Have bikes got too good to turn a profit?

On the back of a couple of threads in the last 12 hours announcing the plight of brands of very different nature and the issues in the last few months with other brands too it got me thinking – have bikes become too good for the industry to make a profit?

Let me explain – when I first starting riding off road in the 80’s and then returned in the noughties, the next big thing around the corner always seemed to be a biggie. Bikes genuinely improved from generation to generation. An upgrade often made a world of different to my pleasure/performance. Stuff also seemed to wear out faster – drivetrains especially. Now, bikes are pretty darned good. All of them. My ‘want’ for a better bike is minimal. Stuff also seems to last longer and component prices have risen to the point where buying only happens when you really need to. We collectively ride more expensive, more complex and fancier bikes that perform well and are reliable and cost lots to replace for pretty marginal gains, so we don’t do it as often as we used to.

The current rates of interest that companies are dealing with on business debt and the lack of pounds in the consumer  pocket for nice things are the main driver for the decline in the bike industry…….but has the maturing of the bike as ‘finished’ product contributed too?

Thoughts…

From an outsiders point of view* it certainly doesn’t seem as dynamic as it did 25+ years ago.

But that’s probably because it’s a far more mature market now. Back then bike manufacturers (and blokes in sheds!) were still working out what worked/broke and what the customer actually wanted. Finding the next big thing now is a lot harder.

(*as in I’ve not ridden seriously or bought anything bike related in 6/7 years).

Expensive discretionary spend product + cost of living squeeze + bike oversupply downturn = some companies will go bust.

I don’t think it’s very complicated.

Maybe, and I definitely think you are on to something as far as MTB geometry and standards plateauing in recent years.

Growth and sales have been more in the eeb (and maybe gravel) side of things, as I understand it.

And for normal MTBs, they’re trying to convince us we need electric gears and suspension – which a lot of us are obviously sceptical about.

Expensive discretionary spend product + cost of living squeeze + bike oversupply downturn = some companies will go bust.

I don’t think it’s very complicated.

This, and bikes have got (IMO) relatively more expensive, especially e-bikes.

My current bikes are pretty future proof and I have no immediate plans to buy anything else. There’s nothing out there that will revolutionise the experience of riding the things. No new wheels sizes, tyre compounds or radical geometry. Purchases will be limited to replacing broken stuff.

Also cozzie livs etc.

Saying that, I do have my first BMX in over 20 years and I am itching to start buying trick bits for it. I can wait until Black Friday for that.

I forgot to add interest rate hike into the equation, anyone who borrowed money  to expand, will be hurting if they need to refinance / are on a variable rate…

It’s a good question; a few thoughts come to mind.
First is that reading Bikeradar, the road bikes they review and compare are mainly in the £5k-12k range. But the MTBs they review and compare are more in the £2k-7k range. Given the sheer engineering involved in them (and the MTBs are usually FS), it feels like mountain bikes are much more keenly priced, presumably with lower margins, than the latest £12k Specialized road bike.

Second is that if you say it loudly enough, I’m sure the MTB manufacturers will come up with another pointless standard that we all need to change to, as a way of drumming up more business…
I recently pulled my much-loved Cotic Soda (26″, 3×9 XT, 2008 130mm RS forks, 25.4mm bars and 27.2mm seatpost) out of storage for a bit of fettling and long overdue riding. It’s just as great as it’s always been, but a few bits are looking rough and will need replacing soon – stem, drivetrain, tyres. Looking around, if I want to replace parts like for like I’ll generally have to go with low-rent heavier parts, like Shimano Sora, no-name 25.4mm stem etc. Otherwise I have to “upgrade” to 1×12 drivetrain (with associated hub, shifter, etc), 31.8mm stem, bars and grips (might have to change brake levers too?). Some upgrades make sense – like I’d prefer 2×10 or similar for the gears, but not sure they’re widely available at LX/ XT level – but others are pure bollocks

it feels like mountain bikes are much more keenly priced, presumably with lower margins, than the latest £12k Specialized road bike.

As said before, the top of the range (halo) product is never priced keenly, nor is it representative of what actually sells.

