LWI - Land Warfare

DSEI 2019: Growth inbound for Europe’s armoured vehicle market

5th September 2019 - 12:53 GMT | by Sonny Butterworth in London

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Over the next ten years, European militaries are expected to invest more funds into the modernisation of their armoured vehicle fleets in order to meet the demands of a potential conflict with a near-peer adversary. 

According to Defence Insight forecasting, this will grow the region’s share in the sector from $5.2 billion in 2019 to $7.1 billion in 2029, making it the second-largest armoured vehicles market in the world.

While the top four military spenders in the region (FranceGermanyItaly and the UK) will together account for an estimated 56% of total global expenditure on armoured vehicles, the trend towards increased investment in these platforms is also apparent elsewhere, particularly among Central and Eastern European states.

Threatened by the prospect of conflict with Russia, these militaries are looking to replace ageing fleets of legacy Soviet-era vehicles with modern platforms that are compatible with NATO standards. These emerging tenders will create new opportunities to sustain the industry as programmes elsewhere wind down.

Among the sectors predicted to see the most rapid growth from this investment are tracked APCs/IFVs and MBTs, with the latter expected to rise from $0.6 billion to $2 billion by 2029. With the end of the Cold War and the prioritisation of counter-insurgency warfare, many nations delayed the replacement of their tracked platforms. 

This has resulted in an urgent need for major upgrades to ensure that the ageing fleets of European militaries remain viable into the near future, until the development of next-generation platforms are procured.

Notwithstanding the revitalisation of the market for heavier tracked vehicles, wheeled armoured variants are still forecast to account for 41% of total spending. Comprising a broad spectrum of platforms – ranging from 4x4 patrol vehicles to heavy 8x8 IFVs – suppliers in this sector have adapted to meet changing European defence requirements.

As the MRAP market continues to decline following the drawdown in Iraq and Afghanistan, technology developed from these vehicles has been leveraged to offer a new generation of protected patrol vehicles and 8x8 IFVs. Quicker to deploy and simpler to support in the field, these platforms have proven to be an invaluable complement to their tracked counterparts.

The Defence Insight Armoured Vehicles Market Report and Forecast 2019-2029’ suggests that growth in these segments will be most pronounced during the next six years, with European spending anticipated to reach a peak of $7.7 billion in 2025. 

This will be followed by a short-term dip to $6.3 billion in 2026 before a recovery to $7.1 billion in 2029. This slightly uneven trajectory reflects the fact that many of the ongoing modernisation efforts and major procurement efforts currently under way in the region are scheduled to either conclude or reach their culmination in the mid-2020s, precipitating a slowdown in growth and a momentary downturn in investment across all sectors of the market.

This trend is highlighted by the 8x8 APC/IFV sector, which has been saturated with a bewildering array of products offered by manufacturers across the world. With most of the platforms planned to have a service life of 40 years, there will be fewer and fewer opportunities to market new products as existing tenders are concluded.

Moreover, given the long development period intended for other major programmes – such as the Franco- German Main Ground Combat System, which is not scheduled for deployment until 2035 – the next wave of procurement is not expected to translate into more spending until after the next ten years.

Therefore, after the current wave of procurement reaches its peak in 2025, the market is likely to become more reliant upon tenders in states such as Bulgaria and the Czech Republic, which are still in the process of determining which platforms to acquire. 

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