2019 turned out to be a significant year for the global armored vehicle market, which is primarily associated with a steady stream of contracts and loud announcements about the implementation of new programs. In this segment, spending is projected to increase by 9.5% in 2020, that is, to $ 26.67 billion (of course, if the events of recent months do not make their adjustments), and this trend is likely to continue in the next decade.
The demand for new machines reflects two strong trends. First, the need for well-protected platforms with sufficient strategic and operational mobility in order to be able to quickly deploy equipment to any potentially hot spot in the world; and second, the desire to have new tracked infantry fighting vehicles and MBTs that can replace the platforms of the Cold War times, because the service life of many of them is close to 40 years.
These needs at this stage are determined by the transformation of views on the nature and likelihood of a major conflict in the future. While counterinsurgency missions will undoubtedly remain of paramount importance in regions such as Africa and the Middle East, the withdrawal of troops from Afghanistan and Iraq has contributed to a sharp reduction in the scale of such operations. At the same time, the deterioration of relations between the NATO states, Russia and China forced to change priorities and move to building up the capabilities that may be needed in the event of a traditional conflict with an equal rival.
American ambitions
With the largest defense budget in the world, the United States is at the forefront of rejuvenating the military hardware market. While the long-term sustainability of US military spending growth is questioned by many analysts, it continues to pursue an ambitious modernization program aimed at gaining superiority in six key areas: long-range precision fire, Next-Generation Combat Vehicles (NGCV), promising vertical take-off platforms, network, air defense and missile defense, and soldier's fire efficiency.
The second of these priorities - the NGCV project - includes several competitions for new armored vehicles. Chief among them is the OMFV (Optionally Manned Fighting Vehicle) competition, as a result of which a new tracked infantry fighting vehicle will be purchased to replace the M2 Bradley by 2026. From the very beginning, two applicants applied for this project, each of whom had to supply 14 prototypes for testing.
However, at the end of 2019, the announcement that the Lynx KF41 armored vehicle from Raytheon / Rheinmetall was excluded from the tender caused a shock among specialists. According to official data, the exception was due to the delay in delivery of prototypes to the Aberdeen test site. Thus, the only participant left in the tender was General Dynamics Land Systems. As a result, the Army announced it would halt the program in January 2020 with a view to revising its procurement requirements and schedule.
Such a development of events, as a rule, is accompanied by certain risks arising from the accelerated development of new technology. BAE Systems' premature withdrawal from the tender in June 2019 made it clear that the nearly 100 mandatory specifications and the ambitious schedule were deemed impracticable by many potential candidates.
Despite the uncertain start of the OMFV subroutine, another important component of the NGCV initiative continues to advance with confidence. The M8 Armored Gun System from BAE Systems and the new platform from GDLS, the first photos of which were published in January last year, are fighting for the Mobile Protected Firepower subprogram. Both companies received contracts worth up to $ 376 million to build 12 prototypes. As a result, in 2022, the winner will be selected, who will receive a contract for the production of 504 cars.
This program is an indicator of the formation of new requirements for lighter platforms of direct fire support, which are easier to deploy and have sufficient mobility to support forces operating in areas inaccessible to heavier MBT and BMP.
The consequence of such a change in priorities in the sector of heavier armored vehicles was a reduction in funding allocated to vehicles of the MRAP category. Subsequently, in the 2019 budget, the allocation of funds for the purchase of the JLTV (Joint Light Tactical Vehicle) armored car from Oshkosh was significantly reduced, which was largely facilitated by the sentiment prevailing among the high-ranking military. Officials have repeatedly admitted that this armored car is better suited for previous wars, it is not for nothing that Defense Minister Mark Esper once said: “What determined the creation of JLTV? Improvised explosive devices in Afghanistan and Iraq. This trend has smoothly moved into the 2020 financial year, the number of purchased JLTV machines was reduced from 3393 in 2019 to 2530 units in order to allocate more funds for other programs.
