Discretionary purchases of goods such as guitars jump up during periods of economic recovery.
New York, NY (PRWEB) November 14, 2014
The Acoustic and Electric Guitar Manufacturing industry has enjoyed solid growth over the five years to 2014 as increasing per capita disposable income has underpinned demand for industry products. Guitars are considered a discretionary purchase and are consequently extremely sensitive to changes in overall economic conditions. As economic conditions rebounded from recessionary lows, pent-up demand for discretionary purchases increased, boosting demand for industry products. Additionally, as conditions improved, consumers chose to buy higher-end guitars, expanding industry revenue and profit margins.
Trade plays a significant role in the industry, with exports accounting for about one-third of industry revenue and imports satisfying more than half of domestic demand. According to IBISWorld Industry Analyst Daniel Carusotto, “Low labor costs in foreign countries, especially Mexico and China, allow overseas manufacturers to undercut the prices of domestic producers, especially on guitars in the low-to-mid price range.” Domestic manufacturers still hold a competitive advantage in high-end guitars, which are the primary export of the industry, mostly going to Canada and Europe. The falling value of the dollar over the past five years has made domestically manufactured guitars more affordable for foreign consumers, contributing to the rise in exports over the period.
Over the five years to 2019, the industry is expected to continue growing, albeit at a slower rate than the previous five-year period. Revenue growth is expected to be driven by rises in per capita disposable income, which will lead to more discretionary purchases. “However,” says Carusotto, “industry growth will be constrained by import penetration and the declining popularity of guitar-based rock music.” Revenue is expected to grow slowly but steadily over the five years to 2019, while industry profit margins are expected to decline slightly as rising lumber prices lead to higher costs for guitar manufacturers.
For more information, visit IBISWorld’s Acoustic and Electric Guitar Manufacturing in the US industry report page.
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IBISWorld industry Report Key Topics
This industry manufactures acoustic and electric guitars. Operators that manufacture guitar amplifiers and accessories are also included in this industry.
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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