Is this the start of the end?

[117]

https://road.cc/content/news/giant-postpones-payments-suppliers-298285

Is this the start of the end of an Era or brand? I've seen big brands like Giant and Merida fall because of the same tactics played from the board room, both local and international brands. 

 

[ChrisF]

 

[RobertWhitehead]

Very interesting, supply and demand is a very tricky thing to get right.

IMO countries like SA will be hit hard because of this. Unfortunately quite a large number of our population jumps onto the "next gravy train" very very quickly and even quicker go "all in".  We're going to see the market move from a "sellers market" into a "buyers market" ever so gradually until one morning prices will just fall off a cliff (Just FYI, this has already started to happen)

 

Full disclaimer: This is the opinion of one noob and does not constitute financial or any sort of life advice 

 

[ChrisF]

29 minutes ago, RobertWhitehead said:

Very interesting, supply and demand is a very tricky thing to get right.

IMO countries like SA will be hit hard because of this. Unfortunately quite a large number of our population jumps onto the "next gravy train" very very quickly and even quicker go "all in".  We're going to see the market move from a "sellers market" into a "buyers market" ever so gradually until one morning prices will just fall off a cliff (Just FYI, this has already started to happen)

 

Full disclaimer: This is the opinion of one noob and does not constitute financial or any sort of life advice 

 

 

The HUB-police may have to find another topic as secondhand values resets itself ....

[RobertWhitehead]

32 minutes ago, ChrisF said:

 

The HUB-police may have to find another topic as secondhand values resets itself ....

Something like why we're not allowed to make comments on ads 

[Paul Ruinaard]

Isn't it time a reset happened especially when bike prices are cranking in to R 270k for something that used to cost R 35k 15 years ago. The input costs associated with bikes have also dropped materially in the longer term, yet prices have continued to rise as the demand supported it. 

So prices are unrelated to value and are being set based on perceived demand. Once the perceived demand drops off and the real demand is way below the actual supply - markets will contract and people will go out of business especially if you have warehouses full of stock. The longer the elastic is pulled back in terms of the price rise based on perceived demand, the greater will be the heights it all falls from when it contracts. You don't want to be sitting with warehouses full of stock when inflation is resulting in a recession. Thats when you will see it all dumped as cash flows become king.

Or in simpler language the bike industry has got fat and complacent during pandemic demand and have geared for an unrealistic assumption this will continue. You just need to look at the stock valuations of the pandemic darlings since 2020 to date for some lessons as to what is going to happen next. Zoom, Peleton, Netflix , Gamestop, bitcoin, FTX etc etc etc to name a few of the standouts where valuations where stratospheric and unrelated to underlying results.

[RobertWhitehead]

51 minutes ago, Paul Ruinaard said:

Snip

I would not go so fr as to put Bitcoin into the same category as that stuff is "liquid gold" - When Lambo, when Moon 🤪

[Theunissa]

1 hour ago, Paul Ruinaard said:

Isn't it time a reset happened especially when bike prices are cranking in to R 270k for something that used to cost R 35k 15 years ago. The input costs associated with bikes have also dropped materially in the longer term, yet prices have continued to rise as the demand supported it. 

So prices are unrelated to value and are being set based on perceived demand. Once the perceived demand drops off and the real demand is way below the actual supply - markets will contract and people will go out of business especially if you have warehouses full of stock. The longer the elastic is pulled back in terms of the price rise based on perceived demand, the greater will be the heights it all falls from when it contracts. You don't want to be sitting with warehouses full of stock when inflation is resulting in a recession. Thats when you will see it all dumped as cash flows become king.

Or in simpler language the bike industry has got fat and complacent during pandemic demand and have geared for an unrealistic assumption this will continue. You just need to look at the stock valuations of the pandemic darlings since 2020 to date for some lessons as to what is going to happen next. Zoom, Peleton, Netflix , Gamestop, bitcoin, FTX etc etc etc to name a few of the standouts where valuations where stratospheric and unrelated to underlying results.

I agree with you. But not just biking industry. But even cars, houses etc

[Paul Ruinaard]

https://www.velonews.com/gear/fallout-from-the-pandemic-bike-boom/

 

[Jewbacca]

I love how dramatic it seems. 

Any well managed business who made prudent business decisions is doing just enough to survive or thrive.

Those who made big growth, risky decisions are being bitten. 

The knock on effect was predicted, the short timespan of the boom was forecast, the shipping and logistic issues were relevant from the start. None of this is a shock nor is it a surprise.

Those businesses who tried to 'maximise profit' took a risk and it hasn't paid off.

Elite stopped taking orders for nearly 2 years and only concentrated on building and supplying trainers to fulfill their order backlog and 'normal' supply flow numbers. 

I've got mates in the property business who have tanked hard. They bonded on bonds on the back of massive tourism/air bnb numbers in 2017/18 and now they are ded.

There wasn't enough consolidation in debt nor a realistic timeframe to 'normalise' the numbers. 

This sort of story is currently prevalent across many many industries. I guess it's a classic tale of 'it won't happen to me'. By all accounts there is a global recession on the horizon, we need to stop pretending there isn't. 

[dasilvarsa]

I don't see Prices of Premium Branded Bicycles Coming Down in 2023 in RSA.

