The cruise missile market is expected to register a CAGR of 13.61% during the forecast period.
- Over the years, the influence of missiles in modern warfare strategies increased, and countries started emphasizing preserving missile systems in their armory. Following the theory of deterrence and mutually assured destruction, countries are procuring and developing more lethal cruise missiles having high speeds and ranges. From a strategic perspective, the possession of such lethal missiles will help the countries in keeping their potential adversaries at bay.
- The market is expected to grow primarily due to the emphasis on the cruise missile procurement and development activities undertaken by militaries to gain a strategic upper hand.
- However, this growth is subjective to several associative factors, such as allocation of funds for procurement of cruise missile systems and may be adversely affected due to budget constraints and various factors that may eventually lead to the program delays and cancellations.
Key Market Trends
Supersonic Missiles Segment Held the Largest Market Share in 2019
In segmentation by speed, the Supersonic segment held the largest share in the market as of 2019. A supersonic missile relies primarily on sheer speed and inbuilt electronic countermeasures to penetrate the air defense network of the hostile enemy forces. The United States, China, Russia, the United Kingdom, France, and India are a handful of countries that possess the capability to develop a supersonic cruise missile. Currently, Russia is actively developing the 9M730 Burevestnik, also known as the SSC-X-9 Skyfall, to deliver long-range strategic nuclear strikes. Theoretically, a nuclear-powered supersonic missile, such as the SSC-X-9 Skyfall can have unlimited range, while sustained supersonic speeds would enhance the difficulty to intercept and enable it to circumnavigate bubbles of radar coverages and leverage terrain to minimize the chance of interception. Russia also developed and deployed the P-800 Oniks anti-ship cruise missile. The missile launches from a vertical position and uses angular thrusters located near the nose to reposition itself horizontally and begin its flight path toward the target. The missile then flies at supersonic speeds, can maneuver to avoid air defense, and is resistant to electronic countermeasures. Also, in October 2019, the Indian Air Force (IAF) conducted test firings of two BrahMos surface-to-surface supersonic cruise missiles to validate the IAF’s ability to neutralize targets located at up to 300 kilometers with pinpoint accuracy. Such developments helped the segment gain the largest market share in 2019.
North America to Dominate the Market During the Forecast Period
During the forecast period, North America is projected to dominate the market by growing with the highest CAGR. The region also accounted for the highest market share in terms of geography in 2019. The growth in the US cruise missile market is the biggest reason for the region’s dominance. The enhanced capabilities of China and Russia on the battlefield forced the United States to increase its investment in technologically advanced weapon systems. Other factors, such as the rising violence in the Middle-East, due to geopolitical tensions and terrorism, significantly contributed toward the growth of the procurement of missiles and missile defense systems by the US armed forces. In February 2020, the current US president proposed an FY 2021 budget of USD 740.5 billion for national security, of which USD 705.4 billion is allocated for the Department of Defense (DoD). The FY 2021 base budget for procurement is USD 131.75 billion, out of which the munitions procurement investment accounts for USD 21.3 billion for Air Force, Navy, and Army. AMRAAM, JASSM/JASSM ER, Harpoon, and Tomahawk are the commonly used cruise missiles by the US Air Force and Navy, respectively. Tomahawk cruise missile is carried by over 145 warships in the United States. Recently, in January 2020, the government announced its plan to upgrade the arsenal of Tomahawk cruise missiles to the latest Block V configuration in the coming years and to retire and demilitarize the older models. Currently, the plan is to convert all the Block IVs into Block V missiles, and Block III missiles are to be retired and demilitarized. Furthermore, under the new defense budget, the largest RDT&E budget of USD 106.6 billion was requested to invest in the development of crucial emerging technologies, like hypersonic, autonomy, and artificial intelligence (AI), among others. With such huge investments into advanced technologies, the country plans to develop and deploy advanced missiles in the coming years. For instance, in February 2020, the government announced its plan to create a program for the development of a new, nuclear-armed, submarine-launched cruise missile with a separate allocated budget in FY 2022. This new program development comes under the Nuclear Posture Review (in 2018) focused on the development of two new nuclear capabilities (submarine-launched ballistic missile and a sea-launched nuclear-capable cruise missile). The government aims to complete the development of the missile over the next decade. As a part of FFG(X) program of the US Navy, the country plans to induct 20 guided-missile frigates (FFGs) during the next decade. In April 2020, the US Air Force placed an order for 78 new F-35 fighter aircraft. Such procurements of the sea and air platforms are anticipated to generate demand for cruise missiles from the country during the forecast period.
The prominent players in the cruise missile market are Lockheed Martin Corporation, Raytheon Company, The Boeing Company, Tactical Missile Corporation, and MBDA, among others. Currently, many local, as well as international players, are developing various cruise missile models. Local production has allowed for a decline in per-unit cost of cruise missiles; this has reduced dependency on large players for advanced and better missiles. The sales of cruise missiles from major players are for upgrade kits and modernization kits of existing missile inventory from countries, like the United States, the United Kingdom, Germany, France, and other European nations. The COVID lockdown situation across the world is expected to delay existing projects and planned projects by half a year, as communities and government reel with the aftereffects of the manufacturing and production shutdown. The impact of the same will be visible directly on raw material and logistics and project completion. Still, the demand in 2020 is expected to drop slightly and then improve starting from 2021.
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