ATV Golf Cart and Snowmobile Manufacturing
Business for Sale Industry Economics
$7,298,000,000
Revenue
-2.86%
Projected CAGR
2003 - 2020
Historical
2020 - 2026
Projection
-1.84%
CAGR
$285,000,000
Profit
Quick Scroll
Summary
The ATV Golf Cart and Snowmobile Manufacturing industry manufacture all-terrain vehicles (ATVs). snowmobiles, golf carts, personal watercraft, and other transport equipment. The industry also includes businesses that manufacture equipment and parts for the aforementioned transport equipment.
Because industry products are considered discretionary, demand for products is generally influenced by the state of the economy. Therefore, the COVID-19 (coronavirus) pandemic has negatively affected the industry. As unemployment has increased due to the pandemic, more consumers have experienced weakened levels of disposable income.
This trend explains why many consumers are putting off purchasing high-value items, such as recreational vehicles, hindering industry revenue over the five years to 2020. Consequently, industry revenue has decreased at an annualized rate of 5.8% to $7.3 billion over the five years to 2020. In 2020 alone, industry revenue is expected to decrease by 16.0% due to the effects of the coronavirus.
Performance
The ATV Golf Cart and Snowmobile Manufacturing industry are composed of operators engaged in manufacturing all-terrain vehicles (ATVs), snowmobiles, golf carts, personal watercraft and other transport equipment.
Industry operators then sell the products to downstream distributors. Because many industry products are considered discretionary goods, demand tends to rise and fall with changes in disposable income and consumer spending.
For example, recreational vehicles, such as those from this industry, experience low sales when consumer confidence and spending is low and increasing revenue when consumer confidence and spending is high.
Therefore, over the five years to 2020 industry revenue has fluctuated. Overall, industry revenue has decreased at an annualized rate of 5.8% to $7.3 billion, including a decline of 16.0% in 2020 alone.
Outlook
Over the five years to 2025, revenue for the ATV, Golf Cart and Snowmobile Manufacturing industry is expected to grow. As the economy recovers from the coronavirus pandemic, per capita disposable income and consumer spending are expected to increase.
Additionally, time spent on leisure and sports is expected to increase an annualized 0.4% over the next five years, slightly exceeding 2019 levels. Due to an increase in consumer confidence and spending, consumers may choose to invest in big-ticket purchases, such as industry products, that they did not feel comfortable making during the uncertainty of the pandemic.
In fact, in 2021 alone, industry revenue is expected to jump 9.4%. This significant increase is expected as consumers release pent-up demand and revenue climbs from the recessionary low; as such, it is not a sustainable growth expectation.
Industry growth will also likely be limited as consumer demand becomes satisfied. Overall, Research projects industry revenue to grow at an annualized rate of 4.1% to $8.9 billion over the five years to 2025.
Industry
This 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 aforementioned transport equipment.
Investment
The capital intensity of the ATV, Golf Cart, and Snowmobile Manufacturing business is modest. The average industry operator is predicted to invest $0.18 on capital equipment for every $1.00 spent on labor in 2020, down from $0.21 in 2015.
During periods of low demand, operators are more inclined to put off investing in capital and automation technology. Meanwhile, salaries as a percentage of sales are forecast to climb over the next five years, while capital equipment investment is predicted to fall.
Capital intensity varies according to the scale of the operations. Many of the smaller operators in this industry are comparatively more labor-intensive, such as family businesses in which the labor costs are higher due to financial constraints on capital expenditure.
As a result, the number of companies has declined during the period as smaller enterprises have been forced to exit the industry at an accelerated rate due to plummeting demand. Efficient communications equipment, newer and more advanced tools, and machinery, and computer-assisted work scheduling can reduce the need for labor.
However, many functions in the industry cannot be made less labor-intensive as customer preferences, testing, and safety requirements demand a high degree of labor input. Capital investment within the industry is likely to increase as companies seek to improve productivity while relying less on labor.
Volatility
The ATV, Golf Cart, and Snowmobile Manufacturing business have had substantial revenue volatility throughout the five years leading up to 2020. Volatility in industry revenue is mostly caused by fluctuations in recreational and sports activities, which are influenced by price, disposable income, and population levels.
While the economy grew most of the time, people bought more large things, such as those sold by the industry. However, because of the COVID-19 (coronavirus) pandemic, industry revenue is expected to drop 16.0 percent in 2020 alone, adding to the high level of revenue volatility.
While leisure time is likely to grow as unemployment rises, many outdoor activities are being hampered by dwindling demand for industrial vehicles. Furthermore, customers are predicted to be discouraged from seeking out industry items due to a loss of money.
Weather conditions, such as heavy snowfall, rain, or exceptionally hot temperatures, can have an impact on product sales by changing customer interest in the product’s recreational usage.
When it’s raining, fewer people golf, and when it’s snowing lightly, fewer people ride snowmobiles. Furthermore, commodity price volatility has a direct impact on revenue volatility.
Over the last five years, the world price of steel has been extremely volatile, falling 30.1 percent in 2015 and then climbing by double digits for the next three years, only to plummet by double digits in the last two years.
Steel tariffs, in part, have contributed to this volatility, which has been exacerbated by the present government. These tariffs have resulted in unforeseen cost increases for industry operators.
As the coronavirus stifles economic activity, declines in 2020 are projected to be directly tied to weaker industrial demand. The agricultural, forestry, fishing, and hunting sector’s performance and volatility will likely have an impact on revenue volatility since the sector’s demand for items found in this area will likely alter.