After Another Bicycle Industry Bust In ’24, Will ’25 Finally Be The Year Of Recovery?

A year ago, there was a series of articles about how 2024 was sure to be the year the bicycle industry bounced back from the doldrums that had plagued it the previous couple of summers.

But that didn’t happen.

Why didn’t it, and why did so many people get it wrong?

The hangover

The root cause of the original bust is no mystery. Like pretty much everything connected to the outdoors industries, bicycles had a major “sugar high” during the pandemic. People who were forcibly kept from their normal activities and from their workplaces sought ways to pass the time and make up for other lost pleasures, and huge numbers of them found the solution in the outdoors.

While that boom created new enthusiasts of all stripes, everybody knew the sky-high sales couldn’t keep going like that for long.

“The numbers I heard is we sold almost three and a half years’ worth of product in a year and a half,” explained Kirby Bedsaul, president and general manager at Chris King Precision Components, a boutique manufacturer of high-end bicycle bearing components and wheelsets. “It’s just like everybody got dollar signs in their eyes, just chased every bit they could, knowing that it wouldn’t last… Then all of a sudden, demand just absolutely falls to the floor.”

The 2023 outdoors season saw the beginning of the bust, and cycling wasn’t spared the slump. Everybody knew that there had been some irrational exuberance during the flush times, and that the supply chain had become bloated with excess inventory. Still, lots of people, including industry insiders, thought that most of the excesses had been purged heading into the 2024 season.

They were wrong.

Hidden problems

One big challenge in the bicycle industry is the unusual opacity of its supply chains. People assumed that the very rough year in 2023 meant that the necessary adjustments to the inventory excesses had been made. But there was really no way to tell.

“I would say, as much as anything, people were hoping 2024 would be the recovery year, but they didn’t really have much data or science behind it,” Ken Lousberg, CEO of SRAM, the second-place global bicycle components manufacturer, told me in an interview. “They knew what their situation was, but they didn’t know what their competitors or suppliers that they don’t use. Nobody really knew how much true inventory was in the complete channel, they really just knew their portion.”

“The bike industry is not very close knit… no one’s sharing, you know, the pressures that they have, right?” Tony Karklins, CEO of Time Bicycles, told me by videoconference. “And so there’s not a lot of great reporting in the bike industry… It’s really hard to track who’s sitting on what and a big part of the problem was a lot of that inventory that people either owned or were committed to was still sitting in the factories of the assemblers in Asia. That’s where a lot of it was backing up.”

It became clear headed into last spring that the assumptions about a quick recovery were wrong.

“When we got to March, everybody learned it was going to be very different, because big strategic sell offs of inventory hit at the very start of the season, which you know has always kind of been an industry no-no, as it just crushes everybody’s business plan, right?” Karklins continued. “Creates a bit of a competition to soak up those dollars. But it was clear that the bigger brands were carrying lots of old inventory, and they were doing better-than-ever deals. That sucked up all the capital of the bike stores… Globally, the distributor market was also a little bit in the same–they had taken in more product than they could sell.”

Increasing industry complexity

Beyond the opacity of its supply chains, there are other difficulties in assessing the cycling industry. One of the biggest is that the bike business has become increasingly crowded and complex over the years. Mountain biking brought a whole new dynamic almost 40 years ago, and since then the additions of hybrids, gravel bikes, and now e-bikes have muddied the waters further.

Meanwhile, the industry has followed the path of the beer world. A few big players dominated decades ago, alongside a handful of specialty producers who added up to a rounding error of the market total. Now the old big guys have given way to new big guys, who increasingly have serious competition from countless “craft” producers as well.

“You know, there’s some new players,” said Gary Fisher, one of the inventors of mountain biking and a serial cycling industry entrepreneur. “You know, a lot of the people behind it are the Chinese guys. I mean, there’s 1,000 companies out there, you know, that are just going for the business. They’re very aggressive and very good.”

Meanwhile, the tariffs picture is also reshaping the industry.

“What’s happening fast is creation of bicycle assembly and painting in North America,” said Karklins. “We have that industry emerging rapidly here in the United States right now, almost like a race for it, because we will allow people to send in the subcomponents from wherever they need to be, pay the duties on just the individual subcomponents, and then the bike assembly is going to be the thing in 2025 North America. That’s great, because when you have painting and assembly in America, then the supply chain starts to set up around it, because it has to feed it… This tariff situation is kind of a baby version of what Europe did a decade ago. So that’s a super-exciting moment in the domestic bike industry.”

As with any industry, the relative values of currencies will also play a part–but in this case, they may sometimes mean more than the tariffs.

“You know, currency is much bigger than we all realize,” Fisher said. “I mean, come on, the Mexican peso used to be ten to the dollar, and it’s been around 18 last few years. I mean, why not do business, you know? And that’s, that’s a bigger difference than [a] 25% [tariff], right?”

Recovery in 2025?

The industry experts have mixed opinions about the prospects for a recovery this year.

“Last year, as people launched new product, we saw it immediately go on sale a month later,” said Karklins. “So we know last year that the general consumer was more enamored with 50% off than they were with the latest, greatest, shiniest penny. And so we think those categories are normalizing, but we won’t really know until March to see if the industry drops its pants again. I think the risk now is, if the consumer was trained in 2024 that it’s a buyer’s market, getting back to normal pricing is not going to be easy. And these brands that went to 50% off, it takes years to get back from 50% And so if you think about e-bikes in the middle of all that, you’ve got tariffs coming on you for the first time, and you’ve got outdated product. And when an e-bike is outdated, nobody wants it at all. But we see performance in the sport categories being pretty normal and being pretty much healthy,”

“Fundamentally, what we pay attention to is, are riders riding their bikes?” Lousberg added. “That’s the fundamental driver of demand. We can clearly see that even the new riders that came in during the pandemic kept riding at a higher rate than we really anticipated they would. I think that’s really encouraging. I definitely think ’25 will be better than ’24. I think it’ll be moderate growth. If you look at the whole I think that road bikes, gravel bikes, I think they’ve recovered. And then there’s still that inventory to work through on the mountain bike side. I can see that at some price points taking all of 2025 to work through.”

But while everyone, it seems, is a bit more cautious about anticipating a big recovery this year, there’s a growing optimism for the industry’s longer-term direction.

“When I started racing bikes a long, long time ago, the opportunities to participate weren’t clear,” said Michael Zellman, senior corporate public relations manager at SRAM. “Especially with gravel, the opportunities [are there] to participate at a level that makes everyone comfortable, where you don’t have to line up against an intimidating group. You line up with friends. And then I want to say also that racing is as exciting as it’s been since the ’90s and 2000s… So I just think the enthusiasm around the sport from a participation level and from a racing level is great.”