It is no secret that the bicycle industry struggled globally in 2024. The US market saw significant financial turbulence with brands entering liquidation, bankruptcy, and restructuring. Earlier this year, I reported on the number of brands closing exceeding 2023. At the time, 25 brands had closed or left the US market. With continued headwinds, this figure greatly increased.
115 bicycle brands have left the US market in 2024
This dramatic increase in closures represents a greater than 4 times the volume of closures in 2023. In late 2023, brands tried to free up inventory space and reduce overhead by aggressive discounting. Much of this discounting was at a loss, with the hope that a return to form in 2024 could heal the wounds. Unfortunately, many smaller brands did not have robust financials, leading to more vulnerability. That is where the large number of closures come in. Many large organizations can restructure, but the options for smaller brands with less recognizable IP are much more limited.
As you can see from the chart above, the majority of these brands closed their doors entirely, while a smaller portion simply stopped selling bicycles. Nearly one third of brands that left continued on after abandoning the US market, retreating mostly to Europe. The European continent is not safe from the economic woes of recent years, so this represents more of a simplifying of their businesses by returning to home countries. In 2023, there were only a couple of brands leaving the US market for Europe, as US ebike growth appeared to be continuing strong.
Brand Channel Distribution
After the exodus of brands from the US, 889 brands remain selling brands in the country with landed inventory in the US. Of these, the distribution strategies remain fairly stable, with Direct to Consumer (DTC) being the most common available option due to the low barriers to entry.
There has been a slow progression of DTC brands trying to gain a foothold into IBD and ROM channels in order to further their distribution. This channel shifting will become evident as more details emerge from the People for Bikes DTC project launching to members early in 2025.
What is in store for 2025?
Looking ahead to 2025, it is hard to miss all of the headwinds for the US bicycle market. Brands who focus on core financials and cash flow management will fare better than those who overextend themselves. Some of the major uncertainties are:
- Potential Tariffs further increasing prices
- Heavy 2023-2024 discounting depleting available demand
- Long term bicycle sales declines
- Strained personal finances of consumers
With all this said, it is likely that 2024 represented a peak of brand closures. 2025 may still exceed 2023, but I expect it to fall well short of the 115 brand exodus we saw in 2024. There are some early signs of life with used bike prices beginning to recover, and unit inventories reaching normal levels. If brands can digest more of their high dollar inventory, they will be in a better position as the market turns.