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Cash flow is crazy. Even though Big Bike has been raking it in from the lockdown boom, the amount of money invested in frames and parts either stuck in factories waiting for assembly or pre-ordering for 3 years time is nuts. Brands are having to take huge risks in terms of ordering just to get a production slot years in the future.
And shipping. Fuck, the price of a container is currently (or at least as of a few weeks ago) 8x the price of last year. Considering you can fit about 30 bikes in a container, that's an extra few hundred dollars or so per bike at the manufacturer level, so either margins get a lot smaller across the board or consumers will foot the bill.
chiroshi
Global shortage of components is becoming a massive problem, at all levels…..
Small/independent bike shops that rely on workshop for cash flow are struggling as they just can’t get any parts that need replacing, so are losing money on labour, and losing profit on any parts that they would have replaced. Many independent mechanics are resorting to buying parts at full RRP from Wiggle etc just so they can get repairs/services done and at least make some money on the labour.
Big brands have warehouses full of frames that they are unable to build into bikes and fulfill orders, which is starting to cause big cashflow problems for the ones don’t have millions in the bank to dip in to.
The huge surge in demand for bikes/parts last year, combined with factories being closed due to lockdown has meant not only are they trying to catch up with the back log, they also have to deal with a much higher demand. Combine this with the fact that global shipping chain is totally fucked as there are still so few planes in the air, and it’s no wonder there is basically zero stock of anything currently, and it is impossible to buy bellow RRP, and RRP on everything will be going up a fair whack over the next year if it hasn’t already.
Shimano factory in Malaysia shut down again due to local COVID lockdown a month or so back - not sure if it has opened again yet, but this will only add to the knock on effect.
Things won’t be back to pre-covid ‘norm’ for a LONG time unfortunately! I think it’s fair to say the old norm of being able to buy groupsets from Merlin at 60% of RRP are probably gone for good. Or for a good few years at least anyway.