While the US is reportedly going to spend 94% of the region's total spending, Canada is also purchasing 360 8x8 vehicles through its Armored Combat Support Vehicle program worth $ 1.54 billion. These vehicles, based on the LAV (Light Armored Vehicle) 6.0 platform manufactured by GDLS-Canada, will replace the M113 and Bison 8x8 tracked armored personnel carriers from 2020 to 2025.
Varied geometry
The armored vehicle market in Europe is much more heterogeneous, albeit no less active. According to some estimates, the European continent, home to the world's five leaders in defense spending, will become the second largest regional armored vehicle market from 2019 to 2029, as armored vehicle spending is projected to rise from $ 7.7 billion to $ 10 billion over this period.
Appetite for new 8x8 machines remains high despite a number of contracts in recent years. Perhaps the most notable development in 2019 was the British Army contract worth 2.8 billion pounds ($ 3.6 billion) for the serial production of 523 Boxer vehicles, most of which will be assembled at the Rheinmetall BAE Systems Land plant in Telford, UK.
European market by sector, 2019-2029, (in millions of dollars)
Although the largest European military structures have already made their choice and settled on wheeled vehicles of the 8x8 configuration, there are several countries that are in the process of purchasing or choosing a platform.
These include the Bulgarian tender for 90 infantry fighting vehicles and 60 support vehicles worth $ 830 million, the Slovak contract for 81 8x8 vehicles worth $ 480 million and the potential Slovenian demand, which initially included the purchase of 48 Boxer armored vehicles until the contract was postponed last January.
In December media reports, it was reported that the Spanish Ministry of Defense has rejected Santa Barbara Sistemas' offer to supply 348 Piranha V 8x8 vehicles worth $ 2.34 billion, with the tender reopening in 2020 quite possible. In this case, the Boxer armored vehicle will become the main competitor, although Nexter and the Italian CIO consortium are also considered as potential candidates.
In addition, in all countries of the Old World there is a huge need for 4x4 tactical vehicles. One of the largest programs is the British Multi-Role Vehicle - Protected. The program, divided into three “packages”, provides for the purchase of three different platforms to perform different tasks.
The British government originally intended to be the sole contractor for the first "package" and in 2017 the US Department of State approved a possible deal to sell up to 2,747 JLTV armored vehicles to the UK worth up to $ 1 billion. However, due to the relatively high cost of the car and the fact that other suppliers could offer alternatives with a greater share of the local industry, some uncertainty remains and only time will tell if this will all end with the signing of the contract.
Foreign sales under the Arms and Military Equipment Act are also an attractive alternative for many smaller countries that do not have a strong defense industry or the resources to conduct competition and comparative testing. In 2019, European countries signed a number of contracts for JLTV, which may stimulate future growth in sales of this platform.
This could be facilitated by programs such as the European Recapitalization Incentive Program. This is a $ 190 million fund, the funds of which go to replace obsolete Soviet weapons in the armies of Albania, Bosnia-Herzegovina, Croatia, Greece, North Macedonia and Slovakia. By subsidizing the supply of American technology to these states, Washington can "clip the wings" of European manufacturers, reducing their opportunities in regional sales. As part of this initiative, for example, a contract was signed, which provides for the supply of 84 tracked vehicles M2A2 Bradley ODS to the Croatian army.
Indeed, analysts predict that the tracked armored vehicle market will begin to grow and increase its share by the middle of the decade. As for other platforms, the countries of Central and Eastern Europe have great opportunities here.
Among the largest programs in this sector is the $ 2.2 billion Czech tender for the purchase of more than 200 tracked infantry fighting vehicles to replace the Cold War-era BVP-2 vehicles, although Poland is also hatching long-term plans to replace its BWP-1 and BWP-2 vehicles. possibly to the locally produced HSW Borsuk platform.
