Warning signs of a bike company about to go broke?

steve_sordy

steve_sordy

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I was reading another post when member said how "we all got burned when YT went broke" (or similar words).

I can only imagine how betrayed and pissed off those affected must feel about the demise of YT. I had a YT Capra for a few years and it was a brilliant bike. I was shocked at the news. Did anyone see the collapse of YT coming? Were there any warning signs that we ought to look for next time. I mean, who does a financial analysis of a company before buying a bike from them (or any products for that matter)?

We can all be wise after the event, but is there a way to get some warning? What would be the warning signs to look for, red flags, whatever you want to call them?
I'll have a go, I've tried to make them in order of escalating seriousness.

Reports of:
  • Long waiting times to get a new bike delivered.
  • Inability to get a response to emails.
  • Poor customer service.
  • Long waiting times to get spares.
  • Warranty claims refused unreasonably.
  • The founder of the company sells out, or "takes an enhanced role".
  • Articles in the trade press expressing concern.
  • Rumours of problems with the company.
  • A merger with, or takeover by, another bike industry company.
  • The company being purchased by another company that has no obvious link to biking.
  • Any more?

The problem is that you could get any or many of these from time to time with just about any bike supplier.
 
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steve_sordy said:
I was reading another post when member said how "we all got burned when YT went broke" (or similar words).

I can only imagine how betrayed and pissed off those affected must feel about the demise of YT. I had a YT Capra for a few years and it was a brilliant bike. I was shocked at the news. Did anyone see the collapse of YT coming? Were there any warning signs that we ought to look for next time. I mean, who does a financial analysis of a company before buying a bike from them (or any products for that matter)?

We can all be wise after the event, but is there a way to get some warning? What would be the warning signs to look for, red flags, whatever you want to call them?
I'll have a go, I've tried to make them in order of escalating seriousness.

Reports of:
  • Long waiting times to get a new bike delivered.
  • Inability to get a response to emails.
  • Poor customer service.
  • Long waiting times to get spares.
  • Warranty claims refused unreasonably.
  • The founder of the company sells out, or "takes an enhanced role".
  • Articles in the trade press expressing concern.
  • Rumours of problems with the company.
  • A merger with, or takeover by, another bike industry company.
  • The company being purchased by another company that has no obvious link to biking.
  • Any more?

The problem is that you could get any or many of these from time to time with just about any bike supplier.
Click to expand...

Yep, it’s really difficult to know when a company is about to hit the buffers, if you’re not in the company or dealing with it B2B so to speak.

The golden rule for me is always to buy on a credit card, guards against something not turning up at least, and can be useful even a long time after the event.

That and finance for a big purchase, even 0% finance holds the order jointly responsible for things should the company you purchase from go under anyway.

Quick disclaimer for any non-UK forum members, that’s how it works here in the UK anyway, I’d be surprised if other countries didn’t have similar consumer protections.
 
Tooks said:
Yep, it’s really difficult to know when a company is about to hit the buffers, if you’re not in the company or dealing with it B2B so to speak.

The golden rule for me is always to buy on a credit card, guards against something not turning up at least, and can be useful even a long time after the event.

That and finance for a big purchase, even 0% finance holds the order jointly responsible for things should the company you purchase from go under anyway.

Quick disclaimer for any non-UK forum members, that’s how it works here in the UK anyway, I’d be surprised if other countries didn’t have similar consumer protections.
Click to expand...
That is good advice and it protects a purchaser of a new bike. But what about the poor sods who have already got one and are now looking at loss of warranty, no essential spares (like a replacement chain stay).....?
 
steve_sordy said:
That is good advice and it protects a purchaser of a new bike. But what about the poor sods who have already got one and are now looking at loss of warranty, no essential spares (like a replacement chain stay).....?
Click to expand...

Section 75 can still apply if there’s a fault during what would have been the warranty period, but clearly it gets more difficult if you need a chain stay due to a non-warranty issue like crash damage etc.

In the latter case, it would mean looking around for a second hand frame to canibalise.

This is why I’m quite wary of smaller/boutique brands, they make some lovely bikes and obviously things like forks and other common items can still be supported independently, but a frame not so much.

That said, you’d still have the other bits to move over to a frame only from another manufacturer in a worse case scenario.
 
Red flag for a bank is when they offer higher than normal interest on savings... for a Bike company when they offer lower than market pricing on a product, and lifetime perks that are free is another.
 
steve_sordy said:
I was reading another post when member said how "we all got burned when YT went broke" (or similar words).

I can only imagine how betrayed and pissed off those affected must feel about the demise of YT. I had a YT Capra for a few years and it was a brilliant bike. I was shocked at the news. Did anyone see the collapse of YT coming? Were there any warning signs that we ought to look for next time. I mean, who does a financial analysis of a company before buying a bike from them (or any products for that matter)?

