Demand for discretionary purchases like ATVs will pick up as spending improves
Los Angeles, CA (PRWEB) December 05, 2013
Fluctuations in consumer disposable income directly influences the financial performance of the ATV, Golf Cart and Snowmobile Manufacturing industry. The industry is strongest when customers have high disposable incomes and confidence in the economy. As such, the industry struggled during the recession when demand for all of its products plummeted. Time-strapped, frugal consumers deferred leisure and recreational activities, stifling sales of all industry products. Although the industry has steadily improved since the end of the recession, increasing 0.3% in 2013, it is not expected to reach prerecessionary highs. To this end, industry revenue is expected to fall at an annualized rate of 1.1% to $7.1 billion over the five years to 2013.
Since the wake of the economic downturn, fluctuating input prices, declining per capita disposable income and an oversupply of all-terrain vehicles (ATVs) at dealerships have all worked against the industry. For example, steel prices have been particularly volatile during the past five years, rising 20.6% in 2008 and subsequently plummeting 25.1% in 2009. This made it difficult for industry participants to plan their budget. Additionally, the discretionary nature of the industry's largest products, snowmobiles and sporty ATVs, hampered sales as consumers held back purchases of nonessential items. On the other hand, manufacturers have benefited from steady demand from farming and other labor-intensive agricultural industries. According to IBISWorld Industry Analyst Brandon Ruiz, “Products like side-by-side ATVs, snowmobiles and vehicles with extensive utility features (e.g. towing capabilities, storage racks and all-wheel drive) sold well among these sectors, keeping the industry afloat despite the recession.”
The industry is in a position to fare better in the five years to 2018. Downstream demand is expected to increase as the economy continues to recover and consumers have more disposable income to spend. To this end, the industry's ultimate success will depend on how well manufacturers capitalize on consumers' propensity to spend. “Successful manufacturers will adapt to consumer needs by releasing revamped, innovative products,” says Ruiz. For example, industry operators are expected to develop ATVs powered by biodiesel. IBISWorld expects industry revenue to grow over the five years to 2018.
For more information, visit IBISWorld’s Metal Pipe & Tube Manufacturing in the US industry report page.
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IBISWorld industry Report Key Topics
The ATV, Golf Cart and Snowmobile Manufacturing industry consists of businesses that manufacture all-terrain vehicles (ATVs), snowmobiles, golf carts, personal watercraft or other transport equipment. It also includes businesses that manufacture equipment and parts for the transport equipment listed here.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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