Epic price gouging?

rgarner

I bought my first bike in 20-odd years in 2008, before the credit crunch started forcing prices higher. My Epic Comp 2008 cost me 1599 list. That was stolen a couple of months later.

While I've bought other bikes since, I've kept my eye on Epics because I really liked the bike and fancied replacing it at some point. But the price rises seem to be utterly disproportionate to the state of the global economy.

A 2011 Epic Comp will set you back 2249 list. Don't know about you, but 40% in three years seems excessive to me, and an increase of 11% from the 2010 alu list of 1999 is likewise steep. I guess if they're shifting them at silly prices they can do what they like, but I won't be buying one (I'll keep buying last-minute sale bikes )

Anyone else feel the manufs are taking advantage a wee bit lately?

nicklouse

so you missed the components prices rises last year?


looked at other bikes and seen what has happened to them? either same spec more cash or same cash less spec.

.blitz

rgarner wrote:

Anyone else feel the manufs are taking advantage a wee bit lately?

Just a little. My Rize was the same price as your Epic in 2008 but last time I looked it was £2200 or something like that. And the spec is worse.

Last month I bought a used £21k car that had 'depreciated' £8k in 6 months. The sales bloke commented that the car cost the dealership £10k new so the 'list price' is a total p*ss-take, bearing in mind the manufacturers are still making a tidy profit even if the markup is +50%.

What price a £2k mountain bike to the trade? £500? £750? It makes you wonder...

ThanksBye

Mark up on mountain bikes is no where near that good

rgarner

nicklouse wrote:

so you missed the components prices rises last year?


looked at other bikes and seen what has happened to them? either same spec more cash or same cash less spec.

Yes, I've looked at all sorts of bikes. Perhaps I shouldn't have chosen just the Epic as an example. It's industry-wide. I just wonder if perhaps manufacturers aren't overstating the rises (more than) a little in a booming market.

EDIT: totally prepared to accept that this might be nothing more than bellyaching on my part that I can't now afford the bike I had nicked

.blitz

tomatoevousparlour wrote:

Mark up on mountain bikes is no where near that good

What is it?

P-Jay

It's a slightly easier pill to swallow if you look at it from another viewpoint, namely the period you're talkign about 07-08 was probably the best time ever to be buying a new bike, the £ was so strong worldwide that everything imported (which is everything bike related not Hope / Orange et al) was artificially cheap, now the £ is very weak worldwide so we've swung the other way - That's way RRP is much higher.

It'll come back, the £ has been slowly regaining some of it's value steadily since the crash so I'm surprised the 2011 bikes are largely following the same higher cost / lower spec patern as the last few years, but I fancy it's not as bad as it was, plus (spesh aside who aren't able to discount I'm told) I've been offered 10-20 even 25% off RRP on new bikes plus 0% finance from some places before I even asked (mostly because I was just window shopping).

rgarner

Nice reply P-Jay. I do think it's clear things were going to rise - I just also suspect manufs are overstating the case a little with respect to how much. Interesting (and illuminating) to see the discounts you've been offered just from window shopping.

thelawnet

.blitz wrote:

rgarner wrote:

Last month I bought a used £21k car that had 'depreciated' £8k in 6 months. The sales bloke commented that the car cost the dealership £10k new so the 'list price' is a total p*ss-take, bearing in mind the manufacturers are still making a tidy profit even if the markup is +50%.

No way is the dealership paying £10k for a new £21k car

Eyon

IMO the '10 to '11 rise was a piss take. The $ to £ hasnt fallen in the last year, its risen slight or stayed very stable. I'm sorry, but i dont buy to paying an extra £800 for a tapered head tube, fancy colours and a bigger BB shell. I got a 2010 and was happy with the purchase

The Rookie

The pound has devalued against the Dollar by about 25% since 2008, and against other currencies by circa 35%, and we wonder why UK list prices have gone up by 40% (2.5% base inflation per year).

Blame Gordon for the state of our economy (relative to the rest of the world) not manufacturers.

