Market value of Cervelo S2s

Frame and Wheel has been following transactions of Cervelo S2 framesets on eBay. The purpose of this exercise is to get an idea of how much value a carbon fiber performance road racing frame loses each year. This exercise is also related to Frame and Wheel's effort to determine the cost of a ride and to develop a new way for paying for increasingly expensive carbon fiber bicycles. Frame and Wheel chose the Cervelo S2 because Frame and Wheel rides one, it is a strong brand and they are popular road frames. Cervelo's suggested retail price (MSRP) for the 2011 version of this frameset is $2,800 (frame, seat post and front fork). 

Year	Item	eBay	Y-Y $	Y-Y %	Cumulative $	Cumulative %	Transactions
2010	Frameset	$1,768	($1,032)	(37)	($1,032)	(37)	4
2009	Frameset	$1,576	($192)	(11)	($1,224)	(44)	2
2008	Frameset	$1,091	($485)	(31)	($1,709)	(61)	3

The average price of 2010 Cervelo S2 framesets auctioned on eBay over the past month is $1,768. This price is 37% below the $2,800 MRSP of a 2011 Cervelo S2. The average price of 2009 Cervelo S2 framesets auctioned over the past month is $1,576. This is 44% below the MSRP of 2011 S2s and 11% less than average price of 2010 S2s sold on eBay over the past month. Finally, the average price of 2008 Cervelo S2s framesets (also known as a Soloist) auctioned on eBay over the past month is $1,091. This is 61% below the MSRP of a 2011 S2 and 31% less than the average price 2009 S2s auctioned on eBay over the past month. 

The first observation is that these framesets lose on average 37% of their value after one year. This phenomena is similar to new cars and explains why many cyclists buy last year's model when searching around for a new bicycle. It also quantifies the effect that planned obsolescence and the push model structure of the industry has on the values of carbon road frames: at the end of each season, retailers discount their excess inventory to make room for new models. They do this because they have limited floor space and they have to keep up with new models if they want to remain authorized dealers.

The next observation is that framesets seem to lose value at a decreasing rate in the second year after they are sold: the two 2009 S2s auctioned over the past month sold for prices that were on average 11% less than the average price of 2010 framesets auctioned during the same period.  The market seems to perceive a 2009 frameset as relatively new, perhaps because the features have not changed too much and the graphics are still perceived as being fresh. Also, there is a greater possibility that the frames have been only lightly used or not at all.

The final observation is that the rate at which these framesets lose their value accelerates in the third year: the three 2008 Soloists auctioned over the past month sold for prices that were on average 31% less than the average prices of the 2009 framesets auctioned during the same period. This makes sense given that a three year old frame will certainly have had some use, and is unlikely to have been sitting in a box somewhere or on the floor of a bike shop. Also, there may be material differences in the features of the frameset after three years and the graphics are also clearly different, and signal the frameset as being "old".
Cervelo S2 transactions on eBay March 2011

Year	Price sold	Bids	Size	Shipping	Comments
2010	$1,651	3	54	45	Less 1000 miles,  fork post, poor description
2010	$1,945	20	51	30	Less 50 miles, no reserve, uncut fork, seat post
2010	$1,700	1	54	35	Discounted from $2,200; some cosmetic wear
2010	$1,775	28	56	45	New and unused by owner
2009	$1,825	16	51	45	New frame, used front fork
2009	$1,327	26	54	80	Low mileage, some cosmetic wear
2008	$1,075	19	58	55	Low mileage, never crashed, some cosmetic wear
2008	$998	16	54	75	Low mileage, some cosmetic wear
2008	$1,200	1	61	65	Buy it now transaction; 3T fork; new seat post

Frame and Wheel appreciates that ten transactions is a small sample, but then again these are market transactions between willing buyers and sellers during the beginning of the cycling season (in North America anyway). There are certainly variables related to seasonality, size and graphics at work here, but the trend is nevertheless clear. 

Frame and Wheel notes that one seller has listed his 2011 S2 on eBay for $2,400, a 14% discount to the MSRP. The item has had 2,500 views and 11 offers, but the seller (who specializes in the sale of Chicago White Sox baseball tickets) is holding out for his selling price. The recent transactions for S2s suggest that the seller is optimistic: eBay buyers seem to want to pay a price that is set by the market rather than the seller, and they demand a larger discount than 15% to compensate for giving up warranty privileges and the risk of buying a performance carbon road frame from someone who specializes in selling baseball tickets for the Chicago White Sox. This offering exemplifies how many sellers frequently have unrealistic expectations about what their bicycles are worth.