Fewer opportunities exist in the MBT sector, as the military seeks to modernize existing tanks in order to extend their service life. In addition to countries capable of developing their own tanks, such as Turkey, the only European tank that claims to be a new one is the Leopard 2A7. This variant was purchased by Denmark, Germany and Hungary; perhaps in the future there may be new customers for this platform.
By 2035, the replacement of the German Leopard 2 tank and the French Leclerc tank with a new platform developed as part of the Mobile Ground Combat System program should begin. More than 500 new tanks are planned to enter the French and German armed forces, although the project could expand into a large pan-European program due to the interest shown by Poland and Great Britain. However, the prospects for investment by other countries are likely to depend on the development and degree of participation of local industry and how the program requirements, which, most likely, will not be developed until 2024, correspond to specific national needs.
Post-Soviet decisions
The latest increase in European defense spending is in large part a response to Russia's modernization of its armed forces and a more belligerent foreign policy that many NATO countries are eyeing with dismay. Moscow is trying to create a more flexible, more responsive army that can quickly deploy anywhere in the world.
In the countries that were in the orbit of influence of the Soviet Union, the modernization of the huge parks of equipment and other weapons inherited from it was not straightforward. Some projects, such as the development of machines in the MRAP category, are beginning to bear fruit. These platforms not only provide protection and mobility for conventional forces, but are also one of the means of projecting force in overseas contingents, as can be seen in the example of Syria.
However, for other types of armored vehicles, the schedule for the development and adoption of new equipment was shifted further to the right. An example is the Armata MBT, which is to undergo military trials in 2020, despite previous plans to produce 2300 platforms by 2025.
A similar fate befell the Kurganets tracked platform and the Boomerang wheeled platform, which are still at the preliminary testing stage, although in 2021 Boomerang is expected to order up to 100 vehicles worth about $ 250 million.
Recognizing the fact that the adoption of new platforms will go much slower, the Russian Ministry of Defense has chosen a priority area for modernizing existing equipment under the current state rearmament program. This means that the production of obsolete platforms, for example, the BMP-3, will continue; a contract for the manufacture of 168 of these machines worth 14.25 billion rubles was announced in November 2019. The existing tanks will also be upgraded to the T-72BZ, T-80BVM and T-90M standards.
Soviet-era technology and weapons also dominate many of the former Soviet republics of Central Asia. Nevertheless, these states buy weapons from different countries of the world, and many of them have taken steps to create their own defense industry, for example, Kazakhstan has organized a joint venture with the South African Paramount Group.
While the ultimate success of Moscow's ambitious arms procurement programs remains to be assessed, they have become a driver of modernization in Europe and the United States. Due to the deterioration of Russia's relations with many states, as well as the insufficient capacity of the national defense industry, Russian manufacturers outside the country have little chance of profit from these investments. Nevertheless, the states of Central Asia that emerged after the collapse of the Soviet Union still remain dependent on the supply of Russian military products, despite the fact that many of them have begun to diversify their suppliers.
The Shattered Market
Expenditures for new weapons procurement programs in the Asia-Pacific region are projected to grow by $ 5.3 billion by 2029. Most of all funds will be spent on defense programs in China, India, Japan and South Korea, while the rest of Asian countries will be able to afford a minimum of defense spending.
Many states in the region must deal with a range of threats, ranging from expansionist neighbors to insurgents and terrorists, and must therefore procure equipment suitable for different types of terrain operations.
This creates a multitude of needs and a fragmented market in which the United States, China, Russia and Europe feel confident. However, more and more states in the region are developing their own defense industry by purchasing their own products, inviting consultants to help develop or create joint ventures to assemble foreign platforms.
Asia Pacific by sector, 2019-2029, in millions of dollars
An increase in demand for new MBTs is predicted. Already, one of the well-known suppliers is making considerable profits from this. The Chinese corporation Norinco has delivered at least 48 VT4 tanks to Thailand, while Pakistan, another state with close ties to Beijing, has reportedly expressed interest in acquiring up to 100 VT4 vehicles.
