Prices to ping pong, ditto delivery dates

Mark Lynskey, CEO of the American Bicycle Group in Chattanooga, Tenn., was perhaps being too conservative when he said bike prices will have to be increased by 20 percent. The word from the Taipei show, which started today, is that price hikes for key bike bits could shoot up by 30 percent. Canny suppliers, seeing China-sourced metal, plastics and cardboard prices appreciate by the day and watching as bike manufacturers gulp at Shimano component shortages, are not guaranteeing delivery dates until they see wholesale prices rise. And raw-materials prices are rising daily...
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In an article on BikeBiz.com last week, Lynkey was quoted as saying price hikes would reach 20 percent but Shimano shortages - worse than feared, say bike suppliers - and an overheating Chinese economy, married to the depreciation of the US dollar, will mean greater hikes.

Component prices will rise 10-30 percent this year, reckon trade pundits scuttling around the Taiwan trade show.

This is what one trade source told BikeBiz.com last week:

"Far Eastern suppliers are raising prices between 10 percent and 13 percent for 2005. This is due to the depreciation in the USD that they use to buy raw materials and pay wages but also now to increasing steel prices due to huge demand from the flourishing Chinese economy.

"Whilst the price hikes are unlikely to result in increased retail or trade prices due to the depreciation of the USD, 2005 is likely to be a complex year for importers as they monitor currency fluctuations (which have been extreme) back to a more traditional level against the USD. In recent years bike suppliers have maintained retail prices for a season and some key models have remained at key price points for several years. 2005 may see prices fall and rise during the year adding headaches for both importers and dealers."

However, this supplier's 10-13 percent price hike prediction has been overtaken by events. Talk at the Taipei show is all about meteoric price hikes. Bike suppliers who have yet to set prices for 2005 product are watching the component price rises with great interest.

Shimano component shortages - flagged, officially, since December last year - are leading to some colly-wobbles from bike manufacturers. Even the biggest suppliers have had to resort to arm-twisting to get components ordered pre-Christmas for February delivery to be actually delivered end of May.

And it's not just high-end stuff on the waiting list, suppliers are complaining of July-August delivery slots for lower -end RapidFire components.

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