IS THE USED MARKET DEAD?

[C&M Music - Lafayette]

Anybody having any luck moving used guitars (and gear)?

Steve, I have been tracking guitar sales for a few years. I don't really know why. It just became an interest to me a few years back when I saw how big box and online stores did business and saw what I perceived to be a slight on PRS. The following is what I have seen year in and out for the past four years. I corroborated my observations with credible NAMM reports, music merchant magazines, and and my regular conversations with music store managers I visit locally and when I travel.

The most popular electric guitars are those that sell new for 399 to 1599. The closer to 699 is the peak high seller. That is why you see so many in this price range (399 to 699) at big box stores and stores in general. Used guitars are moving quite well if the selling price range is 699 to 1999. Above that and they seem to sit for a while before selling or get low balled. Many factors come into play here and are each subjects for their own threads. Some of which I seen previously mentioned in this thread. One of the biggest reasons is the slow moving away of the electric guitar from the music scene and the rise of the acoustic guitar in same. Acoustic guitars have outsold electrics by a split of 52/48%, 55/45%, 58/42% margin over the last few years. The big growth in acoustic sales could be the current music scene and the artist associated with acoustic instruments. A big name in acoustic guitars that has their own plant in Mexico in addition to their big plant in California has seen substantial growth in their acoustic sales below the 1599 mark. What is also unique is that they have seen a drop in their acoustic sales above the 1599 mark, which may bode for the argument that it is the economy that is affecting sales of of higher end new and used electric and acoustic guitar sales. This year alone the Mexico plant made the unheard of total of 100,000 acoustics, most of which in the sub 1000 range, but did include some models that are up to 1599. These guitars all have solid tops and real wood fingerboards and bridges. More crazy is that these guitars were all pre-sold out for the year by June. Only cancellations are backfilling some late orders. Insane huh! A guitar company in PA. is not producing those numbers but they are ever dramitcally increasing their acoustic sales in that price range evident by the crazy of new models they are offering to compete. If guitar companies are putting this much into acoustic sales that are sub 1599K and being successful. it supports the current trend in new and used electric sales dropping. What does this have to do with the used market? I see the higher end electric guitars losing ground to cheaper electric instruments which is compounded by the decline in higher end acoustic sales and the growth of lower end acoustic sales. With the used market flooded with used guitars it is a buyers market that is most brutal on the higher end used electric market.

I am suffering from this as well. I recently and relunctantly put a couple of my beloved core line PRS up for sale to fund my PS purchase. I have been greeted with lowball insults despite lots of views and admorable comments of how beautiful and great they are.

Last thing. I believe PRS is entering the acoustic market at the right time. They get to see in advance what price points are working. I also believe this is why we see and continue to see the growth in the S2 line. The price points are just right for the current trends and whatever is guiding them. PRS's recently announced entrance into the acoustic foray will likely see a nice acoustic line in the S2 series as well as growth in the SE line. I also expect to see PRS grow the electric line in this way as well. Not because I have secret insight into PRS, but because the writing is on the retail wall (pun intended). The S2 line might even see a splash of the return of real abalone/pearl moons to draw in some more customers. Just my educated 2 cents on the conversation.

 

[CVS]

Audie,

Great write up & research on the guitar market. I agree with the direction PRS appears to be headed strategically and I hope that they introduce a line of S2 Acoustic guitars as you mentioned. Sounds like they are about to do so.

One other thought - There will be a lot of baby boomers retiring over the next 5-10 years and some of them will decide to fill up some of their time by trying to learn how to play a musical instrument or going back to revisit an instrument they learned how to play to some degree at a much younger age. This may bode well for the guitar market at all price points in the future. Just some additional food for thought.

Did / do you work in the strategic planning or market research department for a large corporation?

 

[C&M Music - Lafayette]

Audie, Did / do you work in the strategic planning or market research department for a large corporation?

No, but it is not out of reach from what I do though. It is my admiration for PRS Guitars and what the company stands for that I chose to do a deep dive for a few years now.

 

[studiotan]

Thanks Audie, well written and thought provoking. I realized kids were not taking up electric guitar, but that is fascinating that acoustic guitars have seen a resurgence. Would not have expected that at all except for isolated pockets of activity like Taylor Swift pop fans buying her cheap signature guitar or something like that.

On the plus side, a soft used market for core guitars means a smaller step up from an S2 to get a used core custom or mccarty. Hopefully some of those cores get into the hands of players who would have otherwise sneered at them based on price or other social factors having nothing to do with playability, tone, and craftsmanship.