For those military who want to have the fire effectiveness of MBT, but are limited in cost or weight, an alternative can be a tracked or wheeled platform of direct fire support. This option, for example, was chosen by Indonesia, with the Philippines also investing in a light tracked tank and wheeled fire support vehicle, implementing a $ 190 million program.
According to some estimates, a significant increase in investment is also expected in tracked infantry fighting vehicles. A significant contribution to this process is made by the program of the Australian army under the designation Land 400 Phase 3 worth 10.1 billion dollars, in which relatively new platforms - Lynx KF41 of the German company Rheinmetall and AS21 Redback of the South Korean company Hanwha - are challengers.
India, which operates a fleet of more than 2,500 BMP-1 and BMP-2, also intends to replace them with a new tracked vehicle. With the declared requirement of 3,000 vehicles, the FICV (Future Infantry Combat Vehicle) program worth $ 8 billion is expected to last more than 20 years. However, as is the case with many other Indian arms purchases, this program, as a result of endless delays, is already very far behind the original schedule, which indicates that the planned date of adoption in the mid-2020s is unlikely to correspond to reality.
In the wheeled segment, many militaries in the region have already signed contracts to meet their needs for 8x8 platforms.
However, several major tenders remain open. One of them is a tender for the Wheeled Amphibious Armored Platform, an Indian wheeled floating platform developed by Tata Motors in collaboration with the Defense Research Organization. If this project is successful, it is hoped that it will be able to meet up to 20% of the need for FICV infantry fighting vehicles (i.e., up to 600 vehicles), although the volatile nature of defense purchases in India may change the original plans.
Japan, which traditionally develops and produces its own armored vehicles, after the Komatsu proposal did not satisfy the Japanese military, opened its program for an improved wheeled armored vehicle for foreign armored vehicle manufacturers. Patria and GDLS presented their 8x8 platforms - AMV and LAV 6.0, respectively. At the same time, Mitsubishi Heavy Industries also presented its Mitsubishi Armored Vehicle, which is distinguished by a high level of unification with the Type 16 Manoeuvre Combat Vehicle armored vehicle already in use in the Japanese army.
Light wheeled vehicles are also not overlooked. For example, Thailand is evaluating the proposal of local companies Chaiseri and Panus Assembly to modernize or replace obsolete V-150 Commando 4x4 reconnaissance vehicles, and Malaysia, in turn, is looking for a replacement for its veteran Condor patrol vehicles.
Other Markets
The Middle East is another tasty morsel. While accurate spending figures are difficult to obtain publicly, there is no doubt that well-equipped troops are a top priority for many countries in the region.
Arms imports are strategically important for almost all countries in the Middle East, despite all attempts to develop their own defense industry, for example, in the United Arab Emirates. This confirms the abundance of 8x8 configuration platforms from suppliers from different countries, including a contract with Saudi Arabia for 928 LAV 700 armored vehicles manufactured by GDLS-Canada, a contract with Oman for 145 Pars III vehicles manufactured by Turkish FNSS and a contract with the UAE for 400 Rabdan vehicles, which will be supplied to the local by AI Jasoor.
However, this can be influenced by high political risks, which is clearly demonstrated by the criticism of the Canadian government regarding the contract with Saudi Arabia for an astronomical amount of 3.4 billion dollars, which, however, has so far been suspended due to the deterioration of relations between the two countries. Qatar's plans to sign a contract with the French company Nexter for 90 VBCI-2 vehicles have also been questioned in connection with a corruption scandal.
Tactical vehicles of 4x4 configuration and armored vehicles of the MRAP category are also in high demand. For example, Saudi Arabia wants to acquire a new 4x4 platform that will suit all types of the country's armed forces. Due to the interruption in the supply of 1,500 Jais machines from the Emirates company Nimr, there is a chance for other suppliers to fill this niche. Following the debut of the Paramount Group's Mbombe 4 at IDEX 2019, the UAE bought four of these machines for testing.
