Your next bike just got a lot more expensive

Delish

Well-Known Member
Team MTBNJ Halter's
Thank you for the synopsis.

It sounds like uncertainty is more of the problem than the tariff.

just to run it through a little further - What did i miss?

let's say a $1000 bike costs $250 in parts and 100% are subject to the 25% tariff .
worst case is $63 in extra tariff, and let's throw the cost of money in at 10%, so $70
The cost of sale also has a cost of money, another 10% increase, so another $7,
and the cost to sell - assuming the sales people are not on commission, and most people use credit cards
at a 3.5% (high side) of $77+$5 increase in sales tax = $3

so the consumer should see an $85 increase on a $1,000 bike at the 25% tariff rate to maintain margins all the way through.
so 8.5% to the consumer. Worst case. unless wildly wrong on the cost of parts - and i think i'm probably high.

Are the margins are higher on higher-end bikes? Then percentage should be lower.

=====

Al and Fe are traded on the futures market (futures means contracting the obligation to buy it in the future at a specific price, on/by a specific date)
This is different from the spot market - which is the price often quoted. (think bbl of oil, you see the spot price, but the refiners don't pay that,
as they have locked in a price and supply - reducing uncertainty)
Al is down 15% in the last couple months (i just dropped 100lbs off at the local metal scrap, and the price they pay is down 25%)
Fe seems to be up 15% - interesting.

Seems like your math checks out. However, your big assumption is that the actual wholesale cost a theoretical $1000 bike is $250. I doubt that the wholesale cost is that low. Working backwards from $1000, figure bike shops' gross margin is around 30-35% +/- for bikes sold at MSRP (lower on low-end bikes, higher on high-end bikes). Cannondale's parent company, Dorel, typically has gross margins for their Sports group around 22%. Lets assume high end bikes are the shining star of Dorel Sports' portfolio and they build in 35% gross margin. If that's the case, the wholesale cost of a $1000 bike is closer to $500, which means the net effect of the 25% tariff would be much greater than in your example.
 

Tim

aka sptimmy43
Why not create incentives for companies to bring mfg jobs back, instead of trying to force it through punitive measures? I feel like the "shake out" here will be higher costs for the same goods, and the jobs will stay overseas.
IMO more taxes=more waste, not < govt debt.

I think this is right on. Tariffs and trade wars are not good for consumers. They aren't good for anything really.

Regardless of the strategy, if we want to bring jobs back to the US then we need to be prepared to pay in one way or another. There is a reason the jobs were shifted out of the US in the first place. A lot of things sound like great ideas until they are actually implemented and it affects something we value.
 

Patrick

Overthinking the draft from the basement already
Staff member
Seems like your math checks out. However, your big assumption is that the actual wholesale cost a theoretical $1000 bike is $250. I doubt that the wholesale cost is that low. Working backwards from $1000, figure bike shops' gross margin is around 30-35% +/- for bikes sold at MSRP (lower on low-end bikes, higher on high-end bikes). Cannondale's parent company, Dorel, typically has gross margins for their Sports group around 22%. Lets assume high end bikes are the shining star of Dorel Sports' portfolio and they build in 35% gross margin. If that's the case, the wholesale cost of a $1000 bike is closer to $500, which means the net effect of the 25% tariff would be much greater than in your example.

The Dorel margin is fully loaded?
Probably could go back and look at their COGS to get a better ballpark - maybe somewhere between 25 and 50 % of msrp. still sounds high.
i sold brains at 100% gross margin (technical consultants).
 
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stb222

Love Drunk
Jerk Squad
Holy shit the surcharges this person had to pay?!?!??????!!!!!!!!!
04B524F5-A367-4E60-A1EF-BEB02EE69529.jpeg
 

stb222

Love Drunk
Jerk Squad
So tariff + 9 days:

Caonnondale100218.jpg

Scalpel Si Carbon 3: $5,500 to $5775 %5 increase
Scalpel Si Carbon SE: $4500 to $4725 %5 increase
Scalpel Si Carbon 4: $4200 to $4400 5% increase
Scalpel Si 5: $3000 to $3150 5% increase
Scalpel Si HI-MOD Frameset: Same
Scalpel Si HI-MOD Black Inc.: Same
Top Stone Apex 1: $2000 to $2,100 5% increase
Slate Force 1: Same
 

rick81721

Lothar
Bikes I'm interested in:

SC blur X01 cc - $6399 (correction - no change, I priced the wrong version initially)

https://www.santacruzbicycles.com/en-US/blur

Turner Czar, x01, stans c wheels - $6227 (up $27)

http://www.turnerbikes.com/bikes/czar-v1-1/?doing_wp_cron=1537534895.8663690090179443359375

Felt Edict 1 - $5999 (no change)

https://feltbicycles.com/collection...-country-mountain-bike?variant=18311241990262

No change in website price on any of these bikes.
 

Xler8

Well-Known Member
Even if there’s no direct financial impact to a company; any company can use this as a reason to increase their revenue stream.
 

Zaskar

Well-Known Member
Not bike releated but related... Just purchased a new quartz counter top. Vendor tells me it was $400 cheaper in Aug...thanks MAGA!
 
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