Having said that I know quite a few people riding top of the range Tarmacs. No shortage of disposable income in our road club.

I really think the rise in the cost of living has hit hard. I bought a new bike in 2020. Just before Covid. My last new bike was bought in 2008.

My disposable income has more than halved since 2020 and that’s with a couple of fair pay rises. So I, and most likely thousands of others simply cannot afford loads of things let alone a new bike. At the moment it feels like I’m stumbling from pay day to pay day. I’m sure I’m not alone but I’m also way better off than a lot of folk out there.

I really don’t understand how people with less pay and more kids are managing.

I really don’t understand how people with less pay and more kids are managing.

They’re not.

I suspect they are having a really, really shit time, getting into debt and risking loosing their home / car etc etc.

Honestly, yes bikes have got too good and innovation has stagnated imo since around 2019-2020.

The 2010’s were a revolutionary decade in bike design imo, we went in with 26″ bikes with 2 inch tubed tyres and half of a group ride was spent lowering seatposts, putting chains back on and patching punctures.

Then we had dropper posts, bigger wheels, tubeless tyres, decent forks (remember noodly 150mm fox 32’s?), decent geo and 1 by systems. Almost every year something came up that made you want a new bike.

Since say 2020 (covid’s a useful point of reference I suppose), what has really came that’s innovate? Headset cabling and electronic drive chains? Neither are going to make someone want to spend out on a new bike.

I suppose its a combination of a struggle to improve something already very good, and e-bikes taking up much of the R&D budget of bike and component suppliers.

For me, I’ve found that the continual changing of “standards” has made me less inclined to keep upgrading/swapping parts around. Before if I bought a new bike, I’d be happy to swap all the components around knowing I could move them on to the next bike, or I could trickle down components. Now that standards for everything seem to change every year or so, bikes feel a lot more like a sunk cost.

uggski
Full Member

I really don’t understand how people with less pay and more kids are managing.

A lot aren’t. But at the same time they were never the people that bought £5000+ bikes etc.

It felt to me like the bike industry just spent a bit too long in a happy hunting ground where it was relatively easy to make money (no offence to those bike business people on here!) You could have big sales and still make money, sell 70 different tyres in 3 different sizes, run a 2 year model cycle, mess around endlessly with standards and play destructive obsolescence games… and yep also sell pretty bad bikes at pretty high prices, sometimes. And throw relatively large amounts at advertising, events, sponsorship, staffing.

Then, the money started to dry up but a lot of companies (and distributors) were still in bloat mode. So suddenly there’s a ton of stock to sell, a warehouse that still has 70 different tyres in 3 sizes in it, and nobody’s buying. You can adapt ro a leaner climate, but it’s hard to do if you’re still on the aftereffects of a decade of bloat. Of course a £10000 bike was always a luxury purchase for people with a lot of money and still is, whereas a £2000 bike was mostly something that a more average purchaser who really wanted a good bike and only had £2000 would buy, and so they’ll now not be buying a £2000 bike, different markets vary

Still… Twice in my life I’ve bought a £350 bike, once in about 1991 when it got me a tange steel bike with a flexstem, cantis and exage… Once in about 2006 I think when it bought me a perfectly decent hardtail with XCR forks, disc brakes all round, good gears. In 2024, 1991’s £350 is £775 corrected for inflation, 2006’s £350 is worth £582. You can get a hell of a lot more bike today for £775 or £582 than you could then, and you can still get a decent bike for £350, without chasing discounts. It’s still a great time to buy an entry level bike, even if not quite as good as at some times in the last few years the longterm trend is good I tink

especially e-bikes

Ridiculously overpriced. Unless you spend £5k+ its 30 quid brakes and a 200 quid fork.

So logically, the industry needs to turn out worse bikes?

So logically, the industry needs to turn out worse bikes?

If I started going through components at the rate I did in the 90’s I’d have to retire. I’ve got 3 mouths to feed these days, I can’t be snapping axles and head tubes and cranks and folding wheels in half every weekend.

I’m quite happy that my current bike takes an absolute battering and doesn’t even flinch.

