Will “The Tesla Of Bicycles “ Go The Way Of De Lorean?

 Henry Ford did something 110 years ago that some considered bold and others thought was crazy:  He increased his workers’ pay to $5.00 a day.  He did it mainly to stanch the turnover that bled his workforce and others in the industry. He reasoned—correctly—that a more stable workforce would be more efficient.

His action would mean, not surprisingly, that other employers, in and outside the auto industry, had to increase their wages. And that led to another phenomenon that, wrongly, has been cited as Ford’s main motivation for increasing his employees’ compensation:  Many more of them could afford the cars—mainly, Model Ts—they were sending forth from assembly lines. Mind you, the car was still a significant, if not major, purchase for most of those assemblers. But the Model T was certainly more attainable for them than automobiles that were made before the advent of the assembly line, and on the wages workers previously earned.

What if Ford’s gambles hadn’t paid off?  What if, after introducing the assembly line and a vehicle that practically defined “economy car” and paying his workers more, the company lost money—or showed a net profit that was less than the price of one of the vehicles it produced?

He would have had a situation like the one Brompton now faces. For year ending in March 2024, the British folding bike maker cleared only £4602 ($5696 at today’s exchange rate) in profit:  less than one of its top-of the-range T Line Explore bikes sells for. 

What is perhaps most startling, at least for the company and the bicycle industry, is that the previous year netted £10.7 million.  In other words, Brompton lost 99 percent of its profitability in just one year.

Analysts blame Brompton’s predicament on many of the same woes that have beset the bicycle industry during the past couple of years.  Surges in demand, combined with supply-chain disruptions led to the closure of some bike shops. The ones that survived placed hefty orders once supplies became available again. But the pandemic “boom” went bust and retailers found themselves discounting overstocks.

Brompton’s situation was complicated, I believe, by the kinds of people who were likely to buy one of their bikes—and the image of those bikes and the company. The latter can be summed up by one shop owner who calls Brompton “the Tesla of bicycles.” I think he was on to something.  “It’s not just the prices,” he explained. “A lot of people think they’re bikes for people who live in Soho or by BAM (the Brooklyn Academy of Music).”

And that brings us to a significant part of Brompton’s demographic.  While competition from eBike rental schemes and manufacturers like British startup GoCycle has affected the entire industry, it seemed to hit Brompton particularly hard: It seems, to me, that many Brompton customers, especially young professionals, were seeking easily-rideable and -portable transportation that looked stylish even more than they sought actual bicycles.

So it’s no surprise that Brompton plans to launch a more utilitarian lineup that includes eBikes. That, company boss Will Butler-Adams, is a “cause for optimism “ that there are “opportunities on the other side” for Brompton and other bike companies that can weather the storm.

What’s Happening To The Bike Biz?

 Four years ago, North America, Europe and other parts of the world were experiencing the biggest “Bike Boom” in decades.  It was a result of the COVID-19 pandemic, which engendered lockdowns and shutdowns. In the wake of social distancing and the closure of gyms, other recreational facilities and transit systems, bicycling became one of the few available options for transportation, exercise and simply getting out of one’s home.

Among the facilities that shut down were ones that produced bicycles and related equipment. Most of those factories are in Asian countries that were subjected to some of the strictest lockdowns and closures.

The inevitable result of surging demand and dwindling—or no—supply meant that people waited weeks or months not only for bikes and helmets, but for replacement parts, let alone accessories. Some shops—most notably Harris Cyclery (Sheldon Brown’s home base) closed.

Those closures were unfortunate, but remaining shops, online retailers and bicycle manufacturers themselves (who, remember, were dealing with supply chain disruptions) figured that all would be well once factories resumed production and transportation was back on track.  

It seems that the supply situation started to get back to “normal” around late 2021 or early 2022. Retailers bought up what they couldn’t get for the previous two years.By then, however, people who couldn’t get a bike gave up. And, those of us who are dedicated cyclists know at least one cyclist who simply has to have the newest and latest of everything, most people don’t trade in their bikes every few years the way other people do with their cars.

Now we are seeing a “bust.” Retailers are sitting on inventory they bought two years ago.  And they aren’t buying what manufacturers are making, and suppliers are providing, to “catch up” with previously-unmet demand.

The result is that businesses throughout the bike industry—from local shops to manufacturers and the mega-online retailers—are going bust. One notable recent casualty is Chain Reaction/Wiggle. Planet Cyclery is on its way to following them.Other “big wheels” are rumored to be in trouble. I won’t name them, simply because I don’t want to run the risk of setting off a panic over a business that might actually be doing OK.

One problem with the “fire sales” at retailers like Planet Cyclery—at least from the consumer’s point of view—is that the big discounts are on prices that were inflate by the pandemic because retailers and suppliers, when they finally could get inventory, were paying , in some cases, double or triple pre-pandemic prices.

So what will be the new “normal?” If I could predict such things…