Vista Outdoor Says Decision to Phase Out Firearms Manufacturing Business-Related, Remains Committed to Second Amendment [More]Is that anything like "I support the Second Amendment but..."
I admit I don't have enough visibility into continued Savage and Stevens viabilty to render an informed judgment on this as a business decision. Those who do, feel free to enlighten.
[Via Jess]
I suspect it's mostly issues of profit margins. Savage 110 base models (like Ruger American and several other competitors) are selling under $500, sometimes way under. Can they really make them for that? Maybe - with enough sales volume but it could be a close run thing. Same with the entry level ARs
ReplyDeleteLike the car makers that make economy boxes and SUVs - the economy car at $10k barely breaks even, and then only if they can sell every single one without sale prices (which they never do). It gets subsidized by the profits from the SUVs and trucks with their $40k stickers (and $10k profit margins). The car makers keep making the econo-boxes because the .gov says they have to (CAFE standards means if you sell a 10MPG truck, you have to sell 3 40MPH boxes to get the average fuel economy math to work) and because selling one truck covers taking a loss on several boxes that are still sitting on the lot when next year's model rolls out.
The gun makers equivalent would be having enough high end sales to cover the low profit margin items - but we keep buying more $500 ARs (and customizing them ourselves) instead of buying the $2000 one. With no .gov mandate the business decision is to stop making the low profit versions. And if that's ALL you make, you just stop altogether.
Another possibility is the big conglomerates get to top heavy to move with the times. It could be Savage gets sold (to itself - ala Harley-Davidson post AMF) or to another investor that gets out of the way and lets them come up with some new innovation. Be that a new sales leader (like the Ruger Precision?) or a new technique to make 110s for less (and thus capture more of the discount/entry rifle market).