As for Spesh and not allowing dealers to discount, that is contrary to Eu law if they really are doing that, retailers have to be free to discount RRP at their own whim if they want to - that is one reason so many companies now (not bikes) own their own retailers as then they can price manage legally!

Simon

MountainMonster

thelawnet wrote:

.blitz wrote:

rgarner wrote:

Last month I bought a used £21k car that had 'depreciated' £8k in 6 months. The sales bloke commented that the car cost the dealership £10k new so the 'list price' is a total p*ss-take, bearing in mind the manufacturers are still making a tidy profit even if the markup is +50%.

No way is the dealership paying £10k for a new £21k car

Care to offer an explanation of why you say that?

Many luxury items, such as automobiles, are sold at low prices to the retailers or dealers and often 200% mark up is normal. Welcome to the business world.

allthegearnoidea

general bikes are in the 25-30% bracket, high through put shops will be boosted to 40% but not all companies offer the same!! also depends on how desperate the suppliers are to shift the bikes on!!
componants are parts are generally a higher percentage,
but before you start to think you can hit the shops with that margin of discount, dont forget general overheads, mechanic to pay to build and check the bikes etc. are all added on to the prices!!

i'd strongly doubt theat a dealership paid £10k for a £20k+ car Unless it was a Pre Reg from the manufacturer, often you'll get them at Silly prices towards the end of the regestration period as they will Pre Reg a Load of cars to meet Sales figures!! When i worked at renault, renault UK pre reg'd 300 clio's to boost sales figure's and offered them off to the relevant dealerships at Knock down prices, they do it because the Main base for the company awards points per sale, and as allways, the more points you get the more money you get! there is a fair mark up on cars but not 50+% that said, It is possible they paid less than 50% rrp but doubtful! Most money is made in the auto industry on the additions, like car mats, Paint sealants, warranty's etc.

Thewaylander

Indeed, that doesn't sound like a crazy mark up.

"00$ sounds a standard mark up to me as a finance lad.

rgarner

thelawnet wrote:

rgarner wrote:

Last month I bought a used £21k car that had 'depreciated' £8k in 6 months.

No way is the dealership paying £10k for a new £21k car

Hey! I didn't write what you quoted me as saying

(stupid quote tag mismatches )

.blitz

thelawnet wrote:

.blitz wrote:

Last month I bought a used £21k car that had 'depreciated' £8k in 6 months. The sales bloke commented that the car cost the dealership £10k new so the 'list price' is a total p*ss-take, bearing in mind the manufacturers are still making a tidy profit even if the markup is +50%.

No way is the dealership paying £10k for a new £21k car

I have no reason to disbelieve them. If the dealers were selling £21k cars for £13k after 6 months, they wouldn't be in business very long.

Northwind

P-jay's spot on, you're not comparing average prices with high prices- you're comparing extremely low prices. It was amazing what you could get a couple of years ago, Pitch Pro for a grand? Amazing. Today's Pro is still great value but people moan that it's not a grand any more, have a word. Prices go up and down but if you compare the down price with the up it'll always look bad.

Eyon

i strongly doubt there is such a mark-up on cars.

Generally the 6 month old cars are ex demo from the dealership salesmen, which are changed every 6 months, or fleet which are changed regularly. Dealer gets them at the normal dealer cost, uses them for 6 months, clocks up 6k miles, sells at a reduced price as a used car but nearly new, doesnt loose out a great deal, if at all (as people feel they have a nearly new car and made a large saving, and didnt have to wait for the delivery).

I used to work for VW and thats how that worked, but i never worked there long enough to find out what the mark ups were, but i very much doubt its that high. Though i guess it depends on what extras are on the car as new. Dont tell me a set of 17" wheels cost £700 more than a set of 16" wheels to make! more like £50 more and a fat profit, so that is a major contributing factor of their over inflated profit claims.

