Analysing the armoured vehicles market

With military presence around the world intensifying due to conflict and the growing threat of terrorism, particularly in the Middle East, the importance and value of armoured vehicles will continue to take on new levels in 2017. Analysing some figures and predictions for this year, Defence Business reports on the UK’s armoured vehicle plans

As part of the launch of its 2017 Global Armoured Vehicles Market Report, Defence IQ estimated that the armoured vehicles market will reach $15.17 billion this year. With defence budgets steadily rising, and expected to continue following the same trajectory, the sector is expected to witness new contract opportunities and large scale government investments. Coupled with a developing global terrorist threat, highlighted by the activity of so-called Islamic State in parts of Europe and Asia, and heightened tensions across the globe, it would seem that many governments, across various continents, are ready to develop their military capabilities and improve their armoured vehicle fleets.

2017 has begun with a completely new political landscape that is proving challenging for a number of regions. The UK, the largest financial supplier to European defence and security services, has triggered Article 50 of the Lisbon Treaty, thus commencing the two year process of leaving the European Union. Amid the negotiations that will take place between UK parliamentary advisors and politicians and European leaders will be the need to establish new relationships, both within Europe and with countries such as Russia and China. Additionally, President Trump’s election success, the continual NATO presence in Poland, Ukraine and the Baltic States, alongside ongoing conflict in Mexico, Somalia, South Sudan and Yemen, mean that defence strategies, and the role that armoured vehicles play in those strategies, have contributed to growth for the armoured vehicle market, meaning that, despite the usual uncertainty, reports such as the Global Armoured Vehicles Market Report confidently predict that the recent decline in market confidence has reversed and that growth will continue to be driven by unrest in eastern Europe, the Middle East and Asia-Pacific.

The aforementioned market confidence is evident in the surveys within the report. When asked about the confidence they held over the future of the armoured vehicle market in their region over the next ten years, 42 per cent of respondents were ‘very confident’, marking an improvement on 2014’s results and a similar level of confidence to 2015/16, while 43 per cent were ‘quite confident’. Regionally, the confidence was at its highest in the Middle East, with the ‘very confident’ respondents recorded at 63 per cent, with officials positivity concerning future business most likely the result of the developing intensity of local conflict in the region. Interestingly, there were no respondents expressing no confidence in the market.

In Europe and Africa, high confidence levels dropped slightly on previous figures but sustained assurance in the market, sitting at 27 per cent ‘very confident’ and 55 per cent ‘quite confident’ in Europe, and 58 per cent ‘very confident’ and 37 per cent ‘quite confident’ in Africa. However, as detailed in the follow-up Armoured Vehicles: Global Inventories 2016-17 report, as a result of major armoured vehicle procurement programmes in Afghanistan, Australia, China and India, among others, the Asia-Pacific regions is predicted to the the major growth area over the next decade. The same region is quoted as accounting for 42.2 per cent of Main Battle Tanks (MBTs) in service worldwide - with the total figure thought to be 53,354. In comparison, Europe has 7,493 MBTs, 14 per cent of the global fleet. Additionally, approximately 6,000 MBTs are forecast to be produced globally over the 10 years, valuing $26 billion.

UK armoured vehicles
The foreword of Defence IQ’s report, provided by Dr. Fahad Saif Harhara, CEO of NIMR Automotive, highlights that the global defence market is becoming ‘more sensitive to cost and value for money’. This is evident when undertaking a UK focus on the market and future purchasing plans. The British Army took delivery of 386 Challenger 2s, but is currently reducing this to 227 units, as plans for the British Army’s Challenger 2 fleet are to further reduce to around 150-160 units. The Defence Equipment and Support (DE&S) organisation has received a number of replies to its pre-qualification questionnaire for the projected Challenger 2 MBT life extension programme (LEP).

Aside from this, the British Army will field two new Strike Brigades by 2025, based upon the AJAX AFV and a new wheeled Mechanised Infantry Vehicle, and has already taken delivery of the first production-standard 40 mm Cased Telescoped Cannon System (CTCS) from CTA International (CTAI) in France, with 525 CTCs’ to be supplied under the contract over seven years.

The UK will also receive 589 Ajax vehicles between now and 2024 under a £3.5 billion agreement with General Dynamics, while it was announced in July 2015 that General Dynamics would manufacture the majority of the vehicles in South Wales as part of a £390 million maintenance and support package.

Elsewhere in Europe, Poland has signed a $605.7 million contract to upgrade its 128 Leopard 2A4 MBTs to a new standard called Leopard 2PL by 2020, as well as undertaking a series of heavy armour procurements, including the purchase and upgrade of 119 Leopard 2A4 and 2A5 MBTs from Germany. Germany has allocated €130 billion for defence procurement over the next 15 years, with plans to increase its Leopard 2 MBT numbers from 225 to 320, its Fennek reconnaissance vehicles from 217 to 248 and its Boxer 8x8 armoured personnel carriers (APC) from 272 to 402.

The French Army is expected to receive 248 Jaguar EBRCs to replace its existing AMX-10RCR 6x6 and Sagaie 6x6 armoured cars, while 1,732 Griffon VBMR vehicles will replace the deployed Vehicule de l’Avant Blindé (VAB) 4x4 APC. The nation’s 200 strong Leclerc fleet and 18 Leclerc armoured recovery vehicles (ARVs) to extend their operational life out to 2035 and 2040, respectively.

The 18th annual International Armoured Vehicles Conference (IAVs) will return to London’s Twickenham Stadium on 22-25 January 2018. For further information on next year’s show, or to review some of the content from the 2017 offering, please visit the IAVs website.