The 2011 bicycle market

I stopped by my favorite bike shop, ATA Cycle in Concord, Massachusetts, to pick up my ten-year-old Trek hybrid. For $250 they replaced the persistently troublesome rear derailleur and shifter (one of the things that I’ve never figured out about bicycles is why a repair or tune-up almost always costs more than an entire new bike from Walmart or Costco). The owner, Husam Sahin, a road biking enthusiast from Turkey, said “they only made that drivetrain for one year and now you know why”.

Casually leaning up against the counter was a Storck road bike. “It’s a carbon fiber frame from Germany,” Sahin explained. “All of the components are from Japan, though. I’m delivering another one just like it over there in the window.” He demonstrated the motorized Shimano derailleurs, powered by a lithium battery just underneath the back of the seat. “The battery is good for 1000 miles,” Sahin noted, “and there are eight shift buttons in different places around the handlebars.”

Was there a big market for a bicycle like that? “It’s $10,000 just for the frame and $25,000 with all of the components,” Sahin noted, “but still there is a two-month waiting list. On the other hand, I can’t sell any $500 bicycles to young people.” He arranged his hands like a teenager playing a video game with his thumbs.

[http://nbda.com/articles/industry-overview-2010-pg34.htm shows that the number of adult-sized bicycles sold in the U.S. is currently about the same as in 1986, a year in which the population was 240 million (22 percent smaller than today), the real GDP per capita was supposedly smaller, and the real cost of a bicycle was no doubt higher due to the lack of Chinese imports (the average price of a bicycle today, including kids’ bikes, is just $79 or $38 in 1986 money).]

20 thoughts on “The 2011 bicycle market

  1. Hi Phil,

    I was tired of problems with my derailleur. Since I bike every day (in rain and snow and on gravel roads here in Sweden) it was a dirt magnet and required too much maintenance. I am however fairly lazy in this regard. My bike should simply work – especially in the morning while I’m still trying to wake up.

    Since a few years I have a Shimano Alfine 8 internal hub gear and I’m satisfied with it. It is heavier and has a smaller gear ratio than a derailleur based gear shift but together with my encapsulated chain it makes a big difference regarding cleaning and maintenance.

    Shimano Alfine 8 (304% gear ratio, ~250 USD)
    Shimano Alfine 11 (409% gear ratio, ~450 USD, pretty new)
    Rohloff (526% gear ratio, ~1.200 USD)

  2. “(one of the things that I’ve never figured out about bicycles is why a repair or tune-up almost always costs more than an entire new bike from Walmart or Costco)”
    One reason is that you’d just throw away the Walmart bike. Of course, it’s not much different than car repairs. The cost of a repair is much more expensive than the cost doing that particular work at the factory as a part of assembly.

  3. There might be regional differences but other bike shops survive on $500 bikes. Also, many “serious” riders manage to spend much less than $25,000 (which is really a lamborghini equivalent. I managed to do 4000 miles last year on a bike that cost me $1200 and I’m a member of a 1400 member bicycling club and there are not many members with $25,000 bikes (the typical range is $1500-$3000). One nice thing about bicycles is that many repairs are reasonable for owners to do.

  4. Close to you there’s Bikeway Source => http://is.gd/d2SZIX

    -or-

    Wheelworks => http://is.gd/yDipx8

    Caveat emptor at ATA => http://is.gd/zgZLiW

    You could have saved money on your repair….unless you’re the sort of person who doesn’t really care that much about saving money when you can have your servicing done at an elite, expensive place selling $25k bikes.

    One lesson may be that government can be criticized for needlessly wasting money, but if an individual has the money and it’s been earned as part of the American Dream, it’s ok. Is Mr. Sahin’s waiting list a “let them eat cake” canary in the coal mine? Why is there such a gap between those that can afford $25K bikes and those who cannot afford the $500 models?

    (You don’t have to thank me for the links)

  5. Ron: The hybrid Trek in question was purchased at Wheelworks Belmont for $1200 back in 2000 or 2001. Despite multiple visits, the Wheelworks mechanics could never get the drivetrain to shift properly. Then one time I had to take the bike to Europe. Wheelworks wanted to charge a lot more than ATA Cambridge to box up the bike and, what was worse, they couldn’t do it before my flight left. I had ATA look at the drivetrain at the same time and they managed to make it work perfectly on their first try.

