Snapshot: Global Armoured Vehicles and Counter IED Vehicles Market

9 June 2011 (Last Updated June 9th, 2011 18:30)

Spurred by the demands of Afghan warfare, the armoured vehicle industry has witnessed significant modernisation. With the end of operations in sight and due to widespread austerity measures, however, the market is expected to decline by 2021.

Snapshot: Global Armoured Vehicles and Counter IED Vehicles Market

The global armoured vehicles and counter IED vehicles market is expected to record decline from 2011-2021 due to the end of military operations in Afghanistan and Iraq in this period. As a result of Western austerity and high levels of fiscal debt in the West, defence modernisation plans have overwhelmingly been postponed to contain fiscal expenditure.

In Asia, however, defence expenditure and modernisation is set to increase in reaction to China's large-scale defence expenditure and territorial disputes between countries such as North and South Korea and Pakistan and India. Despite North America's high levels of fiscal debt, this region will constitute the largest share of the global market from 2011-21.

According to detailed market data from ICD Research, the market is expected to register a compound annual growth rate (CAGR) of -0.43% during the forecast period, to reach $24.1bn by 2021, while the cumulative market value for armoured vehicles and counter IED vehicles during the forecast period is estimated at $26bn.

North America to constitute largest market share

Despite the high fiscal deficit of North American countries, from 2011-21 these nations will constitute over 30% of the global armoured vehicles and counter IED vehicles market, which is the largest market share. Europe is expected to account for around a quarter of market share from 2011-21, but demand for armoured vehicles in this period will decline.

"Between 2011 and 2021 North America will constitute over 30% of the global armoured vehicles and counter IED vehicles market, which is the largest market share."

In contrast, Asia will increasingly require armoured and counter IED vehicles to combat territorial disputes and to cater to the large troop size of regional forces. Additionally, soaring oil prices and economic development in the Middle East will increase demand for armoured vehicles from 2011-21, and the discovery of oil and mineral resources in Africa, along with ethnic and territorial disputes, will increase demand for armoured vehicles in this region.

Countries such as India, China, Japan, Thailand, Singapore, Pakistan, Afghanistan and South Korea face threats from internal insurgent groups and territorial disputes with neighbouring countries. The value of the armoured vehicles market in Asia is estimated at $4.4bn in 2011; this is expected to increase at a CAGR of 2.05% during the forecast period to reach $5.4 billion by 2021, which will mainly be spent on tactical trucks, MBTs and APCs.

The expected decline in the armoured vehicles market in Europe is primarily driven by defence budget cuts due to the high fiscal deficit of most of the countries in the continent. These cuts have forced European countries to postpone long-term modernisation plans and instead focus on urgent operational requirements. Europe is characterised by minimal threats and few territorial disputes.

Peacekeeping missions in Afghanistan and Iraq were the primary driving force behind the procurement of armoured vehicles in the region. However, with both wars nearing an end, the demand for armoured vehicles is expected to slow within these regions, with a projected total spend of $70.3bn on the procurement and modernisation of armoured vehicles.

"The value of the armoured vehicles market in Asia is estimated at $4.4bn in 2011; this is expected to reach $5.4 billion by 2021."

Although South American countries plan to modernise their armed forces, this modernisation is only expected for air and navy forces, and therefore demand for armoured vehicles in this region is expected to decline between 2011 and 2021.

Total expenditure on armoured vehicles in Africa is expected to be $10.8bn during the forecast period. This increase is due to economic growth in the region, caused by the discovery of new minerals and oil resources, and territorial and ethnic disputes. South Africa and Algeria account for the largest share of the African land vehicles market.

IFVs and APCs account for largest market share

Collectively, Infantry fighting vehicles (IFVs) and armoured personnel carriers (APCs) are expected to account for the largest share of the global armoured vehicles and counter IED vehicles market from 2011-21. Increasing global troop sizes and overseas operations are expected to up demand for tactical trucks and light multirole vehicles (LMV).

However, the end of military operations in Afghanistan and Iraq, coupled with the integration of mine protection technology in all other classes of vehicles, will result in mine-resistant ambush protected (MRAP) vehicles contributing just over 5% to the global market from by 2021.

"European countries such as the UK, France, Germany and Spain have postponed defence modernisation due to the recent economic crisis."

Increasing global demand for armored and counter IED vehicles will come from overseas peacekeeping missions, territorial disputes, military modernisation programmes and internal insurgencies faced by some countries.

Integration of enhanced mine, blast and ballistic protection systems

MRAPs were procured in large numbers in early 2007 to address the IED threat prevalent in Iraq at that time. With a significant number of its forces deployed in Iraq, the US had an immediate need to provide protected mobility for its troops.

Therefore, during 2006-2008 expenditure on MRAPs reached $38.3bn, with almost $17bn spent in 2008 alone. However, this trend in expected to experience a significant decline during the forecast period, with MRAP spending set to fall from $3.8bn in 2011 to $766m by 2021.

The US accounts for a major share of the market; however, production of MRAPs in the US will end by 2012, and the maintenance and repair of existing models will be the only factors driving spending in the US after this period. MRAPs were an interim solution for the persistent problem of IED threats and insurgent tactics in Iraq. Nations around the world, especially western countries, have started to implement the protection and survivability technologies of MRAPs into conventional families of vehicles, effectively eliminating the need for the MRAP family of vehicles.

Comprehensive protection against conventional and unconventional threats is a top priority in all ongoing and forthcoming vehicle programmes, and will lead to a decrease in the demand for MRAPs.

Modernisation delayed in Europe but increasing in Asia

European countries such as the UK, France, Germany and Spain have postponed defence modernisation due to the recent economic crisis, which resulted in high levels of fiscal debt. As a result, European countries have postponed modernisation plans to contain fiscal expenditure and are exploring options for joint procurement and equipment development.

However, defence modernisation in Asia, which primarily consists of India, China, Japan and South Korea, is leading to an increase in global defence capital expenditure. China's significant increase in defence expenditure has led to an imbalance of power in Asia, forcing other Asian countries to increase their defence expenditure accordingly. The alleged nuclear aspirations of North Korea and territorial disputes between Thailand, Malaysia and Singapore also contribute to enhanced defence expenditure and modernisation in Asia.

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