How about the Bicycle Price in 2023

The three years of COVID-19 have had a significant impact on the bike industry, with words like demand outpace supply, price increases, and long delivery times popping up all over the place, but now these seemingly escalating price winds seem to be subsiding, as evidenced by the recent price cuts by Canyon and Specialized. Could this signal an imminent sell-off of excess inventory, as some in the industry have predicted?

The reason of bicycle price increased.

According to the UK's national trade body, Cycling (BA), the price of a bike with the same or similar specifications increased significantly between 2019 and 2022, from around 10% to more than 40%. That means a bike that cost £1,000 in 2019 could now cost £1,400.

In the United States, a Bloomberg 2021 report said the average price of a bike rose 27 percent from the start of the year through March. In addition to the long tail effects of Brexit and COVID-19, new factors pushed up the average bike price in the period covered by the data.

In Britain, the 49-day premiership of Liz Truss has badly shaken things up, causing inflation to rise. The pound has fallen, making imported goods more expensive overnight. The fall in the pound has had a direct impact on the British cycling industry, which imports most of its goods. Brexit, while not a new factor, continues to cause headaches for bike brands. Around the world, the Russia-Ukraine conflict has also led to higher energy costs and increased manufacturing costs.

The coronavirus has spurred a boom in cycling and also played a role in keeping prices high. Between April and September 2020, bicycle sales increased by 27 percent, while sales of electric-powered models more than doubled. As huge demand in some regions outstrips supply, brands are raising prices, reducing the number of deals. Despite the recent cancellation of the zero-inventory policy of COVID-19, it has put great pressure on the logistics industry.

The requirement and Supply

Many predict that the slowdown in demand for bikes could lead to lower prices across the industry. Bicycle sales in the UK are now a quarter lower than at the height of the pandemic, according to a report from the national trade body Cycling (BA). Market capacity and value decreased by 28% and 26% respectively in the first half of 2022 compared to the same period in 2021.

According to Department of Transport figures cited in the BBC report, the decline comes despite a sustained 33% increase in the number of cyclists compared to pre-pandemic levels. That figure has soared to 39 per cent since March last year, when fuel prices began to rise after the conflict with Russia.

Some have speculated that bike brands may have overestimated market demand, leading to a growing inventory of bikes. Interestingly, some bike events continue to have strong sales, and in some cases grow. The BBC's market data service shows that average selling prices (the average selling price per bike, rather than the average asking price) rose by more than 40% between 2019 and 2022. John Worthington, the BBC's head of Insight, said demand from cycling enthusiasts for high-end carbon fibre road or mountain bikes had contributed to the phenomenon.

According to the BBC report, sales of electrically-assisted models have plateaed, but from January to May 2022, compared to 12 months earlier, electrically-assisted sales increased by 37% to about 10,000 units. Worthington says this shift in buying habits has led to excess inventory, especially in the entry/mid-level market. Worthington expects retailers and brands will have to offer significant discounts to shift inventory, putting some downward pressure on average selling prices across the market.

In an interview with Bloomberg, Brompton CEO Will Butler Adams was blunt about the fact that the industry has overproduced bikes. Early signs point to the possibility of a major sell-off, although no manufacturer has specifically pointed to an inventory glut as the root cause of the sell-off.

Canyon's Aaron Budd says many things affect the final pricing, such as raw materials, exchange rates, customs and delivery costs, and we constantly review them. In this case, it just means we can lower the price. Canyon added that this is a permanent price cut, not a limited time sale.

Specialized also posted on Instagram that "" a significant change in the economy" "had lowered prices on some of its models in Canada. None of this is good news if you're a retailer, but it does mean you'll need to discount soon, or price closer to what we expected a few years ago.

On the face of it, 2023 looks set to be a less turbulent year for the bike industry. Despite the ongoing conflict between Russia and Ukraine, energy costs have largely normalised, a successful vaccine programme has ushered us into a post-COVID-19 era and the political situation in the UK is unlikely to lead to another spike in sterling. Will these more stable prospects help stabilize bike prices?

Although any unforeseen global factors could derail things, we think the average price in the bike industry will fall in the short term. If brands are overstocked in the low to mid-range, you're likely to see deep discounts on 2022 models, especially with new models coming out in the summer.

Worthington, however, believes that long-term price cuts are unlikely. Although the pound has risen since the autumn slump, there is little expectation across the industry that the price of newly imported bikes is likely to fall significantly in the short term. He added that while promotions were increasing across the industry, there was no sign in the data that average selling prices were actually falling.

Supply at the top end of the market has improved, Worthington said, but there are still shortages. This, combined with strong demand for high-end carbon fibre road bicycles and mountain bikes, means that deep long-term cuts at this end of the market seem unlikely. Worthington concluded that the year ahead will be turbulent and challenging, with low consumer demand affecting the entire industry. Will this turn into a sustained bust after a few years of boom? It remains to be seen.