The value of the maintenance, repair and overhaul (MRO) market will increase at a compound annual growth rate of 5% from US$4.1 billion to US$7.1 billion between now and 2022, while the overall market for armoured vehicles is projected to drop from US$25.1 billion in 2011 to US$24.1 billion by 2021.
The value of the armoured vehicle MRO market (Armoured Personnel Carriers, Main Battle Tanks, Mine Resistant Ambush Protected vehicles and Tactical Trucks) is expected to increase at a CAGR of 5.86% between now and 2021, according to a new report published by ICD Research/Strategic Defence Intelligence.
The report, entitled “The Global Armoured Vehicles MRO Market 2012-2022” says that the demand for armoured vehicle MRO services is anticipated to be driven by ageing military equipment globally, technological innovations in the industry, internal and external security threats, territorial disputes and modernization initiatives undertaken by armed forces across the world.
“The expenditure in this segment during the forecast period is expected to be dominated by North America, followed by Asia Pacific and Europe. Despite the economic crisis in Europe, Europe’s share of the global market is projected to increase during the forecast period, albeit marginally due to the scheduled deployment of various modernization programmes initiated in previous years,” according to the publication.
Technological innovations in the field of armoured vehicle MRO have garnered significant interest over the last decade, the report notes. “With global defence budgets shrinking or growing at a marginal pace, countries are now looking to maintain, repair and upgrade their defence equipment instead of developing new programmes. Moreover, the recent nuclear proliferation being carried out by Iran has heightened military tensions between Iran, the US and Israel. The possible conflict has resulted in the US spending heavily on getting its existing military equipment ready for battle, which in turn is driving the armoured vehicles MRO industry. Technological innovations in this domain are oriented towards developing stealth capabilities, enhancing armour protection and other counter insurgency measures.”
The report goes on to state that the armoured vehicle MRO market is currently characterized by a focus on survivability and adaptability. Traditional threats such as enemy tanks or sophisticated antitank missiles have assumed less importance in recent years; while large improvised explosive devices (IED) and rocket propelled grenades (RPG) that are used to attack the more vulnerable flanks and rear of the armoured vehicles, pose the maximum threat. Military operations in former Yugoslavia, Somalia, Israel and Iraq have shown the need for all-round protection particularly when operating in urban environments. Companies operating in the military armoured vehicles MRO domain are now aware that solutions must be oriented towards protection against a range of threats including medium and large-calibre kinetic energy rounds, shaped-charge warheads, explosively formed projectiles, high explosive squash head, shell fragments and small arms.
“One of the major challenges being faced by the global armoured vehicles MRO industry is balancing the ever increasing weight of the armoured vehicles with the need for increased protection. Moreover, manufacturers are also facing a problem of achieving high mobility for heavily protected vehicles. To combat this problem, the US Army is investing in technologies to develop composite armours that are lighter than the all-metal equivalent, occupying a larger volume for the same resistance to penetration. However, these currently are expensive and governments are looking for ways to develop this material affordably,” the report said.
While the demand for armoured vehicle MRO has increased, ICD predicts that the global market for armoured and counter IED vehicles will decline during the next nine years, as global operations in Afghanistan and Iraq draw down toward the second half of the decade. “As a result, the global AFV market is expected to register a negative combined annual growth rate of -0.43% during the 2011-2021 period, to reach US$24.1 billion by 2021,” according to ‘The Global Armoured vehicles Market 2011-2021′ report. Nevertheless, the cumulative market value for armoured vehicles and counter IED vehicles acquisition during the forecast period is estimated at US$265 billion.
“Despite the high fiscal deficit of North American countries, this region is expected to account for the largest share of the armoured vehicles market during the forecast period, with a share of 31.9%. Countries in Europe are also facing high fiscal debt, which will reflect in the declining market for armoured vehicles during the forecast period. Europe is expected to account for 26.5% of the total armoured vehicles market during this time,” the report said.
It observed that strong economic growth, territorial disputes, domestic violence and the large troop size of regional forces will create a significant demand for armoured vehicles in Asia, which will account for a share of 24.1% of the total armoured vehicles market during the forecast period (2011-2021). Soaring oil prices and high economic development in the Middle East is expected to be reflected in the demand for armoured vehicles in the region, which will account for 8.8% of the total armoured vehicles market during the forecast period.
“Latin American countries are expected to modernize their armed forces over the forecast period; and their main modernization priority is expected to be on the air force and navy, and for other electronic and cyber warfare capabilities. As a result, the demand for armoured vehicles in the region will witness a slight increase, and South America will account for just 4.7% of the global armoured vehicles market during the forecast period.
“The demand for armoured vehicles in Africa is expected to be strong in the forecast period, driven by the discovery of new mineral and oil resources, and territorial and ethnic disputes. However, the small defence budget of countries in the region will result in a small market share of 4.1%.
“Together, APCs and IFVs are expected to account for the largest share of the total armoured vehicles market across the forecast period. APCs are expected to account for 24.4% of the total market, while IFVs are expected to account for 23.2%. Increasing global troop sizes and overseas operations are expected to increase the demand for tactical trucks for operational efficiency and LMVs for deployability and mobility, with tactical trucks accounting for 18.3% and LMVs accounting for 15.4% of the total armoured vehicles market during the forecast period.
“Countries facing conventional threats such as territorial disputes and hostile neighbors will drive the demand for MBTs, which are expected to account for 12.7% of the total armoured vehicles market. The end of the Iraq war and Afghanistan war, coupled with the integration of mine protection technology in all other classes of vehicles, will result in MRAPs contributing a share of 6% to the armoured vehicles market.
“Overall, the key factors behind the increasing demand for armored vehicles on a global level are overseas peacekeeping missions, the military modernization initiatives of governments around the world, and the territorial disputes and internal insurgencies faced by many countries,” the report said.
The US and Canada are the largest defense spenders in North America, and IFVs, LMVs and tactical trucks are expected to dominate the armored vehicles market in the region. The top markets in Europe for armoured vehicles are expected to be Russia, the UK and France, where APCs, IFVs and LMVs are expected to account for the largest share of the market. India, China and South Korea are the leading markets for armored vehicles in Asia, as these countries face threats such as territorial disputes and domestic violence, resulting in considerable demand for MBTs. South Africa dominates the African armored vehicles market, with a total expected value of over US$1 billion for the forecast period. The country is expected to procure tactical trucks, APCs and MRAPs, according to ICD.