Although information about defense programs is rather scarce in the public space, it is obvious that the demand for new tracked vehicles is also growing. A huge number of obsolete platforms, for example the M113 armored personnel carrier, are ultimately subject to replacement, this also applies to obsolete MBTs. In line with this reality, Oman began evaluating the South Korean company Hyundai Rotem's K2 tank, possibly with the aim of replacing its 38 Challenger 2 tanks.
Concluding contracts
Despite some positive developments, many African states are in a difficult social and political situation, while the military of these countries are forced to be content with modest defense budgets. Given the recent drop in defense spending by African countries, the Defense Insight analyst website estimates the continent's armored vehicle market has shrunk from $ 1.3 billion in 2019 to $ 800 million in 2029.
In order to somehow make ends meet, many military personnel rely on outdated systems dating back to the Cold War. Defense budgets on rare occasions can be increased, but only to purchase a minimum amount of equipment.
Since many states do not have capacities for the assembly or production of armored vehicles, most of the equipment is purchased from abroad. While the United States is quite active in supplying MRAPs and 4x4s from its stocks, China, Israel and Russia are also offering their allies a wide range of outdated but still workable platforms without any political control, usually accompanying the supply of new armored vehicles.
Despite the predominance of imported cars, new industrial players are starting to appear in some African countries, although they are still in their infancy and developing business, working mainly with local or regional customers. Examples include Nigeria's Proforce and South Africa's Twiga, whose efforts are focused on meeting the strong demand for mine-protected vehicles.
Obviously, most of the developed defense industry is located in the Republic of South Africa, which exports military equipment to many countries of the world. However, the country's largest program for the purchase of 244 BMP Badger 8x8 worth $ 1.3 billion is faced with certain difficulties associated with technical problems and the financial situation of the head contractor Denel Land Systems, forced to postpone the delivery of the first batch until 2022. Meanwhile, the country's army still operates the Olifant Mk 1B and Mk 2 tanks (based on the Centurion tank from the 50s) and there is no talk of replacing them.
In this difficult region, one exception is Algeria, which has spent significant sums of money to upgrade its armored vehicle fleet. Export deliveries of Russian armored vehicles predominate, while the country is actively cooperating with the German company Rheinmetall to organize the assembly production of the Fuchs 2 6x6 patrol vehicle. According to some reports, Algeria may be interested in assembling an 8x8 platform at this enterprise. This is hinted at by photographs in which this machine is being tested in the Algerian army. However, it is necessary to wait for the official confirmation of this deal.
Financial realities
For many years, the Latin American military has invested in armored vehicles in general, not very large sums and in this regard, many platforms are outdated at the moment, but, nevertheless, are still used in the armed forces of the countries of the continent. Despite the fact that many countries have decided on their needs for new cars, most of them still have to make official decisions.
The only major project in this region is the purchase by Brazil of 2044 VBTP-MR Guarani armored personnel carriers in the amount of 3.4 billion dollars. However, new opportunities may appear in the face of Colombia's modernization plan, abbreviated as PETEF, which aims to purchase weapons systems so that by 2030 the armed forces can more effectively respond to traditional and asymmetric challenges.
While Colombia has already purchased Commando 4x4 patrol vehicles from Textron Systems, procurement of other equipment has not yet been clearly defined in this plan, including new MBT, tracked infantry fighting vehicles and light tactical vehicles. Consequently, it remains only to wait what of this will actually be embodied in reality.
The Latin American market is largely dependent on funds allocated, which are often very limited. Since most of the military in the region is focused on fighting criminal organizations and paramilitary insurgents, upgrading existing platforms or channeling limited resources into purchasing the necessary equipment is often more attractive.
Armored abundance
From a global perspective, there is an abundance of opportunity in the armored vehicle market. Even if not all sectors and regions are projected to grow evenly, the challenging geopolitical environment is not only stimulating an increase in the volume of purchases of new platforms, but also changing the types of vehicles in which the military intends to invest.
