Bicycle makers don't see inflation as transitory, continue to increase prices
“We don’t see any improvement for 2022, for sure. We’re going to be in the same boat that we’ve been in since the end of the summer 2020, when there’s not enough supply to meet demand,” says Larry Pizzi, chief commercial officer at Alta Cycling Group LLC, based in Kent, Wash
The average selling price of a new bicycle in the U.S. in September was $346, up 28% compared with 2020 and 54% higher than the average selling price of a bicycle in 2019, according to data from NPD Group Inc., a market research agency.
He says he is pressing ahead with price increases for 2022 because he doesn’t expect these supply-chain issues to get much better. He estimates the cost to the company of producing a single bike has shot up by 20% to 25% compared with the cost before the pandemic, as competition between manufacturers for common parts pushes prices skyward.
Seatpost prices have gone up 20% in the past 12 months. So have prices for the cranks the rider turns when pedaling. Handlebars are up 11%. Brake levers and calipers are up 14%. Chain prices are up 17%, and reflectors are up 50%, according to Karbon Kinetics.
Mr. Thorpe learned by email Wednesday that higher prices for magnesium—used in Gocycle wheels—mean future shipments of wheels will be 17% more expensive than they are now.
The supply-chain mess meant Karbon Kinetics fell 40% short of its production goal this year, making only 3,000 of a planned 5,000 bikes—cutting the company’s expected revenue for the year.
Mr. Thorpe says he is hopeful of hitting the 5,000 mark in 2022, a more conservative goal than the 10,000 or so he had penciled in before the pandemic struck.
Alta’s Mr. Pizzi says at the beginning of the pandemic he thought he was going to be canceling orders. By April 2020, he says, he was asking his suppliers in Asia if there was any way they could increase production.
Before the pandemic, the company would have expected to sell 200,000 bikes a year. In 2020 it sold 250,000, completely exhausting its stock. “It was bike in, bike out,” Mr. Pizzi says.
Alta could easily have sold another 125,000 or so last year if its contractors in countries including Thailand, Cambodia and Vietnam could have kept up with retailers’ appetite, he says.