The global small caliber ammunition market is significant affected due to the COVID-19 outbreak. Pricing of ammunition depends on the production cost for subsequent batch of ammunition. Moreover, the profit merging for the ammunition remains constant as far as production costs remain constant. Product costs primarily include labor cost, which is a constant unless there is a surge in demand impacting the long-term projections. Due to the pandemic, prices are fluctuating dramatically. Moreover, a surge in the raw material and component prices during March 2020 has been overserved, further making the small caliber ammunition companies market unstable. Fiocchi Ammunition only operating with minimal workers for military operations and completely closed its commercial business. Due to the cancelation of all international transportation, the ammunition supply from major countries, such as Turkey, Czech Republic and Russia, has been cut off in various countries. Moreover, in the first week of March 2020, the sales of ammunition skyrocketed in regions such as North America. As people were panicking and want to stock up their arms and ammunition, there was a huge sale in the U.S.
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The global small caliber ammunition market has gained its importance in military operations where it has been used against terrorist groups and enemy forces. Furthermore, companies are introducing latest technology weapons for the small caliber ammunition market that is gaining the importance among defense end users due to the advantages of enhanced lethality. Many defense forces across the world have engaged in contracts with various leading manufacturers to produce a specific range of small caliber ammunition.
Moreover, increasing demand in Asia-Pacific and Middle East regions gives an opportunity to the companies to expand their product in these regions. With the Middle East in political turmoil, Asia-Pacific is becoming the next hub of global economic growth, followed by Africa. New military policies in the countries of Asia-Pacific focus on modernizing weapons. For instance, in February 2019, India signed a contract with Sig Sauer, Inc. to import 72,400 assault rifles. Moreover, the U.S. military is assisting Asia-Pacific countries such as India and Japan to rebalance the defense and its economic resources, which will strengthen the partnership and alliance of both the regions. Major small firearms that find extensive use in the small caliber ammunition industry include handguns which cover pistols and revolvers, rifles, shotguns, and other miscellaneous firearms, such as pistol grip firearms, starter guns, and firearm frames and receivers.
Major end users of small caliber ammunition include hunting, shooting, and sports, homeland security/law enforcement and government agencies, civilian, and military. Military in industrialized nations such as North America (Canada and the U.S.) and Europe (Russia, Switzerland, the U.K., Germany, and others major countries in Europe) is among the prominent end users for the market. The military segment is expected to lead in terms of market value and reach $3.14 billion in 2025 at a CAGR of 4.58% during the period 2020-2025.
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The North America region is the largest market for ammunition manufacturers and is expected to remain so over the forecasted period. In 2019, North America had a market share of 41.7% of the global small caliber ammunition market. It is anticipated to reach a market value of $3.57 billion by 2025 at a CAGR of 4.48% from 2020 to 2025. The small arms and ammunition manufacturers in North America are experiencing a growth in the defense/military market, as the governments in this region are significantly increasing their defense budgets for procuring defense solutions. Although civilian and commercial sectors are expected to have decent demand in the market. However, due to the pandemic, the civilian market is completely closed for more than a quarter of the year. Due to the same, the civilian market experienced a dip in its market value.
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