We can all be wise after the event, but is there a way to get some warning? What would be the warning signs to look for, red flags, whatever you want to call them?
I'll have a go, I've tried to make them in order of escalating seriousness.

Reports of:
  • Long waiting times to get a new bike delivered.
  • Inability to get a response to emails.
  • Poor customer service.
  • Long waiting times to get spares.
  • Warranty claims refused unreasonably.
  • The founder of the company sells out, or "takes an enhanced role".
  • Articles in the trade press expressing concern.
  • Rumours of problems with the company.
  • A merger with, or takeover by, another bike industry company.
  • The company being purchased by another company that has no obvious link to biking.
  • Any more?

The problem is that you could get any or many of these from time to time with just about any bike supplier.
Click to expand...
Good luck with trying to predict a bike companies demise. And there are quite a few going under with more to come I’m sure. I recently bought a gas gas MXC 6 and as we all know Pierre AG stopped producing mountain bikes. It’s OK though because almost all of the components including motor are not exclusive to gas gas and can be replaced. If your worried buy from a strong established brand like Specialized, Giant, Intense and others.
 
I used to think that being taken over by a non biking company was a disaster waiting to happen but my partner has just bought a bike from what must be one of the biggest suppliers in the U.K. at a good discount and they are owned by some venture capitalists.
 
Old Codger said:
I used to think that being taken over by a non biking company was a disaster waiting to happen but my partner has just bought a bike from what must be one of the biggest suppliers in the U.K. at a good discount and they are owned by some venture capitalists.
Click to expand...
Just wait. Venture Capitalists are all about the money. Most invest and want a quick return, they push for expansion, frequently much faster than the founder either envisaged or is comfortable with. They do not necessarily have any idea of the market they are investing into. It's mostly just balance sheet driven. Financial engineering is employed, terms like "gearing" are employed which leads to debt being taken on as it allegedly makes the business "more efficient". It can do that and has done so quite successfully, but if it goes wrong it can go wrong suddenly and in a big way.

I can agree that many companies would benefit from some financial guidance, but short term actions that are based upon a quick in and out investment are not always in the interests of the business, just the VC investor.
 
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virtually the only part of a bike exclusive to the brand is the frame so avoid any brands with known frame issues...and in my case stay away from carbon anything! A bike with a complete Bosch system....motor,cables, controller, battery etc is a safer bet as well.............is Shimano still in the motor game going forward?? Are Chinese products likely to be hit with sanctions and/or increased import tariffs?
 
After all this word salad what's the conclusion to the original proposition?
dunno.gif
 
steve_sordy said:
But what about the poor sods who have already got one and are now looking at loss of warranty, no essential spares (like a replacement chain stay).....?
Click to expand...
Carbon Fibre can be repaired. There are companies in Australia that do it. So buy a carbon frame if there is any suspicion of issues. Frame axles and bushes can be machined at any machine shop. Get some made before they wear, if the host company has gone broke.

Carbon Repair

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The only other issue tends to be custom batteries. So just get the battery that is the same as the motor supplier, not a 3rd party. Buy one of the Big 4 motors. Bosch, Shimano, Yamaha or Avinox (DJI). These guys should be around for a while.

The rest of the components should be able to be sourced from the manufacturers or just change to another type or brand.
 
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dezzracer said:
If your worried buy from a strong established brand like Specialized, Giant, Intense and others.
Click to expand...
Intense!?

Back to the OP the big one has to be what was alluded to above, huge discounts in a fire sale. Raymon/GasGas et al at daft prices, CRC-Wiggle mega sale, YT 50% off etc.
 
steve_sordy said:
Just wait. Venture Capitailsts are all about the money. Most invest and want a quick return, they push for expansion, frequently much faster than the founder either envisaged or is comfortable with. They do not necessarily have any idea of the market they are investing into. It's mostly just balance sheet driven. Financial engineering is employed, terms like "gearing" are employed which leads to debt being taken on as it allegedly makes the business "more efficient". It can do that and has done so quite successfully, but if it goes wrong it can go wrong suddenly and in a big way.

I can agree that many companies would benefit from some financial guidance, but short term actions that are based upon a quick in and out investment are not always in the interests of the business, just the VC investor.
Click to expand...
Look what happened with Pierre AG andKTM…..so much for Gas Gas and Husqvarna MTB.
 
According to Pinkbike the original owner of YT has bought back the brand and is settling all outstanding orders etc as well as providing warranty support and spares. His purchase does not include facilities like the Mill in the UK . Sounds like there is recourse for YT owners. Refer to the Pinkbike article for details.
 
steve_sordy said:
Just wait. Venture Capitailsts are all about the money. Most invest and want a quick return, they push for expansion, frequently much faster than the founder either envisaged or is comfortable with. They do not necessarily have any idea of the market they are investing into. It's mostly just balance sheet driven. Financial engineering is employed, terms like "gearing" are employed which leads to debt being taken on as it allegedly makes the business "more efficient". It can do that and has done so quite successfully, but if it goes wrong it can go wrong suddenly and in a big way.

