Di2 was just released.

So yes, a new bike with old technology is going to cost less than a new bike with new technology.

alcjphil

The main reason why bikes and components have gone down in price in the US in the last 2 years is because of exchange rates. The US dollar has increased in value compared to other currencies. Keep in mind that bikes that you see in stores today were ordered by distributors almost 2 years ago and prices you pay reflect the value of your currency at that time. An example: The Canadian dollar has been trading well below the US dollar for over 2 years, yet even last year bike prices in Canada were lower than the US because 2015 bikes sold in Canada were purchased using 2014 Canadian dollars at a time that the Canadian dollar was trading above the US buck. Bikes and components in Canada have been increasing in price for the last 2 years

GerryinHouston

That's what I thought, but the facts do not agree...

The Chinese Yuan is trading in a very narrow band against the dollar, while the Japanese yen (components) strengthened over the same period:

jefnvk

It is my understanding that most of the mass bike manufacturers are in Taiwan, is business actually conducted in Renminbis? Seems to me that it would be conducted in USD or the local Taiwanese currency. In any case, the value of the Renminbi has even dropped in the neighborhood of 10% in those two years, and those components are likely coming from somewhere that is no Japan themselves, possibly tossing more currencies in the mix.

We've got an entire department of people whose job it is to estimate currency markets for pricing automotive components where I work, it is very much one of the things that cause price fluctuations.

SkyDog75

Mainland China and Taiwan are, for practical purposes, two different countries. Sorta like the Facebook relationship status says, "It's complicated". After the Chinese Civil War, each claims sovereignty over the other. The yuan/renminbi is the currency of mainland China and the new Taiwan dollar is the currency of Taiwan.

GerryinHouston

Indeed the New Taiwanese Dollar has been dropping in the last couple of years, surging back a bit in the last few months. It therefore stands to reason that bikes and parts made in Taiwan can be cheaper due to the currency fluctuation.

I was fixated on China/Japan because my Novara is made in China and Shimano is one of the major parts supplier. Unfortunately, Novara cycles have not gone down in price over the last few years...

Hiro11

1. Increased competition
2. Lower costs of production. Consolidation has led to economies of scale. Also, technology and materials have improved dramatically particularly in carbon and aluminum. These days brands can buy quality, hydroformed aluminum alloy frames for less that $50 from giant manufacturers like Kinesis.
3. Oversupply: too many brands offering too many bikes on the market. Surly got hammered by this reality. Also bikes last a long time and I don't think consumers beyond the high end see value in new technologies.
4. Shimano lowering USDM prices and SRAM following suit (less certain about this one).
5. LBSs suffering and cutting prices to stay alive.

Sangetsu

The "race to the bottom" as you call it, is primarily caused by consumer demand. Consumers want the best bike they can get for the lowest price possible, and that applies to more than just bikes, as Henry Ford was one of the first to acknowledge. If your company can not give them what they want, they will go to another company which can. And the less money you spend on your bike, the more money you have to spend on other things, and those who make and sell these other things earn a profit from that extra money you have to spend.

Back in the 50's, a bike was expensive, as were things like radios, televisions, and other appliances. These were all American-made. And though we look back on the 50's as a time of plenty, with high wages and good quality of life, that is not necessarily true. Families of the 50's at every income level had far fewer toys than we enjoy today. A bicycle, television, or refrigerator was a huge investment, and people counted on any of these things to last at least a decade, as they could not afford to replace them more often.

I recently had a guitar made for me in China. I asked for a Gibson L-5 copy with a Florentine cut away, with solid Canadian spruce top, maple back, and sides, a mahogany neck, ebony fretboard, and ivory inlays. The price delivered to my door was $450, and to my surprise, "ivory" inlays turned out not to be ivory-colored plastic, but genuine ivory. I was amazed at the quality of this copy guitar, it was much better made than Gibsons of the 60's and 70's. I have a genuine Gibson L4 CES, and the Chinese guitar is every bit as nice, but at 1/6th the price.