As for £ to $ prices on new bikes. I still think its utter BS from the manufacturers. In 2008 the dollar fell massively, If you take a look on, say, XE you can see that the exchange rate went from 2.05:1 down to a low of about 1.36:1 in little over a year (between 08 and 09). 2009 bikes were up in price on the 08's i guess (wasnt mtbing at that time), so the prices of course would rise. However it has since risen to 1.6:1 and stayed relatively stable (save a blip in may) since. 2010 bikes were up on 2009, but why are 2011 up on 2010 when, unless their component, wages and overhead costs have risen dramatically, do they feel justified to increase the cost so much.

I have an Anthem X3, it was £1800 new, i got it for £1400. The latest X3 with a very simular spec is £2150 at various stores. For a tapered head tube, larger BB and a QR15? Is that really worth £350 more? No, the headtube and BB will only cost a re-tooling of their machines, which is very cheap in asia, and the QR15 upgrade from normal QR will be a minimal cost increase with the quantities Giant talk about.

Am I missing something totally here? I understand things go up in price, but when I asked a few places why the increase in cost and was met with them saying "supplyer says exchange rate", i just have my doubts!

Opens can.

.blitz

Eyon wrote:

i strongly doubt there is such a mark-up on cars.

But it seems reasonable no? 10% or £2k off a £20k car is almost a given when buying new, just to make the punter feel good and there's still enough profit in it at £18k for the dealers to close early and throw a party.

If the dealers sell the £20k car (which really cost them £10k) for £13k after six months, that's still 30% profit which is realistic. The punter thinks he's getting a bargain because of the hallucinogenic RRP, the dealer makes a profit, the manufacturers sell another car. Everybody's happy.

neiltb

over here in NA, the big mark up is on trucks (pick ups), those are around 60 - 70% but it gives wiggle room for dealers to offer bits for business buyers to be included 'at no charge'. your average car is probably around 9 or 10%.

The Rookie

The dealer mark up on most cars is circa 10% higher end nearer 15%, add in the incentives they get based on numbers and in reality it's about 15-18%, on some models as high as 22% but that is the absolute maximum mark up a dealer could knock off (and then he's paying to do things like the PDI out of his own pocket).

Info from when I worked at Rover and Ford (the manufacturer not a dealership!)

Simon

pastey_boy

.blitz wrote:

rgarner wrote:

What price a £2k mountain bike to the trade? £500? £750? It makes you wonder...

as a cycle shop owner i can reveal that if i sell a £2k mtb i will make at least £1500 pure profit. i sell at least 20 such bikes a week on average so im earning a modest living by some standards, but its for the love of cycling that i persevere.

.blitz

Aha! I knew it!

P-Jay

As for cars...

Not sure the dealer cost, but the mark up won't be as high as some are saying.

The difference between the manufacturing costs of new cars and the rrp is massively different, I'm told it costs them c20% of the rrp to actually make a mass produced car from scratch including materials, but, and this is the big but it costs billions in some cases to design and test new cars which proportionally has to be added to each car.

For example, it doesn't cost all that more to build say a Lamborghini that it does a Fiesta, 800kgs of raw material, bit of leather here and there, some exotic metals perhaps but certainly nowhere near 20x times as much, in fact if they mass produced them it would be even closer - but Ford will sell millions of Fiestas every year, Lamborghini maybe a few hundred so the R&D costs are diveded much a much smaller number of cars, but oddly Ford's budget for designing a new Fiesta would be MUCH higher than Lambourghini would have for the lamborghini murcielago replacement.

Going back to bikes, that's why if you're after a 6" trail bike you can buy a Lap Spicy 316 for about 2.2k at the moment ('10) but if you want a Cove G-Spot it'll cost you that for the frame alone. One's not really better than the other.

Graeme.C

They can only charge what the market will allow, YOU are that market.

Shotsaway

LONG POST ALERT

I’ve worked in the motor industry (manufacturer level) for the last 15 years, as a business developer/sales process trainer and what some of the posters have said is correct. However I’ll put it down so everybody can see that it isn’t as rosy as some posters believe.