I can agree that many companies would benefit from some financial guidance, but short term actions that are based upon a quick in and out investment are not always in the interests of the business, just the VC investor.
Click to expand...
All true but if you’ve got your bike at a good discount, it’s a well known make and the warrantee can be satisfied by another dealer then you’re all set for a few years. 10 in my case.
 
Mikerb said:
According to Pinkbike the original owner of YT has bought back the brand and is settling all outstanding orders etc as well as providing warranty support and spares. His purchase does not include facilities like the Mill in the UK . Sounds like there is recourse for YT owners. Refer to the Pinkbike article for details.
Click to expand...
I think you find the old company tends to not actually be liable for the sales under the old under its limited liability depends how it happened , however some do offer help under goodwill type arrangements so get high fives and mucho good publicity
 
mmcengineer said:
I think you find the old company tends to not actually be liable for the sales under the old under its limited liability depends how it happened , however some do offer help under goodwill type arrangements so get high fives and mucho good publicity
Click to expand...
There will be no legal liability for anything that occurred during the old owner's administration of the business unless the contract of sale of the business between the old owner and new owner so provides.
 
irie said:
There will be no legal liability for anything that occurred during the old owner's administration of the business unless the contract of sale of the business between the old owner and new owner so provides.
Click to expand...
Must be an echo in the room
 
I was hooked on the quality of Mondraker bicycles. When I needed another bike, the obvious choice was a Mondraker.
Recently I called a bicycle shop to buy another Mondraker mtb and was told they are no longer being imported into Australia.
I've moved on to a Zerode bicycle now but quite sad that Mondraker has ceased to sell bikes in Oz.
 
Being a Bike company in todays market is hard. I am surprised that more brands have not gone under in the last couple of years. Any company backed by Venture Capitalists, can very easily have their financing pulled and that is the end of that company.

Having said that I am planning on buying a Gravel E-bike from a smaller mtb company that has been around for 40 years.
 
One way to tell if a bike company is going to close is if I buy one. 😭

My first ebike was a Yamaha Moro - they quit selling in the USA
My second ebike was a Vitus - They closed within 6 months of purchasing
My third ebike was a YT - no need to tell you what happened after that.

I was tempted to buy a Trek for myself and a Specalized for the wife just to see what would happen....🤣
 
steve_sordy said:
  • Long waiting times to get spares.
  • The founder of the company sells out, or "takes an enhanced role".
  • A merger with, or takeover by, another bike industry company.
  • The company being purchased by another company that has no obvious link to biking.
Click to expand...

Some of these I would disagree with.

It takes a long time to get parts from Orbea. They seem viable, but they're on the other side of the world. Nukeproof, Cube, Whyte are other brands that seem viable, but I wouldn't have have any idea where to get parts or even complete bikes. They just haven't penetrated our market like some other brands. So they're probably good companies, but not for me.

Founders selling out, and mergers, are often a sign of a successful company. Failing companies are not attractive investments. Examples:

Mike Sinyard founded and sold Specialized. I think they're still a successful company.
Roskopp and Marquez founded Santa Cruz and sold to Pon.
White and Vroomen founded Cervélo and sold to Pon
Gary Turner founded GT and sold to Questor
John Parker founded Yeti and sold to Schwinn
Frank Bowden founded Raleigh eventually sold to Accell Group

To answer what I think is the deeper question and concern, it makes sense to stick with a brand that is well represented in your area, has a solid dealer network, customer support that you can speak with on the phone or get a prompt email response, and who has a warehouse with some parts that can be shipped out.
 
@RustyIron Thanks for the response. I knew that my first attempt would need improvement and would not be valid the world over, so thanks for your persepective.

I cannot argue with your list of successful sell outs. But they are only judged to be successful after the fact. You and I, not even the press, would hear about it until the deed has been done. It is a stressful time for any company when it is about to be sold, being sold, and has just been sold. The jury will be out for quite a while and it may go either way. I'm not saying don't buy a bike from a recently sold out bike maker, I just give it a red flag as a warning. Do your research and do what you believe to be correct.

Your point about the bike company being a long way away and that means them taking longer to supply parts or respond to new bike orders is also a valid point. Many distant sellers are good companies and with great bikes. But if they get into trouble, like many have done, then they will start to review the markets they are in and will withdraw from the least profitable. Not just YT, but Focus also. There may be others.

Your final point is bang on. But meeting those list of requirements would remove many internet sellers that have great bikes and are trying hard to grow their business. I am thinking particularly of YT. I bought a Capra off the internet in 2014. I was lucky; the bike was brilliant and I had zero problems with it. But I didn't know that I was going to get it until the day it turned up! That was a nervous 7 weeks! S..E..V..E..N weeks!
 
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