A version of this interview ran in the October issue of BRAIN.
Wayne D. Gray began his industry career in 1991 and is now vice president at KHS. As a mid-tier bike brand, a top-line distributor and someone who thrived, didn't just survive, the COVID mess, he's in a unique position to observe and explain our current market conditions.
BRAIN: Talk us through your career evolution?
Wayne D.: I started in the bicycle business as Customer Service Manager and then advanced to Inside Sales Manager at Blackburn. A few months after Bell purchased Blackburn, I pursued an opportunity at Diamondback as Inside Sales Manager. I did that for a couple of years, and then was promoted to National Sales Manager.
Then Raleigh purchased Diamondback and moved the company. I decided not to move to Washington and joined KHS as National Sales Manager instead. After a few years as National Sales Manager, I was promoted to Vice President, the position I hold today. I have worked at KHS for 26 years.
BRAIN: It's KHS' 50th anniversary. Tell us about the evolution of and the current structure of the company?
Wayne D.: We are proud of our accomplishment of making it to 50 years in the bicycle business. It has not always been easy! KHS, Inc. was founded in 1974 by Wen Hsieh. The KHS bicycle brand is a part of the KHS Co. Ltd., and UEC (United Engineering Corporation) which manufactures bicycles, motorcycles and Yamaha musical instruments in wholly owned factories located in Taiwan.
The KHS brand stands for Kung Hsue She, the English versions of Mandarin characters meaning Beneficial, School, Society. There’s a long story involving exporting bananas and importing Yamaha musical instruments, I’ll spare you the details.
KHS, Inc. is located in Southern California. We make more than 90 models of KHS bicycles, 24 models of Free Agent BMX Bicycles, and 25 models of Manhattan Cruisers to serve the needs of recreational as well as enthusiast cyclists in over 33 countries around the world.
KHS Inc. is also a distributor for various parts and accessory manufacturers in the USA. Featuring brands like Shimano, Kryptonite, Park Tool, Maxxis, Hollywood Racks, Thule, Topeak, WTB and ODI, just to name a few.
BRAIN: How would you characterize our current market conditions, both from a supplier and a retailer perspective?
Wayne D.: Retail traffic has been down for three solid seasons. Until this changes, the pressure on retailers, manufacturers and distributors will not relent. We are finally starting to see youth bikes and low-end bikes selling again, so I suspect that 2026 will be a year of decent recovery.
BRAIN: You employed a relatively successful COVID strategy, can you share some details?
Wayne D.: 2020 and 2021 were two of the best years in the bicycle business, but it was pretty obvious that this “Covid phenomenon” was not going to last. We started trimming our bike and parts purchases at the end of 2021, much to the chagrin of many of our vendors. This helped us not have too much inventory when business began to slow in 2022.
BRAIN: What do you see as driving the current downturn? It seems like sales have dropped around 10% across the board on the specialty side each of the last three years.
Wayne D.: “COVID hangover!” It seems as if every person in the world purchased a bike or bike accessories during the pandemic, and it is taking a long time for consumers to need new equipment after this event.
BRAIN: Tariffs are driving company decisions like never before. Were you able to diversify your countries of origin in the past few years?
Wayne D.: We moved bicycle production away from China during Trump 1.0. We began sourcing our P&A from alternate countries (where possible) to help mitigate the 301 Tariffs imposed during Trump 1.0 and continued during the Biden administration.
BRAIN: Is there any coherent strategy around the current tariff chaos, or is it just a matter of hanging on tight and making day-to-day decisions?
Wayne D.: With the constant changing status of tariffs, it has been very hard to develop a coherent strategy that you can stick with. We have adjusted our plans at least three times to mitigate the effect of the changing tariff landscape.
BRAIN: Predictions of mid-tier bike brands falling prey to the downturn are common. Are you concerned, for yourself or other similar brands?
Wayne D.: Yes, this is a terrible time to be a mid-tier brand. With bicycle sales in a slump, the natural decision for retailers will be to concentrate on their more dominant brands.
BRAIN: Any bright spots, either on the complete bike side or the parts, accessories, and rubber side?
Wayne D.: Youth, low-end and e-bikes have been the driving force this season. At retail, repairs have been keeping the lights on.
BRAIN: Talk about how KHS has addressed the e-bike market?
Wayne D.: We ONLY sell Class 1 and 2 e-bikes. With so much of the bicycle production in our factories going to countries other than the USA, and the EN standards being so much different that the USA, we decided long ago that we won’t be making Class 3 e-bikes.
BRAIN: Some might say that the specialty bike brands have missed an opportunity by being late to the Class 2 category. What’s your take on throttles?
Wayne D.: We have always believed that Class 1 e-bikes were the SAFEST route for most companies to go with e-bikes. But from the very start, we knew that throttle e-bikes (Class 2) were going to be “The thing in the USA” so we introduced them at the same time as our Class 1 offerings.
BRAIN: When the BPSA and PeopleForBikes established the three-class system in 2015, we all wondered how the e-bike market would evolve. A decade later, we're seeing many challenges, inevitable with such a significant addition to the transportation and recreation streams. Which do you see as the most concerning?
Wayne D.: UL certification and lithium battery fires are what we feel will be the biggest long-term challenges for e-bikes in general. The certification costs are so high, they prohibit smaller manufacturers from introducing new models. The lithium battery fire issue (with ALL e-mobility devices) has motivated many states to implement UL certification laws that will definitely improve safety, but slow new product introductions.
BRAIN: How about your kids and BMX program, is that still an area of strength for KHS and Free Agent?
Wayne D.: BMX sales have been in the dumps for three seasons and there is some evidence of this market returning, with very low-priced BMX bikes selling in good numbers now. Youth bike MTB sales (20” & 24”) have been strong this year, and appear to be the leading edge of the recovery we are all hoping for in the bike business.
BRAIN: When Shimano pared down its distribution, you were one of the smaller distributors by volume. Why do you think you retained what most would see as the privilege of that relationship?
Wayne D.: We have a very long relationship with Shimano, and as a bicycle manufacturer in Taiwan and a parts distributor in the USA, with a passion for serving the smaller retailers, I think it was a natural fit for Shimano to continue allowing KHS to distribute their P&A.
BRAIN: Any other P & A brands you see as instrumental to your success as a distributor?
Wayne D.: We have been distributing P&A for decades. We sell over 150 brands. The two biggest brands were Shimano and SRAM, so I’d have to say these brands helped cement KHS as a valued distributor to our retailers. We no longer distribute SRAM.
BRAIN: Is there some glimmer of hope for 2026, if so, what would create that hope for you and KHS?
Wayne D.: Youth MTB and e-bikes and continued service business for bikes purchased during the pandemic.
BRAIN: Looking out toward the end of the decade, it seems like some market forces are working in our favor, participation continues to climb, new infrastructure is getting built, any other cause for optimism?
Wayne D.: I think that the leadership of PeopleForBikes is helping the bicycle industry a great deal, and under the leadership of Jenn Dice this should continue into the future.
