Market Watch: Why The Bottom is Falling Out From The Used Bike Market

Wanting to sell your nice lugged, steel road bike? You may want to wait a couple of years.

There is no market indicator for the used bike market. Like all unofficial, unregulated cash in hand markets there is no "official" way for tracking improvement or decline of sales, especially when the sellers are people unloading their second-hand goods on others. However, as somebody who actually pays attention to these things, I have picked up on a market trend which will probably benefit consumers more than anyone else in determining what their next bike purchase will be. 

If you, like me are a die hard vintage bike collector, now is not the time to keep adding old bikes to your collection. If anything, now is the time to start letting go of whatever old bikes you're able to, probably at a loss. However, if you have an Eddy Merckx Super Corsa or a Colnago Art Decor, you may definitely want to keep holding on to it. Look at the new bikes that are coming out. Look at the technology bundles offered. Look at the prices. Especially the prices. The prices of new bikes are blowing my mind. Never before have I seen so many quality bicycles at such affordable prices being offered new. Some retailers are offering steel cyclocross bikes with disc brakes for about $600, for example. These bikes also come equipped with brifters, ISIS drive or Hollowtech II bottom brackets and compact gearing.This is in stark contrast to the 2008-2009 calendar year, when even the most basic, Shimano Sora equipped bicycle with a carbon fiber fork was selling for about $800.00.  What's happening that is driving down the prices so much, especially in light of all the new technology coming out on bikes nowadays? Let's discuss some of the reasons.

Bicycle Technology Arms Race:

2015 is seeing a lot of concept technologies such as electronic shifting and 1x10 drivetrains becoming mainstream on many production bicycles. Only a couple of years ago, Shimano Di2 was only offered on the most expensive $10,000.00 bicycles. Nowadays Di2 technology can be found on bikes costing less than $3k retail. Mountain bike manufacturers have introduced an extra wheel size into the market, now offering three options of wheel sizes for their models. Sram 1x10 now is in direct competition with Shimano SLX. There are about a dozen new innovations that have come out in groupset technology over the last couple of years alone. All of the groupset and bicycle manufacturers are vouching for your purchase, and this is one of the reasons prices are lower this year. Retailers and manufacturers alike realize that they need to lure in early adopters to all the new tech that has come out. Anyone who is trying to sell a  square tapered bottom bracket, Shimano Sora component equipped bicycle for $800 in 2015 will be quickly squeezed out of the market like an overgrown pimple. Bicycle companies are also realizing that they have all been fishing out of the same small pond for a while now, so many companies are lowering their prices to attract a broader consumer base. All this is resulting in awesome bikes becoming available for everyone. For the same price or less than the retail price of an iPhone, someone can now buy a legitimate bike of good quality. 

Online Retailers:

Online retailers have forced the hand of major bicycle companies to evolve or die to the new consumer mindset. The harsh truth is that a $9.00 an hour bike shop employee doesn't know more about bike fit then what is already extensively available on the subject online. As someone who never had a bike fit, it didn't take me a physics degree to figure it out. Welcome to the internet baby, it's 2015! If I were to go back in time to 2007 when I bought my first road bike, I would have just gone to the bike shop, found a bike that I was comfortable on and look for the same size bike for hundreds less from an online retailer. At the expense of their corporate bonuses and their bottom line, bicycle manufacturers are finally starting to play ball with smart and informed consumers, which are quickly becoming that vast majority thanks to the internet. Without ever having mounted a bicycle, somebody can figure out that the super nice, quality bicycles are made in Taiwan, and the average but still very good bikes are made in China. It's becoming common knowledge that all bicycles are being manufactured in the same factories, regardless of brand name. Only a select few niche bikes are handcrafted or made exclusively in certain areas. But the fact is that a guy riding a Canyon and a guy riding a Merida could very well be riding essentially the same bike with different wrappers put on. 

The Used Bicycle Market:

The grassroots, organic used bike market, full of retro-grouches, hipsters and flea market professionals, has finally made a dent on the profits of major bike industries. So much so that at there are loads of good new bikes now available at the $500 range, just a couple of hundred dollars more than the arbitrary $300 Craigslist spending limit. The bicycle industry is getting tired of all of the bottom feeders making residual income of their inability to see what the consumer wants. They are finally waking up and lowering their prices for this very reason. That is why, at least for the foreseeable future, the bottom is out on the used bike market. People may be selling their bikes at a loss or not selling them at all. I see a trend of most bikes on craigslist selling for about $120, and most high end bikes for about $500. At the $500 they will probably be Dura Ace or Campagnolo equipped Colnagos. That is how much of the bottom will be eaten out of the flipper's market this year. There will be little demand from collectors so those who own nice vintage bikes may just want to hang onto them.

Some Things are Cheaper to Buy New than to Replace:  

Many people may not want to hear this, but it's true. Once a critical part on an old,  classic bicycle breaks it may take a few months of combing through eBay to get an exact replacement. A lot of the tools for working on older bicycles are also becoming obsolete. It may finally be time to retire that cottered crank bicycle project with the swiss bottom bracket and the Campagnolo Cambio Corsa shifting you've been working on and just hang it on the wall for the sake of art.

Market Forcast for 2015:

Dorel Industries will probably close out the year on a high. Shimano shares will increase because of the Deore SLX component line and the trickle down in electronic shifting technology to their 105 and Ultegra component range. Sram will have big profits this year but they are not a publicly traded company. Expect a bull-run year from Garmin as they have made their bike computers compatible with the online app Strava. Expect shares to rise to peak levels in the summer months and slowly start going down in the fall. There you go, I just made you some money, now go on and buy one of those nice, brand new bicycles! (Or you can send me a check for the free advice, I'm not actually a stockbroker so I'm not in the money like you are).