So logically, the industry needs to turn out worse bikes?

As I said, for me, just having standards settle down a bit would be the answer. I don’t want to spend £1k on a set of wheels when who knows what size rims, hub spacing, or axle size is going to be fashionable tomorrow.

Standards haven’t really moved in 5 years, theyve settled imo and the problem is more no one really knows what do innovate on as bikes are already so good.

I don’t think they’re too good, but they have plateaued. It’s a mature market. Plus an oversupplied market, always has been. Brands with little differentiation aside from price/value and some marketing. There’s too much churn because it’s a fashion industry yet there aren’t the margins to support that churn and discounting unless you own or merge more of the links in the route to market chain, go D2C, etc, the business gets more complex then.

If there are companies making good money out of bikes they’re most likely to be logistics or retail industry imo not ‘bike’ industry ie they just happen to move bikes rather than sofas or washing machines. There’s certainly some successful bike brands around but they’ve all got points of difference – value/short RTM, scale, ownership of key processes etc. Without any of those plus good marketing it’s really hard.

Well usually this time of year I’d have a fair chunk of cash in savings, to book holidays, maybe put towards a bike or whatever. This year I’m having to find the holiday money, a new bike is right out.

Even if I had the disposable, looking out the window I’d think twice.

Plus I’d then have to sell a bike. Something I loathe. I’d rather ride it until it snaps.

When Bird were doing trade ins on the old Aeris frame it made it much less aggro for me to move to a new Aeris.

whereas a £2000 bike was mostly something that a more average purchaser who really wanted a good bike and only had £2000 would buy, and so they’ll now not be buying a £2000 bike,

I think this is the crux. In 2020 I could afford a £2000 bike. Now I simply can’t. Plus in 2020 I could have sold my old bike for a fairly good price to put towards my next one. The bottom has fallen out of the second hand market as well as new.

The hit from higher energy costs as well as higher mortgages has hit everyone even on middle to high incomes and people have had to prioratise where their disposable will go and unfortunately even £2k bikes are now not on the list.

Interesting responses, thanks.

A few have gone to the trouble of pointing out a lack of disposable income amongst buyers. As a root cause. As I set out in the OP, that’s obviously the main issue (along with the cost of servicing debt for companies).

There are clearly many people for whom investing in a new bike right now is beyond them and might not have been in the past. There’s also a much smaller group way beyond average income who’s disposable income is largely unaffected in any meaningful way. But I’m suggesting there’s a group in the middle who ‘would find a way’ to afford one if they were motivated enough to do it – but currently have such a great bike in the shed already they cant find that motivation. And that middle group’s mood might just be the difference between survival and administration for some bike firms.

Loads of factors at play. Not all of which will affect all companies equally.

• Interest rates on commercial and domestic borrowing
• Cost of living putting on sales pressure
• Super sales in COVID and a lot of those are probably gathering dust / on eBay
• Lack of any recent game changer developments
• The supply issues and pressure for excess orders to secure build slots in the factories (aiui)
• Loss/suspension of equity funding (e.g. Chiggle)
• High leverage/debt burden from COVID finance
• Raw material inflation
• Energy inflation
• Saturated market
• Brexit factors (e.g. red tape and duties)

I’ve probably forgotten some but that’s a fair bit to manage your way through.

This isn’t a bike industry problem exclusively.  A number of these factors I am seeing in other industries too.

Both can be true though.

The cost of living is an acute problem if you’re making ends meet, and with productivity flatlining for over a decade that’s more people than before.

On the other hand if you’re making enough to get by, and have a few quid in your pocket, then it might be a few quid less but not entirely gone. Especially if you got an inflationary pay rise because inflation was highest on the essentials.  Food, energy and rent all went up a lot more than 10%, but discretionary stuff, that’s deflated massively.

New bike? First time in years there’s been widespread 40%+ off sales on new bikes.

Old bike? GX cassettes have dropped 33% from £150 to £100

New smartphone? My Pixel 8 cost £100 spread over 2 years once you factor in the cost of a similar sim-only deal and the cashback.

