Where Did All The Bikes Go?
Dear Rich Lifer,
The pandemic has affected our lives in countless ways and has dragged the economy up, down, and back up again.
We’ve been through so many stages of the pandemic, it’s hard to keep up.
I’m sure we all remember the early days of the pandemic, where waiting in lines for a dwindling supply of toilet paper and hand sanitizer was the norm.
And while such products are largely back in stock, there is a large sector of the economy that still is facing huge shortages: the recreation sector.
There has been a bike shortage for months, and it is likely to continue. Other recreational commodities such as RVs, motorcycles, and dirt bikes have also seen a decrease in availability.
Why are we seeing this happen?
Today we will break down what’s been happening in this sector of the economy.
From Leisure To Lasting Lifestyle Change
Bike shops around the country are selling record numbers of bikes.
The coronavirus has changed life for many who live in cities. Most traditional pastimes are discouraged, and taking public transportation has become the last resort for many still forced to commute.
These changes resulted in many reverting to a more basic form of both leisure and transportation — biking.
Biking may have permanently changed from a fun hobby to an essential and safe way to get around.
For example, in April, New York announced that it would temporarily open 100 miles of roads to pedestrians and cyclists. Other cities like Oakland, CA and Seattle, WA also planned street closures so cyclists could get around more easily.
Still, relatively few Americans have used bikes as a lasting alternative to public transportation or cars. In Portland, which has the highest percentage of cycling commuters of any American city, only 6.3% of commuters ride bikes.
However, we could see this change as the demand for and use of bikes continues to skyrocket.
A Disruption In Supply
In March, nationwide sales of bicycles, equipment, and repair services nearly doubled compared with the same period last year, according to the N.P.D. Group, a market research company.
Additionally, sales of commuter and fitness bikes increased 66%, leisure bikes jumped 121%, children’s bikes went up 59%, and electric bikes rose 85%.
By the end of April, many stores had run out of bikes to sell, and now, America is facing a bike shortage as supply chains struggle to meet the growing demand.
Alain Guillerme, the owner of Al’s Cycle Solutions in Manhattan says,
“I don’t have any more bikes — period. You can see all my racks are empty. [The] problem is I don’t have enough supply to make money right now.”
Supply chains have been disrupted ever since the beginning of the pandemic when coronavirus forced factories in East Asia, the center of the bike industry’s supply chain, to shut down.
Taioku Manufacturing Co., a bicycle manufacturer in China and Taiwan, has received double the orders from importers for the first six months of this year compared with the same period last year.
However, the manufacturer can produce only 20,000 bikes a month due to a shortage of labor and component parts.
However, even before the pandemic, many American importers have had a smaller inventory because of President Trump’s 2018 tariffs on goods produced in China, where some parts of nearly all bikes sold in the United States are made.
As a result, in 2019, the number of bikes imported into the United States dropped by around 25 percent, according to Robert Margevicius, executive vice president of Specialized, one of the largest bicycle companies in the United States.
In the first quarter of 2020, imports were down even further, with a 30% decrease compared to the same period in 2019.
These shifts may be bad news for some, but if you know how to take advantage of the current market climate, huge profits are possible. Learn more here.
RVs And Motorcycles Zoom Ahead
Bikes are not the only recreational equipment that’s in demand right now.
Both the RV market and the motorcycle market are booming.
Harley-Davidson, Inc. (HOG), is seeing stocks trending as the demand for motorcycles ramps up.
Although prices dipped for the company at the beginning of the pandemic, today stocks are at almost $30 (a 2.93% increase).
This still falls short of HOG’s record highs ($40.89), but many analysts are reassessing the performance of HOG stocks, and investors are making changes to their positions in the company, with many growing their stake of shares.
Even if you aren’t interested in buying a motorcycle for yourself, the time to invest could be now.
RVs have also increased in popularity during the pandemic, both as a safe form of transportation and as a means of isolating from others.
Tony Mucerino, owner of Hometown RV in Carol Stream, IL says that as more of the country begins to open back up and people are eager to travel, he has seen an increase in RV rentals.
In fact, The Recreational Vehicle Industry Association sees North American RV sales rising 4.5% in 2020, to 424,400 units.
Shares of Thor Industries (THO), whose brands include Airstream and Keystone, and Winnebago Industries (WGO), plus components suppliers Patrick Industries (PATK) and LCI Industries (LCII), have all recovered from their March lows and are in positive territory for 2020.
Camping World Holdings (CWH) is another stock to keep your eye on. It’s Chairman and CEO Marcus Lemonis laid out the company’s objective to increase earnings from $460 million to $490 million.
This signals to some analysis that there is confidence the RV boom will continue past this current “trend” during the pandemic.
With all these recreational equipment in high demand, we know it can be frustrating to figure out how to find these hot commodities.
Tune in tomorrow for further discussion on investing in the recreational sector – and where to find the bike, motorcycle, or RV of your dreams,
To a richer life,
The Rich Life Roadmap Team