    A ratchet inside the shifter finally failed this season, which is why ATA had to replace it. But until the Shimano part failed, ATA was able to keep the bike shifting nicely, something that Wheelworks was never able to do.

    ATA is also a very low pressure shop. They’ve never tried to sell me anything. A friend of mine went there and said she was interested in road biking but didn’t have any money (she was earning about $14/hour at the time). They fixed her up with an excellent fitting road bike for about $600.

    [On the other hand, last year I met a (rich) guy who had gone into ATA and said “sell me the most expensive bike that you have”. He came out $15,000 lighter, but noted “I told my wife it cost $1500”.]

  6. There is a big difference in components–Almost all Walmart bikes use a variation of the Shimano Lark/Tourney stamped steel derailleur, made by a variety of competing companies, with other components similar quality stamped steel or plastic, and installed on an assembly line by low-cost foreign workers.

    A ‘good’ bike has to have Shimano’s upper level parts at minimum–Significantly more to manufacture, effectively no competition, and several more layers of distribution when purchased as replacement parts, installed by skilled labor with higher overheads.

  7. What I always find rather ironic is that many people I know that ride road bikes not to win races, but purely for exercise and losing weight, go all out and spend enormous amounts of money on ever lighter bikes. To the point where one of my friends bought a new headlight but didn’t end up putting it on because it weighed too much. Doesn’t riding a lighter bike around the same route make you burn LESS calories?

    One of my friends started with a $6000 bike and over the course of a year has turned it into a $15K+ bike by buying lighter components, electronic gear shifters, faster wheels, etc. He’s still one of the slowest in our pack.

    At least his excuse is that he knows this, he just likes buying toys.

  8. Bas: I wouldn’t call a guy who earns $25,000 per hour (a fair number of public company executives and Wall Streeters) and spends an hour’s wages on a road bike extravagant. Maybe he enjoys going 1-2 mph faster for the same effort and it encourages him to bike more. I have 25,003 reasons for not buying a $25,000 bike. The first one is that I’m not sure that my 47-year-old back would enjoy being hunched over. The second is that I think my neck would hurt from trying to look up. The third one is that I wouldn’t want to be staring at the road in front of the bike; I’d rather be upright looking at the scenery.

  9. I’ve found that there are four types of folks who buy expensive bikes:

    a) those who race (or think they might want to race). These folks try to measure the difference that a new piece of gear gives them, perhaps by timing how long it takes to ride up a big hill, or measuring their top speed.

    b) those who like toys. These folks measure how much reaction they get when they talk about their toy, or how many stares they get from other bicyclists they ride with.

    c) those who just love cycling. Often a lighter bike or some fancy piece of gear just makes the bike feel better, more responsive, faster, “better”. For them, spending some money on an upgrade gives them a little bit of joy which may be worth the expense.

    d) those who want utility and quality. By paying more up front, you may get a bike which breaks down less. (This is usually not equivalent to “lighter”. Quality durable parts may be heavier.)

    Ok, fine. In reality, everyone who buys bike stuff is a combination of two or more of the above. Personally, I lean towards c+d. Oh, and then there is the secret fifth category:

    e) those who think they are out of shape, and think that spending more on equipment will motivate them to exercise more. In my experience, once you pass the point of buying quality gear and into the realm of getting toys, these folks are generally wrong.

  10. Phil: Making a decent quality derailer shift right is trivial and the first thing you learn at bike mechanic school. You probably had a bent derailer hanger, which is more serious and harder to fix but a careful mechanic will test for it and bend it back gently with usually excellent results. (There is a special tool you need for realigning the hanger exactly vertical.)

    Wal-mart bikes run for a while for $150, but they’re never as much of a pleasure as a bike that doesn’t rattle, whine, and bounce because it’s made with quality components. I rode one 2000 miles last winter in ice, snow, rain, salt, and other harmful conditions that eat bike components. Eventually I simply wore right through the hub cups and went out to buy a new bike (that’s a >$150 repair). I didn’t even think they made hubs where the cups could wear through like that.

    Bas: on buying the new bike, I told the salesman that I didn’t want to pay hundreds more for a lighter bike — I just wanted quality parts that were put together to run smoothly and last. He was astonished that anyone wasn’t looking to shave a pound or two. I told him that if I wanted to shave pounds, I’d shave them off my belly for free. If your body fat is over 8%, you have no business on an ultra-light bike.

