The North American armored fighting vehicles market is expected to register a CAGR of over 5% during the forecast period.
- The United States and Canada are increasing their defense budgets, and a significant share is being allocated for the procurement of new armored vehicles that can enhance the ground combat capabilities of both the countries. Also, the involvement of the United States in various missions in the Middle-East is generating demand for armored vehicle fleet expansion and modernization.
- The aging armored vehicle fleet in the region has necessitated frequent upgrades and modernization, which is also supporting the growth of the market.
- The US is also shifting its R&D focus toward robotic ground vehicles, and it is expected to procure several units of unmanned armored trucks and armored cargo vehicles in the coming years, which may further propel the growth of the market.
Key Market Trends
Infantry Fighting Vehicle (IFV) Segment Held the Largest Market Share in 2019
By vehicle type, the infantry fighting vehicle (IFV) segment held the largest market share, as of 2019. The segment is also projected to witness the highest growth rate in the market during the forecast period. The use of IFVs is increasing, as they are very effective in carrying mechanized infantry units into battle, while also providing direct-fire support. Major IFV procurement and upgrade plans are currently ongoing in the region. As a part of the US Army’s combat vehicle modernization strategy that aims at ensuring force readiness of the Armored Brigade Combat Teams (ABCT), in October 2019, BAE Systems was awarded a USD 269 million contract covering the production of 168 additional units of the Bradley A4 IFV. The contract also included upgrades and associated spares for the two variants of the Bradley IFV: the M2A4 Infantry Fighting Vehicle and the M7A4 Fire Support Team Vehicle. Moreover, in October 2011, General Dynamics Land Systems-Canada was awarded a contract worth over USD 1.5 billion to upgrade 409 of the Army’s 651 LAV III IFVs in four variants: an infantry section carrier, a command post, an observation post, and an engineering vehicle. In February 2017, the upgrade program was expanded to include an additional 141 vehicles to enhance the total tally to 550 units. Also, in 2019, the Canadian government unveiled plans to procure 360 combat LAVs from General Dynamics Land Systems-Canada for USD 2.26 billion. Such plans are expected to bolster the market prospects for IFVs in the region during the forecast period.
The United States is Expected to Dominate the Market During the Forecast Period
During the forecast period, the United States is projected to dominate the market, with the highest CAGR. The country accounted for the highest market share in 2019. It is an avid user of armored vehicles in North America, and it is currently focusing on upgrading its existing vehicle fleet and corresponding capabilities. The FY 2021 defense budget request included funding to modernize critical systems for the fleet, such as the Bradley Infantry Fighting Vehicle, the Stryker armored vehicle, the M1 Abrams tank, and the Paladin howitzer. The Army plans to spend USD 3.7 billion to procure weapons and tracked combat vehicles, in which USD 1 billion may be spent on Abrams upgrades in FY21. The Army plans to upgrade 89 of the M1A1 tanks to the M1A2 version. The country is working to develop armored fighting vehicles that can offer high survivability over a wide range of terrains. The need for upgrading the existing fleet of military armored vehicles to counter emerging threats resulted in a flurry of contracts being awarded to cater to the diversified needs of the armed forces. The US armed forces are also keenly investing in indigenous technologies for enhancing their battlefield prowess. The US Department of Defense (DoD) plans to procure around 54,599 JLTVs, of which around 90% are meant to be utilized by the US Army and the remaining 10% by the US Marine Corps. Hence, the US DoD is expected to spend more than USD 53.3 billion on the JLTV program, of which USD 1.1 billion is allocated for R&D, while the remainder, USD 52.3 billion, is meant for procurement. Several such developments are envisioned to enhance the growth of the US segment during the forecast period.
The North American armored fighting vehicles market is consolidated, with a few players controlling most of the market share. BAE Systems PLC, Rheinmetall AG, Oshkosh Defense, LLC, General Dynamics Corporation, Textron Inc. are some of the prominent players in the market. With the countries in the region focusing on upgrading the armored vehicle fleets, innovation becomes a key aspect of differentiation among the players, which may help the players with innovative technologies gain major contracts. Also, as the countries are focusing on the next-generation combat vehicles, players are expected to focus on R&D in armored vehicle situational awareness systems and materials that offer better vehicle protection while reducing the overall weight. Such a focus on the R&D activities is expected to help the growth of the players during the forecast period.
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