Colt's Halt to Civilian AR-15 Sales Could Prompt Other Gunmakers to Exit Market

Colt's recent decision to halt civilian production of AR-15s sent a tremor through the small-arms community, a sign that other gunmakers may fall victim to a market swelled to capacity with the popular semi-automatic rifle.

Just a few years ago, in the run-up to the 2016 presidential election, gunmakers couldn't make enough AR-style rifles and carbines to satisfy public demand. The fear of many gun enthusiasts that a Democratic victory would lead to the reinstatement of the 1994 Federal Assault Weapons Ban drove large gun companies to ramp up AR production and opened up a flood of small AR shops, said Mark Oliva, spokesman for the National Shooting Sports Foundation, the firearms industry trade association.

"When the 1994 assault weapons ban expired in 2004, the interest in people buying firearms, particularly these firearms, increased rapidly," Oliva said.

"And as we start to look at the sales figures ... going right up until the 2016 election, in 2015 and 2016, we just had a huge spike in people buying AR-15s ... and I think that is why you saw such an exponential growth of just people coming out of the woodwork, making their own AR-15s, and a lot of the small makers jumping into the market."

Related: Colt Suspends Production of AR-15 for Civilian Market

The problem is that the gun industry was left with a huge inventory of ARs after President Donald Trump won the 2016 election, said Ryan Cleckner, a firearms industry attorney and former vice president of Remington Outdoor Company, a conglomerate that owns AR makers such as Remington, Bushmaster and DPMS.

"Up until the last year, the AR market still sells strong ... however, the market has been a rough market these past few years," said Cleckner, who served in the Army's 1st Battalion, 75th Ranger Regiment, from 1998 to 2003 and now is the owner of Gun University, a firearms review website.

"The industry is going to take a downturn; it just has to. It's just the natural cyclical rate of any industry. And it will be good because it will separate some of the wheat from the chaff. We have too many AR makers right now," he said.

Colt's Manufacturing Co. LLC acknowledged the "significant excess in manufacturing" in the "sporting rifle" market in a Sept. 19 statement explaining its suspension of civilian AR production. The company gave no indication that its decision might be tied to the current debate over the public's access to AR-15s and other semi-automatic rifles, which have been used in several mass shootings, as some have inferred.

On the same day, the Defense Department announced that U.S. Army Contracting Command had awarded a $41.9 million foreign military sales contract to Colt to produce M4 and M4A1 carbines for more than a dozen countries, including Afghanistan, Djibouti, Jordan, Kuwait and Lebanon.

"We are fortunate enough to have been awarded significant military and law enforcement contracts," Dennis Veilleux, president and CEO of Colt, said in the statement. "Currently, these high-volume contracts are absorbing all of Colt's manufacturing capacity for rifles."

Military.com reached out to Colt, but did not receive a response by press time.

Colt became an icon of the AR-15/M16 family shortly after Eugene Stoner invented the AR-15 design for ArmaLite Company in the late 1950s. Colt purchased the design rights and produced mass quantities of the M16 during the Vietnam War.

Over the years, it has supplied the U.S. military with multiple versions of the M16, including the M4 and M4A1 up until 2013 when FN Manufacturing outbid Remington Arms Company and Colt Defense LLC to win a contract worth just under $77 million to make M4A1s for the Army.

Colt has also struggled on the civilian side of the AR market over the past 10 years, Cleckner said.

"It was rare in the past decade to go into a gun shop to see more than a couple of Colts," he said, adding that "it was a great business decision" for the Hartford, Connecticut-based company to focus on its military contracts, an option smaller gun shops have not had.

"We have had a bunch of smaller shops that have already shut down," Cleckner said. "The only reason the big manufacturers have stayed around is they are so big, and they will be able to weather the storm."

Despite the decrease in demand, the AR-15 is still an extremely popular rifle, Oliva said.

"It's still a very competitive market; we are looking at 16 million AR-15s that are in private ownership today in America," he said. "I think this is a decision that [Colt officials] are making that is probably temporary, and I think that you [will] see them, when the time is right, re-emerge into the market."

-- Matthew Cox can be reached at matthew.cox@military.com.

Read more: Army Unveils Major Changes to New Combat Fitness Test