The economics of second-hand bikes

By Felix Salmon
August 19, 2009
Robin Goldstein went to the trouble of collecting 700 datapoints off Craigslist for a single blog entry, I thought the least I could do was turn it into a pretty scatterchart for him:

" data-share-img="" data-share="twitter,facebook,linkedin,reddit,google" data-share-count="true">

If Robin Goldstein went to the trouble of collecting 700 datapoints off Craigslist for a single blog entry, I thought the least I could do was turn it into a pretty scatterchart for him:

carbike.png

What we’re looking at here is the average price of a used car in each metro area, on the x-axis, against the average price of a used bike, on the y-axis. As Goldstein says:

Not one city fell out of line in the inverse order. Where cars were selling for the most, bikes were selling for the least; where cars were selling for the least, bikes were selling for the most; and so on, inversely, in between.

The really weird thing is that the cities with the most bikes, like Portland, also have the most expensive bikes:

I know this is sort of quaint, but the last time I bought a bike, I think I spent $35 and it wasn’t hot. It was a road bike; it had 18 speeds, I think; it squeaked; and it served my needs (biking from my house to school every day) perfectly well…

The guy in the store asked me how much I wanted to spend…

He had something super-cheap for me, an old road bike that they’d fixed up. It wasn’t exactly my size, but it would do. It was a 1991 model, a Trek, I think. It was in good working condition, it had some newer components, and it came with a warranty. I could have it, he said, for $475.

I’m with Robin: this makes no sense. You can buy a really nice new bike for less than that — and new bikes cost the same no matter where in the country you buy them. They also have brand-new components, and component technology has been improving a lot of late. The only real problem with a new bike is that it’s a bit more attractive to thieves.

Still, the second-hand bike dealers are clearly on to a good thing, and there does seem to be an implicit understanding among them that they’re not going to compete on price. So this state of affairs might well last indefinitely.

More From Felix Salmon
Post Felix
The Piketty pessimist
The most expensive lottery ticket in the world
The problems of HFT, Joe Stiglitz edition
Private equity math, Nuveen edition
Five explanations for Greece’s bond yield
Comments
9 comments so far

riding a bike through the sprawl of phoenix in the month of july, is like protesting global warming in new hampshire -in february

if you include tax, registration, and smog/emissions CA fees the data is useless

Posted by dvictr | Report as abusive

Probably not a coincidence that cities where a bicycle commute would be hellish is where the cheap bikes and expensive cars are.

Seems tied to some personal preference though- I would much rather ride through Death Valley in July than dodge traffic on wet asphalt in Seattle.

Posted by Mark Beauchamp | Report as abusive

The one thing that is missing here is the overall quality of the used bikes or cars. In areas where there are going to be more bikes, there are going to be more qualified mechanics that can take an older bike and turn it into something not just ride-able, but a quality ride. Hence the increased cost of a used bike.

Check out the NYC Bike Snob- he keeps a “Pista Index”- the Pista is a single-speed track bike made by Bianci that retails for $400, yet people on craigslist reoutinely ask for upwards of $1000 for it- mostly because of it’s “cool” status in parts of Brooklyn.

It’s actually just a great example of value differences in across the country. Thanks for the post.

Hah! Two comments, written at the same time with the image of riding a bike in the Southwest USA in July in them! Synchronicity!

Posted by Mark Beauchamp | Report as abusive

You have to make sure you are comparing apples to apples. A large chunk of the value of a bike lies in the components – they break and give users far more trouble than a frame typically does, so it makes sense for people who ride often to avoid the lowest-end gear. That said, bike geeks typically go overboard and buy ridiculously expensive components for no reason other than conspicious consumption. (see this link for an amusing piss take on the style excesses of cycling) http://www.youtube.com/watch?v=Vn29DvMIT u4).

$495 for an old frame with new components doesn’t sound like a ripoff. It may even be a bargain. And the bike you (Felix) link to looks like a reasonable price. But they aren’t the same thing at all.

Posted by Rob Cyran | Report as abusive

Sorry, forgot to state that the bike you linked to had a rather cheap set of components.

Posted by Rob Cyran | Report as abusive

Ultimately, though, whether expensive or inexpensive, the key to a bike is getting out and riding it!

Out here in Portland, we have advanced to what I would call a Stage II bike economy, where they have ascended to the category of status goods. Every lowly bike messenger tries to impress her friends with the fancy shifters and toe clips and most importantly, the custom built frame. They still get you from Point A to Point B about as fast, and to be honest the custom stuff is finicky and needs a lot of maintenance.

But as a result we are seeing an explosion of innovation as the wave of status-driven purchases drives money into the local industry. A veritable Tin Pan Alley of local bike makers has sprung up, madly trying to beat the others for style and engineering. This ranges from effective refinements that benefit everyone to local oddities like the high-risers which have two or even three bike frames welded together. You are perched on a regular seat and have regular gears, but you’re 6 feet above the pavement. It takes special effort to mount one of these gizmos and they’re pretty dangerous to ride in regular traffic because it’s hard to dismount and you really can’t brake and stop. But they are part of the bike zoo here now. Also a great many variations on carriers, just sitting on my front porch here typing this someone rolled by with a kind of boxy three-wheeler suitable for a pretty large load of groceries.

I’ve been in London, Amsterdam and Copenhagen in the last year and have the impression that while there is a high-end segment there too, they are in Stage III of the bike economy where it’s basically just transport. Especially in Amsterdam the average is an old beater with dented fenders, the back one with a strip of scuffed white paint for safety. Bikes in A’dam are often stolen and many end up in the canals or rusting away at the giant bike park next to the Centraal Station. There are people with €5,000 bikes but they keep them discreetly hidden. In Stage III cities, a bike is really only a way from Point A to Point B.

Jeff Mapes, the political reporter for the Oregonian, our decaying dead-trees daily, has written a very fine book called Pedaling Revolution which covers both bike policy, history and current developments, of course focusing on Portland but also Davis, California, Amsterdam and so on, and an especially good section on bicycling in New York that I know you will appreciate, Felix.

Posted by Observer | Report as abusive

A long time ago, houses and cars define the wealth of a person, but no more; bicycles also demand its share of the rich cake, but truly the price of a second hand bike depends on what’s on it than its age.

Posted by simonwheeler | Report as abusive
Post Your Comment

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/