There’s some jabs thrown and then some lack of accountability, interesting read…
“Raymond Dutil, owner of RAD Industries, says the problems for his company started in March 2023, when American bicycle giant Specialized began to discount bikes.”
Followed by
“According to court documents, Rocky Mountain took a $17.8-million loss in 2023 with a failed venture to supply e-bikes for a bike share company. That was part of the $11-million net loss for Rocky Mountie that year.”
Stick in spoke meme?
frankendudes on
Definitely has nothing to do with the fact that mountain bikes are the cost of a decent used car these days… 😂
I shouldn’t be one to speak, because an old bike got stolen and I had good home
Owners insurance, I was able to replace it with a Santa Cruz, but damn I was super shocked at how much the price just keeps increasing. People are not going to keep buying $6k bikes every year. I’m riding that Santa Cruz into the ground. Slightly New geometry isn’t enough of a factor to get me to spend that kind of cash..
ADrenalinnjunky on
I guess it’s hard to feel bad for companies who had no problem charging double what they’re charging now, during COVID when they were selling more than ever, and I don’t mean Rocky Mountain specifically.
kitnerboyredoubt on
This is a multi faceted problem, so many companies got drunk on sales and ended up way over their skis during covid. Lots of them got so sales drunk and partied like covid sales were going to continue forever.
Factory lead times for bicycles stretch out into years depending on the size of your order, the smaller your company the longer your order lead times. Even smart(er) companies trying to take advantage of an expected modest boost in sales due to pandemic numbers modeling were left holding the bag.
Another thing I’ve been thinking about with all the company closures is that a lot of the people that bought bikes during Covid were dipping their toes in the pond, how many of them actually became cyclists vs just wanting some way to escape the boredom and monotony brought on by lockdowns? I would venture to guess it likely isn’t a huge number. And most of the people that did buy bikes during that time are likely still happy with the one they bought, which brings me to my next point.
Manufacturers for years have focused intensely on a model year strategy, this meant discounting the old one when the new model came out. This worked for a time but consumers finally caught wise and especially lately as major geometry and ride quality (wholesale changes) have slowed to a trickle. A big driver for this (aside from the fact that geometry is pretty well sorted for most companies) is the cost for new molds. A new carbon mold can cost in the hundreds of thousands usd. If this cost can be amortized over years it works, but what happened is all of these major companies bought way to many components expecting sales to follow the graphs to infinity.
When this didn’t happen they were the ones to press the giant red button first, and for the lost part were the ones in a financial position to ready the impending recession. To stay relevant and sell anything smaller companies had to follow suit, selling bikes at a loss in order to bring any kind of revenue into the fold. It makes me wonder if this is the reason we’ve seen such a slow down in terms of genuinely game changing technology being introduced.
The big hedge fund managers and venture cap managers (like them or not) are not stupid people, they are going to be very unlikely to extend a life line via a capital infusion to any of these companies given market conditions. Why would you inject capital at a higher loss risk when you could simply buy up the company for pennies on the dollar after they’re forced to shut up shop?
TLDR: the model year strategy and going way too hard in the paint with order numbers during COVID will spell financial ruin for many companies. And it’s sad.
______deleted__ on
Beautiful. Once these dinosaurs are burned to the ground, they’ll nurture the soil for new companies to rise.
5 Comments
There’s some jabs thrown and then some lack of accountability, interesting read…
“Raymond Dutil, owner of RAD Industries, says the problems for his company started in March 2023, when American bicycle giant Specialized began to discount bikes.”
Followed by
“According to court documents, Rocky Mountain took a $17.8-million loss in 2023 with a failed venture to supply e-bikes for a bike share company. That was part of the $11-million net loss for Rocky Mountie that year.”
Stick in spoke meme?
Definitely has nothing to do with the fact that mountain bikes are the cost of a decent used car these days… 😂
I shouldn’t be one to speak, because an old bike got stolen and I had good home
Owners insurance, I was able to replace it with a Santa Cruz, but damn I was super shocked at how much the price just keeps increasing. People are not going to keep buying $6k bikes every year. I’m riding that Santa Cruz into the ground. Slightly New geometry isn’t enough of a factor to get me to spend that kind of cash..
I guess it’s hard to feel bad for companies who had no problem charging double what they’re charging now, during COVID when they were selling more than ever, and I don’t mean Rocky Mountain specifically.
This is a multi faceted problem, so many companies got drunk on sales and ended up way over their skis during covid. Lots of them got so sales drunk and partied like covid sales were going to continue forever.
Factory lead times for bicycles stretch out into years depending on the size of your order, the smaller your company the longer your order lead times. Even smart(er) companies trying to take advantage of an expected modest boost in sales due to pandemic numbers modeling were left holding the bag.
Another thing I’ve been thinking about with all the company closures is that a lot of the people that bought bikes during Covid were dipping their toes in the pond, how many of them actually became cyclists vs just wanting some way to escape the boredom and monotony brought on by lockdowns? I would venture to guess it likely isn’t a huge number. And most of the people that did buy bikes during that time are likely still happy with the one they bought, which brings me to my next point.
Manufacturers for years have focused intensely on a model year strategy, this meant discounting the old one when the new model came out. This worked for a time but consumers finally caught wise and especially lately as major geometry and ride quality (wholesale changes) have slowed to a trickle. A big driver for this (aside from the fact that geometry is pretty well sorted for most companies) is the cost for new molds. A new carbon mold can cost in the hundreds of thousands usd. If this cost can be amortized over years it works, but what happened is all of these major companies bought way to many components expecting sales to follow the graphs to infinity.
When this didn’t happen they were the ones to press the giant red button first, and for the lost part were the ones in a financial position to ready the impending recession. To stay relevant and sell anything smaller companies had to follow suit, selling bikes at a loss in order to bring any kind of revenue into the fold. It makes me wonder if this is the reason we’ve seen such a slow down in terms of genuinely game changing technology being introduced.
The big hedge fund managers and venture cap managers (like them or not) are not stupid people, they are going to be very unlikely to extend a life line via a capital infusion to any of these companies given market conditions. Why would you inject capital at a higher loss risk when you could simply buy up the company for pennies on the dollar after they’re forced to shut up shop?
TLDR: the model year strategy and going way too hard in the paint with order numbers during COVID will spell financial ruin for many companies. And it’s sad.
Beautiful. Once these dinosaurs are burned to the ground, they’ll nurture the soil for new companies to rise.