So if an average person on an average salary was buying the average basket of goods then they’re no better or worse off.  The top 50% on the other hand will actually be better off than they were before.  That’s why it’s a “cost of living crisis”.

If the cost of living goes up from lets say £18k to £22k*  a year, and you were only earning between £18k and £20k, you were f***** even if you got a 10% payrise.  If you were earning £40k then you got a 10% rise that actually covered the cost of living, and your £20k (not £20k after tax but you get my point) now actually goes further because everything from bikes to flat screen telly’s is cheaper than it was even pre covid.

But I agree with the OP, the cost of a viable mountainbike has dropped a lot.  For quite a while there was a dearth of decent bikes <£2500. Shimano’s latest Deore though is a return to form, and Rockshox 35 Gold and Marzocchi Z2 have made specifying OEM bikes in that price range easy rather than having to fit some noodly steel stanchioned RS fork, or something cheap (whatever happened to X-fusion? They seemed to be right up there, then they vanished?).  You’re either super talented or kidding yourself if you need rather than want something more expensive at the moment.

*made up guestimate to illustrate the idea that the average basket of goods used for inflation calculations matches the average salary which is mid-high £30k’s and therefore the rise at the bottom end is >>10%.

It’s crazy that, in a market wher the product has pretty much stabilised, so many bike companies are still doing annual launches and models. By the time some models hit the shops, it’s already 6 months from when they were launched  and in another 4 months or so they’ll have to be sold at a discount as folk know the new model is around the corner – often only differentiated by a new paint job.

Loads of factors at play. Not all of which will affect all companies equally.

More for your list…

• Job security for buyers
• Bargain new components making upgrades attractive
• Cost of travel for big bike trips/holidays, so less money for bike stuff if still going, and less excuse for new bike if not going.

An upgrade often made a world of different to my pleasure/performance.

Can still be the case with components, has been for me. Didn’t start with poor, but suspension and brake upgrades have blown me away over the past 2 years.

A lot of the problems listed above are largely UK specific and we’re not a massive market so why aren’t people in other countries buying bikes?

If it’s not high pivot is it really a MTB? So if you’re not making them you may as well fold.

Locally kids are riding stupidly expensive bikes, lots of Pivot, Intense, etc. I wonder if the cool brands just aren’t the ones that were cool 20 years ago?

… but seriously there are definitely signs of the economy cooling in Oz*

eg:

• Craft breweries are closing
• LBS are continuing to close down
• Music festivals are being cancelled due to low sales (plus insurance costs etc)

*admittedly an even smaller market

Has there really not been major developments in bikes? Don’t e-Bikes count?

 In 2024, 1991’s £350 is £775 corrected for inflation, 2006’s £350 is worth £582.

Inflation, what inflation?

Let’s use wages, and start at the bottom, Minimum Wage per hour (1999 £3.60, 2006 £5.35, 2016 £7.20, 2024 £11.44).  Thinking back to 1991, I reckon ‘minimum wage’ would’ve been nearer £2,00 per hour.

To use your example, in 1991 a £350 bike cost 175 hours at #minimum wage’.  By 2006, 175 hours equated to £936 and by 2024 £2002.  A £2k bike now is a decent bike that’ll do stuff far in excess of it’s 1991 ‘cousin’.

And to answer the original OP, is the main reason for your lack of interest etc that you’ve just reached an age where you want to be ‘comfortable’, pipe & slippers 🙂

Has there really not been major developments in bikes? Don’t e-Bikes count?

Yes in the wider market sense but not to every rider. To some riders they’re just irrelevant?

I think the huge one is the cost of living crisis. Which is a world wide phenomenon. I think its worse here in some respects

I think mountain bikes have plateaued. Which is perhaps a big deal if you only sell mountain bikes. But lots of companies also sell ebikes, road bikes and gravel bikes. These are bikes that are changing much faster than mountain bikes at the moment. I see still see gravel as a growth sectuer, in that people without an off road have wood like a gravel bike to fill that role.