    Sevesteen: The Shimano Alivio or even Acera components are pretty cheap and 99% as good as Ultegra and Dura-Ace. If you’re not taking EPO for performance, you don’t need to shave 100 grams either. It’s only the very lowest end Tourney stuff that’s junk and even that’s not absolutely awful. The no-name Chinese or Vietnamese Wal-Mart stuff that Shimano won’t even put their name on fails first.

    I’d like to be able to buy a Honda-type bike: cheap and low power but made to last and last. That would only fit a market that bikes for basic transportation; Americans treat their bikes as toys. Maybe when gas is less cheap at $20 a gallon things will change.

  11. ATA is known as the ne plus ultra bike shop in the Boston area. I doubt many $500 bike consumers even know of the store, let alone would schlep out to Concord instead of local Walmart, REI or other mass market retailer.

    As my friend Chris (who is a good ATA customer) says, above $3000 you might as well just lose the weight off your body. Above that it is about $1000 per lbs, decreasing logarithmically.

    If you get serious about riding, you’ll find a properly fitted road bike very comfortable for long distances. Just having three hand positions makes it easier than a hybrid or recumbant. There is a good reason why this basic frame hasn’t changed in 50 or so years.

  12. David: I think ATA is the ONLY bike shop in Concord and it is right on a main street. So surely at least the 1300+ teenagers who attend Concord-Carlisle High School know about it. They also won Best of Boston a few times, so some folks might come from surrounding neighborhoods. And I got the impression from the owner that he had been successful in the past selling mid-priced bikes to younger customers.

    When back in 2003 I proposed http://philip.greenspun.com/blog/2003/05/16/should-high-school-students-design-and-build-bicycles/ , a bunch of folks told me that “kids today don’t like bicycles”.

  13. “one of the things that I’ve never figured out about bicycles is why a repair or tune-up almost always costs more than an entire new bike from Walmart or Costco”

    … or, Why didn’t they write the Constitution on toilet paper? Would have been cheaper! 🙂

    A decent tune-up for a decent bicycle in fair shape would probably run 2-3 hours for a skilled mechanic, plus a small amount for parts and consumables (cables, grease, tubes, etc.). Figure ~$20/hour as the take home rate for someone who’s been wrenching for a few years, and you’ve got $50-70 in direct costs, plus shop overhead as another 50% on top. Any actual repairs and now you’re talking parts, which have your typical retail markup and are often high precision machinery.

    A Wal-Mart bike is made with poor quality (heavy, sloppy build, sometimes unsafe) parts and materials, and shoddy labor both on the manufacturing side and the assembly side. It is a major PITA to maintain and service, and some bike shops will have nothing to do with them. They are essentially disposable consumable items that won’t satisfy more than the most basic of cycling needs, and even that for only a relatively short time.

    I wrenched in a shop that reclaimed bikes from the waste stream and refurbished those of value to help fund other activities of the non-profit organization (www.workingbikes.org). Half a day of work into a 40 year old Schwinn 10 speed was almost always enough to have it operating in very usable condition. That same bike, with modest attention, will probably run happily for another 20 years of moderate use. We shipped the Wal-Mart bikes to partners in developing countries, where the cost of labor and scarcity of materials made them economical for rural transport there. Here, their only lasting value is literally scrap.

  14. My experience has been that $600 is all you really need to spend on a quality bike. I’ve had mine for around 10 years and in that time have commuted 10 miles one way to work for 3 years, done 5 major ( 400+ miles) bicycle trips, and completed a Century ride. I’ve been comfortable on the bike that entire time and the only repairs I’ve made have been to replace the wheelset and replacing tires and cables. Good fit and reasonable maintenance ( e.g. keeping the bike indoors and oiling the chain every once in a while) go a long way toward keeping you and your bicycle happy.

  15. I just have to throw my $99.95 in on this one. Cheap bikes don’t occupy the same product category as real ones. I recently picked up a kid size cheapy at a garage sale, expecting to have it tuned up lickety split (it was in mint condition) – after all, even cheap bikes can be made to work smoothly with a bit of effort. Wrong. This bike has very-long-reach stamped steel caliper brakes that flex by half an inch under the modest grip that the brake pads can provide that can not be made to brake safely with any amount of work, and a rear shifting mechanism so shoddily manufactured (*not* Shimano brand) that it will never index properly no matter how much it is adjusted. The bike is a shiny, new piece of garbage.

    There is a subtle dividing line – usually around the second-cheapest Shimano mechanicals – where department store bikes can be at least used, if kept in tune; by “used” I mean enjoyably ridden 1000km+ between significant repair attention.

