There are still lots of completely awful bicycles on the market. The industry uses the term "Bicycle Shaped Object" - the cheapest possible machine that resembles a bicycle to a naive consumer. Every possible corner is cut to bring the price down. You'll see plenty of BSOs at general retailers like Walmart and Target, often carrying the Schwinn brand.

http://www.thecyclingexperts.co.uk/get-cycling/buying-a-bike...

There are really two kinds of cyclists; enthusiasts who ride regularly and dilettantes who ride two or three times a year. The latter choose a bicycle almost entirely on price, because they don't know any other criteria on which to judge bicycles. These customers don't care that the bike will start disintegrating after a couple of hundred miles, because they'll never use it that much.

The bike boom of the 1970s meant that lousy bicycles almost completely dominated the market, but the more recent bike boom has created a generation of much more savvy customers. The market has split into lousy department-store bikes and real bikes sold through specialist retailers.