I was chatting to a friend. Her mortgage jumped £500 a month. Surely surely we funny need to look further than that

I’ve found that the continual changing of “standards” has made me less inclined to keep upgrading/swapping parts around

Boost and one by groupsets are both nearly a decade old now. 29er wheels are more than that. I can’t think of any other major innovations that have made frames redundant.

I’ve not got rent or a mortgage to worry about. Have enough disposable money that I could, if I wanted, drop 5k on a bike.

However….

I’m still riding my Strive race Team or whatever it’s called from 2017.

See nothing out there that I would want to replace it with.

Most new models are 29″, I’m 5’7″ and often scrape my arse on the back wheel. Can’t see a bigger rear helping things.

Ride with other folk on newer bikes and I don’t feel like it’s my bike holding me back.

Recently serviced the forks, shock and seat post, replaced the broken Race Face cranks last year…. The bike owes me nothing and still does its job… Even the Shapeshifter still works!

GF’s bike is a 2018 Trance Sx. Same deal. Serviced the forks and shock…. rides like new.

Can’t see anything out there that makes me think I need a new ride.

To some riders they’re just irrelevant?

Right, but it seems a large number of enthusiasts have ‘gone electric’ when they perhaps would have kept riding their non e-bikes.  Certainly around here – there are lots of people using them for portable uplifts, as well as people who are clearly new to the sport or at least returning.  That must be driving sales surely?  Maybe the situation would be even worse without ebikes?

I’ve not got rent or a mortgage to worry about.

But where do you go for a poo?

For me personally it’s a mixture of what I have being great, what I could replace it with being marginal gains and having less spare cash so being reluctant to spend.

My Stage 5 is the later geometry so pretty up to date, still in vgc and the fork/shock are plush. I could maybe refresh the group set but given what I could sell it for and how much a replacement would cost what would I actually gain?

My Pace ht was only built last year, has modern geometry and does what I want it to do. What could I replace it with that would be worth the cost?

My Cube carbon xc bike is always on the chopping block because I bought second hand on value rather than want so I could easily find something I like better. Problem is all the cheap sale bikes are too low and racie or have terrible parts (Lapierre XR, Specialized Epic, etc.). It’s my most used bike so I could justify an upgrade but simply can’t afford to get what I’d actually want so I’m unlikely to bother anytime soon.

No interest in E-Bikes atm and have tried gravel and road but don’t like drops so what is there to tempt me, especially when most bikes are painted in such dull colours these days?

Right, but it seems a large number of enthusiasts have ‘gone electric’ when they perhaps would have kept riding their non e-bikes.  Certainly around here – there are lots of people using them for portable uplifts, as well as people who are clearly new to the sport or at least returning.  That must be driving sales surely?  Maybe the situation would be even worse without ebikes?

I know a couple of people who have, but equally they would probably have spent that same budget on a normal bike anyway.

There’s also a massive bias there as everyone sees E-bikes. Either they’re riding in a group of e-bikes (so to them 100% of riders are on e-bikes) or they ride in a group that gets frequently overtaken by e-bikes due to the average speed difference. In which case everyone else seems to be on E-Bikes.

Like gravel bikes and fat bikes and enduro bikes before them, what’s a big seller for the industry is probably a small fraction of miles ridden. And in a lot of cases is a buy one and done sort of deal. There’ll be some people upgrading but not the same as the initial adoption.

And it’s not spread evenly around the cycling industry.  Cycling News saying millions of e-bikes are being sold and it’ the biggest thing since the last big thing might not help Kona because 90% of them might be some BSO brand you’ve neve heard of selling them to Dutch commuters.

Second is that if you say it loudly enough, I’m sure the MTB manufacturers will come up with another pointless standard that we all need to change to, as a way of drumming up more business…

I recently pulled my much-loved Cotic Soda (26″, 3×9 XT, 2008 130mm RS forks, 25.4mm bars and 27.2mm seatpost)

I am really pleased the industry came up with new standards since your Soda as while I am sure you find it great and see them as pointless, my opinion is the opposite as I find bikes far better, more fun, more versatile and more capable than 15 years ago in no small part thanks to boost, x1, droppers, 29 inch wheels, geo etc etc.