Stock is Still in Low Supply.

Second Hand Prices have Flattened off a bit but usually the bikes need work and Spares have become extremely expensive. MTB Tyres have Jumped from R499 to R799 in a Year.

 

 

[Eddy Gordo]

On 12/30/2022 at 12:56 PM, Jewbacca said:

I love how dramatic it seems. 

Any well managed business who made prudent business decisions is doing just enough to survive or thrive.

Those who made big growth, risky decisions are being bitten. 

The knock on effect was predicted, the short timespan of the boom was forecast, the shipping and logistic issues were relevant from the start. None of this is a shock nor is it a surprise.

Those businesses who tried to 'maximise profit' took a risk and it hasn't paid off.

Elite stopped taking orders for nearly 2 years and only concentrated on building and supplying trainers to fulfill their order backlog and 'normal' supply flow numbers. 

I've got mates in the property business who have tanked hard. They bonded on bonds on the back of massive tourism/air bnb numbers in 2017/18 and now they are ded.

There wasn't enough consolidation in debt nor a realistic timeframe to 'normalise' the numbers. 

This sort of story is currently prevalent across many many industries. I guess it's a classic tale of 'it won't happen to me'. By all accounts there is a global recession on the horizon, we need to stop pretending there isn't. 

absolutely. When lockdown hit, it was all good and well, 3 weeks in and I realised we need to make business. Chatted to the boss, organized permits for trading. If it wasnt for that minute bit of business we most likely would be closed and me sitting without a job. I can tell you post covid, or 2022 rather has been an extremely tough one.

The business is not there!

The stock is not available.

The factories are still are not making/producing or supplying the same quantities or variety. Instead old dead stock that didnt sell pre covid has now been pushed forward and selling slowly. We had old stock in our storeroom which is depleted and prior it didnt move at all.

Then we get some clients who come in and they are like why is there no stock? Is it still covid? Covid is finished! When are you ordering stock and so on and so on. I cant deal anymore LOL. Funny thing is the little stock that I order and receive( a 1/4 of what I order as there is no stock available), gets sold out within a week. Every little bit of business is appreciated and I try my utmost to find stock for clients but its a literal dead end. If I had the finances I would try and import myself.

I made some hard decisions financially on a personal level and hopefully by the end of this year I will be in the black. 

Then my wife decided her(our) business needs to grow and we now have a shop in Simons Town! Well done wife!!! No formal work for 20 years and now she is feeling a days work.

This year is gonna shock alot of people. There are extremely tough times ahead, and I do think that the recession has arrived even though still early stages. 

[love2fly]

When a set of OEM brake pads for my SRAM Levels cost the same as for my VW Golf, and the same goes for tyres yet the material weight of the bike part is 1/20 of the car part and probably only lasts 1/20 of the distance I have a problem. Some sort of correction in the market can't come soon enough IMHO. I also like to see the new (Chinese) brands starting to challenge Shimano & SRAM iron groupsets...

[Prince Albert Cycles]

On 12/30/2022 at 9:58 AM, Paul Ruinaard said:

Isn't it time a reset happened especially when bike prices are cranking in to R 270k for something that used to cost R 35k 15 years ago. The input costs associated with bikes have also dropped materially in the longer term, yet prices have continued to rise as the demand supported it. 

So prices are unrelated to value and are being set based on perceived demand. Once the perceived demand drops off and the real demand is way below the actual supply - markets will contract and people will go out of business especially if you have warehouses full of stock. The longer the elastic is pulled back in terms of the price rise based on perceived demand, the greater will be the heights it all falls from when it contracts. You don't want to be sitting with warehouses full of stock when inflation is resulting in a recession. Thats when you will see it all dumped as cash flows become king.

Or in simpler language the bike industry has got fat and complacent during pandemic demand and have geared for an unrealistic assumption this will continue. You just need to look at the stock valuations of the pandemic darlings since 2020 to date for some lessons as to what is going to happen next. Zoom, Peleton, Netflix , Gamestop, bitcoin, FTX etc etc etc to name a few of the standouts where valuations where stratospheric and unrelated to underlying results.

I am always puzzled by high end bike prices so am intrigued by your remark that prices are unrelated to value . Being a small shop none of the popular brands are available to me from the importers so I have to buy from shops and get a discount . One of these shops disclose to me what they pay for a particular bicycle and according to that the margin is not excessive . So my question to you is this , where does the huge markup occurs . Manufacturer or importer ?

[Mokgaga'a mmakubela!]

i dont think it is the start of the end. it is probably a market correction, which is long overdue. i bought my MTB, road and gravel bikes about 8 years ago and will not buy a bike or bikes second hand or new  anytime soon. current prices are on steroids 🙄

Edited January 1, 2023 by Mokgaga

[DieselnDust]

23 minutes ago, Prince Albert Cycles said:

I am always puzzled by high end bike prices so am intrigued by your remark that prices are unrelated to value . Being a small shop none of the popular brands are available to me from the importers so I have to buy from shops and get a discount . One of these shops disclose to me what they pay for a particular bicycle and according to that the margin is not excessive . So my question to you is this , where does the huge markup occurs . Manufacturer or importer ?

So the cabal is alive and well. Any store should have access to product