Okay the dealer buys a car for £10k. This car was £21k new so whoever the original owner was has taken this initial depreciation. The dealer then sells the vehicle for £13k and this seems like a big profit. But this is not the case. The dealer will need to pay HMRC VAT on the difference between the purchase price and the selling price. So straight away this takes £446 out of the profit. The dealer will also send the car through the service department (This is a separate department within the dealer, with it’s own Manager, with it’s own targets and budgets - The dealers sales departments will tend to be the dealers service department biggest customers). The workshop will find lots of things wrong with the car. If these aren’t covered by the warranty, the service department will invoice the sales department. Now on cars of 3 years plus the service invoice can be between £500-£1000. So let’s say the service department invoice the sales department £750. Well that’s another £750 straight out of the sales department’s profit. The car also needs to be cleaned before it is displayed and before it is handed over to a customer. Call this £25 for the first clean and £10 for the re-clean. A customer then turns up and wants to buy the car. This customer has a part exchange. The dealer values the part exchange using either Glasses or CAP. They value the part exchange at say £5000. However the customer wants £6000 for the part exchange. After some negotiation, the dealer finally agrees to give the customer £6000 (The dealers call this an over-allowance). Remember the part exchange is only worth £5000 and if it goes to auction it will probably sell for this price! So the dealer is losing another £1000 from the profit, but they are doing this to secure a new sale. So from the original £3000 profit, less the additional costs of £2231.80, this leaves a profit of £768.20. Take out the salesman’s commission and the dealer have a profit of say £650-£700 profit. Not as great as it appears.

Now the dealers sales departments make their profit on the add on’s (Warranty, Paint Protector, GAP Insurance). These items have fairly low cost but big mark ups for the dealer. For example if you buy paint protector the dealer may sell it for £250. However it will only cost them £30. GAP insurance will cost the dealer £50-£100 and they will sell this from £250-£500. These are big profit opportunites for dealer sales departments, which is why they will always try to sell you them.

With regard to new car margins, the average dealer will have a 10% margin to work with (List Price £10000 = The dealer pays £9000 to the manufacturer). In some cases this margin can be as low as 2% (Mini’s and Honda Jazz’s) but it can be as high as 15% (Some Audi’s).
However the dealer may also get a back end bonus (This can be between 2%-10%) but they will only get this bonus if the adhere to certain standard (The must get good CSI scores from their customers, they must hit certain targets etc). Any dealer that gives away this as extra discount is fool hardy, as they never know what they will get.

FWIW – There is no real profit for dealers in selling new cars. They really make their money by selling using cars.

With regard to the OP – Evans still have 2010 Epic Comps in Small and Medium for £1499.

RevellRider

.blitz wrote:

What price a £2k mountain bike to the trade? £500? £750? It makes you wonder...

I really do wish £2k mountain bikes cost £500. I'd treat myself to a Whyte 146 Works on CTW scheme

john74

i bought a giant talon 1 2010 for £650 the new 2011 talon 1 is £750 with a worse spec.
i was told that this was due to increases in import costs ie getting a container from the far east is £5k whereas last year it was only £3k.

Northwind

Wonder how many bikes you can fit in a shipping container. More than 20 anyway.

Still the Talon was rubbish value last year as well so I suppose in the grand scheme of things it's not really any different now.

paramart

how many bikes will a shop actually sell in a week or month, then add leccie, rates, tax,insurance, vat, wages for the owner +staff, like everyone of us we want a pay rise so do manufacturers, noticed it with fishing tackle once when he left the book open, cant remember the mark up but it was alot, they also have blanket rrps to stop themselves out doing each other, got to agree with the high cost low spec bit, thats why i,m undecided on buying new or upgrading, either way they have us over a barrel

SDK2007

Like the original poster I bought my Enduro SL Carbon in 2008 and I'm so glad I did.
The year after prices rose 25% for the same bike, a £675 increase

pastey_boy wrote:

as a cycle shop owner i can reveal that if i sell a £2k mtb i will make at least £1500 pure profit.

So you're making more than the bike manufacturers, how does that work :?: