The Argentinian Minister of Defense Agustin Rossi recently paid a visit to the Iveco Brazil factory where he was toured at the Guarani armored vehicles production line. The visit is important as it coincides with the Argentinean Army’s plan to modernize its fleet of armored vehicles.
According to GlobalData’s current fleet inventory, the Brazilian Army uses legacy APCs and IFVs, such as the M113, AMX-VCI, VCTP and Panhard AML, which need to be replaced as their maintenance is difficult and expensive. Among the solutions that are currently being considered, besides the Guarani family of vehicles, are the GDLS Stryker and the Norinco VN-1. Such platforms are suitable for Argentina’s security operations against drug cartels, illegal trafficking groups and international terrorist groups with ties in the region, as the country does not face any direct military threats from its neighbors. The vehicles would also improve the security of its troops serving in UN missions, an area where the country has been very active.
Argentina also sees the procurement of new armored vehicles as an opportunity to support its automotive and defense industries and substitute imports. Eventually that would support its economy which suffers from years of economic austerity and recently from the COVID-19 impact. According to GlobalData’s Macroeconomic Indicators the FY2020 GDP will drop by 11.06% thereby making it difficult for the Defense Ministry to implement its modernization plans.
Therefore, any negotiations with the candidates will focus on work being subcontracted to the local suppliers. Currently there are 12 vehicle plants in Argentina from some of the world’s biggest manufacturers. The talks will also be an opportunity for the expansion of the political and economic relations with the manufacturing countries in support of additional exports.
Currently, Iveco Defense seems to be better positioned in this geographic area and already offers significant benefits to the local supply chain, as the chassis and the engines of the Brazilian Guarani vehicles are produced at the company’s factory in Argentina. Therefore, Brazil and the local Iveco plant are keen to add a second customer to Guarani project, after Lebanon, as it can open it to further opportunities around the globe.
Moreover, Argentina pays special attention to its relations with Brazil, the biggest economy in Latin and South America, and its largest trading partner ahead of the US and China. On the other hand, Argentina is Brazil’s third largest partner behind, once again, the US and China. With regards to the automotive industry, Argentina is the biggest exporter of assembled vehicles and parts to Brazil ($5.02bn in 2018), and the biggest importer of vehicles from the latter. Therefore, a deal with Brazil will further strengthen the ties between the two countries and support Argentina’s ailing economy, especially ahead of the reduction of tarrifs on EU vehicles imported in Mercosur (South American countries’ trading agreement), which will significantly increase competition against local manufacturers and their supply chain.