I've sold a lot of music gear in the last few years, mostly percussion and studio electronics primarily on ebay. If I am serious about moving something I price aggressively on items that are not in demand and make it up on vintage items that have irrationally appreciated beyond their utility. No magic formula there. If I had to sell guitars, I'd start with my strat , but then I'd get creative - trades for something else you can fix up or refurb to eventually sell at a net profit, or bundle several guitars together and deal with a specialist store for credit towards something new. Probably just repeating what others have said elsewhere,

Honestly I don't think this macro guitar market economics, as interesting as it is, particularly applies to pre-owned custom built guitars. If I owned a PS, or a small shop luthier built custom, I would not try to convince myself that the unique and beautiful guitar I spec'd out for my needs and aesthetic sensibilities would have any sort of broad appeal. I would price at the low end of what I could stomach and leave it on reverb indefinitely until someone falls in love with it. Which I think is what 11top is doing and I sympathize that it sucks! But that part has very little to do with market forces and more to do with the nature of custom items be they cars, sailboats, watches, whatever. No unique insight, Just my $0.02,

 

[László]

I took many a bath selling guitars and amps even during so-called good times. So I've decided to keep everything and hoard it in caves until the collapse of our civilization. Then, thousands of years from now, when my hoard is discovered, people will wonder who owned it and why it was put in caves.

But I won't leave them a clue, because I want them to wonder WTF happened that caused the ancient owner to hoard guitars and put them in caves.

Because I'm that sort of devil-may-care, end of civilization, kinda guy.

 

[newfmp3]

Well, I'm sure there are guys here with far more experience finding used then me, but my first reaction to this thread as a Canadian is my guitar buying days are over. Used or New. Yup, the Canadian dollar is certainly a huge factor, but it seems PRS themselves have forced some of my fav. dealers to raise their prices into insanity on top of the bad dollar. Example, a certain guitar last month that has been sitting at the dealer for months was ~3400 New. Today it's 5100. That's a guitar that was purchased by dealer earlier in the year. And to make the best of it, there's nothing special about it, just a natural CU24. If this is the direction PRS is trying to Force dealers into, it feels a little too familiar to Gibsons type of behavoir and I won't be spending my dollars on any more PRS.

As for used, due to bad exchange rate causing new inventory guitars to be priced high, it seems people think the guitar they bought last year for $2500 is now worth $3000 used. It's absurd, the entire market up here is nuts. Irks me because I really wanted another PRS, maybe DGT, but not at these prices.

 

[CatStrangler]

Well, I'm sure there are guys here with far more experience finding used then me, but my first reaction to this thread as a Canadian is my guitar buying days are over. Used or New. Yup, the Canadian dollar is certainly a huge factor, but it seems PRS themselves have forced some of my fav. dealers to raise their prices into insanity on top of the bad dollar. Example, a certain guitar last month that has been sitting at the dealer for months was ~3400 New. Today it's 5100. That's a guitar that was purchased by dealer earlier in the year. And to make the best of it, there's nothing special about it, just a natural CU24. If this is the direction PRS is trying to Force dealers into, it feels a little too familiar to Gibsons type of behavoir and I won't be spending my dollars on any more PRS.

As for used, due to bad exchange rate causing new inventory guitars to be so priced, it seems people think suddently the guitar they bought last year for $2500 is now worth $3000 new. It's absurd, the entire market up here is nuts.

I hear you man, I used to live in St. John's, now back in the USA (nothing left on the rock for me). Given the Exchange rate and HST/GST, Your dealer actually is about spot on in terms of margin (by my calculations), given the original price. I suspect PRS will have a hard time moving guitars in Canada with oil prices at their current levels.

 

[newfmp3]

Fellow Newf! Wow. Yeah, I feel really bad for the dealers. I mean for me, I don't buy another guitar, whoopie big deal, but dealers got mouths to feed like the rest of us. We finally got a PRS dealer here locally and being a small town, PRS is done here. At these prices it doesn't have a chance. PRS just started to get popular up here too so it is really bad timing.

 

[CVS]

Yes, I agree if you are a guitar buyer or a guitar dealer in Canada, these are not good times. Be patient, there was a time not too long ago when Canadians (Customers and or Distributors) were getting bargain prices on all US made goods because of the FX rate.

"What goes around comes around" (eventually ).

The only other option available if you want to eliminate FX from the picture is to make guitars in Canada with Canadian sourced labor, materials and components. (Not sure this is possible - but this maybe an opportunity for an aspiring entrepreneur). Selling Canadian made goods in US is a good business move at the moment as well given the FX rate.

 

[veinbuster]

it seems PRS themselves have forced some of my fav. dealers to raise their prices into insanity on top of the bad dollar. Example, a certain guitar last month that has been sitting at the dealer for months was ~3400 New. Today it's 5100. That's a guitar that was purchased by dealer earlier in the year.

I don't think you can blame PRS for a dealer raising the price of a guitar they already have in inventory. I know some dealers will price items based on the exchange rate when they bought the guitar, others will price based on current exchange.
The strength of the US dollar has slowed down my spending though, not that I need anything else.