    $250 to replace a rear derailer and shifter sounds a bit high, but that’s shop rates at bike shops. If you don’t like it, learn to do it yourself – bike maintenance is fun and you can do a lot with very modestly priced special tools (around here the Filzer brand is good and cheap). If you don’t want to do that, well, at least the $100 of labour charge they probably dinged you with goes into the local economy, and the overhauled bike will go 2-3x as far until its next overhaul as a $250 (new) bike will probably go in its whole lifetime. If you use it that is.

  16. Bas Scheffers: “Doesn’t riding a lighter bike around the same route make you burn LESS calories?”

    No, of course, not! It’s the effort one expends and the time doing that effort that relates to burning calories. Basically, a lighter bike lets you go faster (a little bit faster) for a given amount of effort or calories burned. Anyway, a lighter bicycle (one of reasonable weight) is more pleasant to ride.

    The benefits of reduced bicycle weight is one of severely diminishing returns anyway. Note that it’s the total weight (bicycle+rider) that matters. People spend lots of money to reduce bicycle weight mostly to brag about it.

    This site provides a way of playing with the numbers: http://noping.net/english/

    For professional racing, there’s a required minimumn weight.

    =============

    philg: “Bas: I wouldn’t call a guy who earns $25,000 per hour (a fair number of public company executives and Wall Streeters) and spends an hour’s wages on a road bike extravagant.”

    It is extravagent because the extra $20,000 doesn’t provide any real performance benefit over a $5,000 bike. The fact that there are people for whom the rationality of a purchase doesn’t matter because they have lots of money to throw around is something else.

    =============

    Chris C.: ” folks who buy expensive bikes … those who race (or think they might want to race).”

    Some racers are sponsored, which means the cost of the bike doesn’t matter to them. A racer who personally buys a $25,000 bike is either wealthy or foolish. The performance benefit of the extra $20,000 is indetectable and the risk of trashing it in a crash is not. Somebody who is starting-out with racing would be much better off using something that is good enough and that they can afford to trash.

    Chris C.: “By paying more up front, you may get a bike which breaks down less.”
    Beyond a certain price, this isn’t happening ($25,000 is well beyond that).

    =============

    Charles Shapiro: “My experience has been that $600 is all you really need to spend on a quality bike. I’ve had mine for around 10 years.”

    $600 a decade ago translates to a bit more now but I basically agree (I’m might have picked a somewhat higher number).

  17. Hard to take any of these guys seriously. Their idea of a bike for daily tranportation:
    1. Costs $500
    2. Has 15 gears.
    3. Has no kickstand.

    In Chang-Sha, China, I saw 70 year old women in dresses biking to work on bikes with coaster brakes.

    By the way, painting a line on the highway while allowing automobile drivers to speak on cell phones is not a bicycle transportation friendly policy.

    Its not hard. Look at what countries do where a lot of people use bikes as transportation.

  18. Brian Gulino: “Hard to take any of these guys seriously. Their idea of a bike for daily tranportation: … In Chang-Sha, China, I saw 70 year old women in dresses biking to work on bikes with coaster brakes.”

    Not many of “these guys” are talking about just “daily transportation” (if even they are talking about that at all). For kind of riding in your particular example, those kinds of bicycles work fine, especially if that is one can afford or is available. But the rides they are doing on them are likely short, flat, and slow.

    Brian Gulino: “Look at what countries do where a lot of people use bikes as transportation.”

    Typical:
    http://en.wikipedia.org/wiki/Flying_Pigeon
    http://en.wikipedia.org/wiki/Omafiets

    Extreme:
    http://www.hembrow.eu/personal/sinnermango.html

  19. The Shimano Alivio or even Acera components are pretty cheap and 99% as good as Ultegra and Dura-Ace. If you’re not taking EPO for performance, you don’t need to shave 100 grams either. It’s only the very lowest end Tourney stuff that’s junk and even that’s not absolutely awful. The no-name Chinese or Vietnamese Wal-Mart stuff that Shimano won’t even put their name on fails first.

    Absolutely. But when I paid attention, there were no mid-grade replacement parts available at retail–you either overpaid for a Tourney, or you paid a few dollars more for 105 or base Deore. The dealer I talked to said that at the quantities he bought in, ‘upgrade’ parts like 105 didn’t cost him significantly more than replacement mid-grade parts, not enough to justify stocking both.

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