The vetronics market is anticipated to register a CAGR of over 4% during the forecast period (2020 - 2025).
- The evolving battlefield environment has necessitated the replacement or upgrade of an aging fleet of terrestrial assets, such as main battle tanks (MBTs), light armored vehicles (including armored personnel carriers, and infantry fighting vehicles), and amphibious armored vehicles.
- Modern warfare necessitates coordinated operations of air, land, and naval forces for active intelligence collection and fusion to enhance their operational capacities and agility to respond to a threat rapidly. Asymmetric warfare approaches circumvent or undermine the military strength of rivals through the exploitation of their weaknesses by employing innovative, non-traditional methods of operation, including tactics, weapons, and other associative technologies. These approaches usually result in the creation of hybrid defense technologies, which in turn, lead to an increase in the procurement of advanced arsenal for combating emerging threats. The integration of sophisticated vetronics systems enables the defense forces to conduct joint operations in critical and challenging scenarios effectively.
Key Market Trends
Ongoing Digitization of Battlefield Operations Fostering Integration of Vetronics
The introduction of information-based weapon systems capable of providing combat vehicle crews with adequate firepower and knowledge base to coordinate and employ both onboard and external sensors and weapons will change the current tactics, techniques, and procedures of the military. Integration of sophisticated vetronics provides a significant enhancement to the surveillance capabilities of the military by providing units with the ability to remotely detect, locate and recognize personnel, vehicles, and other threats, continuously in all weather conditions. Digitization of domains like communication and surveillance, play a vital role in the integrated operations of the modem battlefield. Most advanced nations have already adopted electronic warfare as a sub-domain of war. They are actively involved in researching advanced capabilities to equip their forces and gain a tactical edge over their rivals. For instance, the US Army is testing the Electronic Warfare Tactical Vehicle (EWTV), which houses an undisclosed specification of radio jamming gear developed by SRC known as Duke. It can detect and disrupt a variety of signals, ranging from cellphones to control links for enemy UAVs. Factors such as easy deployment and a wide range of sensing and disruption are key features incorporated in modern armored vehicle mounted jamming systems that augment their scope of usage. The rapid adoption of similar technology by other nations is anticipated to drive the vetronics market during the forecast period.
Asia-Pacific to Dominate the Market During the Forecast Period
Asia-Pacific is expected to be the fastest-growing market during the forecast period in terms of procurement initiatives and adjoining orders placed. Owing to the rising tension among neighboring countries, particularly the South China Sea dispute, neighboring countries are strengthening their military prowess through the rapid procurement of military vehicles. Emerging markets such as China, South Korea, India, and Japan are continuously increasing their defense budgets to strengthen their national security. The arms race in the region is evident through the lavish defense budget spending of regional superpowers such as China and India. In the last 20 years, China's annual defense budget has increased eightfold, and the country has been focusing on indigenous development of armored vehicles to reduce its dependence on imported equipment. Countries like Korea have also been focusing on indigenously developing MBTs such as the K2 Korean New Main Battle Tank (KNMBT), the future main tank model of the Korean Armed Forces, and the K1A1 MBT, the current main tank model. In November 2018, QN-506 was unveiled at the Chinese defense trade show. QN-506 is a combat support vehicle, which is armed with small-caliber cannon and missiles, to support regular tanks, especially in urban warfare. Wuhan Guide Infrared Co. Ltd manufactures the QN-506, and it is based on the venerable Type 59. The QN-506 has the customary array of sensors, including a laser range finder, day/night camera, thermal imager, and panoramic sight. During the 70th anniversary of the founding of the People's Republic of China held in October 2019, a new generation of tracked armored IFV, ZBD-04A, was unveiled by the Chinese army. It is an improved version of ZBD-04, which has been in service with the PLA ground forces since 2006. Combat equipment of the new IFV includes a digital information system and battle management system. The commander, gunner, and driver in the new IFV are equipped with control display devices to perform firing and combat operations. Onboard equipment also includes advanced digital radio and wireless broadband, China's Beidou satellite navigation system, and an inertial navigation system. Such developments are anticipated to drive the market in Asia-Pacific during the forecast period.
The vetronics market is highly fragmented, with several players accounting for significant amounts of shares in the market. Some of the prominent market players are Curtiss-Wright Corporation, Thales Group, Saab AB, General Dynamics Corporation, and Rheinmetall AG. The operations of the market players are focused on the designing, engineering, and manufacturing of high-performing vetronics for the terrestrial assets of the global armed forces. Therefore, the market in focus is directly affected by economic factors and other trends that influence end-user segments, more specifically by the cyclicity of the revenue stream. The revenues of market players are also dependent on the R&D initiatives of OEMs for designing a new vehicle model or augmenting the mission profile of the existing models. The stringent safety and regulatory policies in the defense segment are expected to restrict the entry of new players. Furthermore, since a contract for armored vehicles requires high technological expertise and spans over several years, careful identification and continuous monitoring of associative risks are required to be undertaken to assess their effects on the operational parameters of the manufacturing company. The assessment includes consideration for technical requirements, the listing of scheduled and associated tasks, and detailed cost analysis.
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