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Annual Industry Dossier - North American Armored Vehicle Industry - 2013-2014 - Key Trends, Strategic Insights, Issues & Challenges, SWOT, Force Field Analysis & Strategic Outlook

North America armoured vehicle market: Navistar enters the industry

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2014-04-04 15:19:01 - Annual Industry Dossier - North American Armored Vehicle Industry - 2013-2014 - Key Trends, Strategic Insights, Issues & Challenges, SWOT, Force Field Analysis & Strategic Outlook - a new market research report on

The allied operations & campaigns across Iraq & Afghanistan war theatres under Operation Iraqi Freedom and Operation Enduring Freedom post 9/11 drove the growth of defense industrial base across North America and especially bolstered growth of armored vehicle manufacturers given the significant utilization & threat from IEDs & other asymmetric tactics across these theatres throughout these campaigns. The industry segment saw the entry of new players like Navistar into the armoured vehicle segment through these years, witnessed the growth of niche players like Force Protection and observed the significant expansion of order backlog at industry heavyweights, especially, GDLS & BAE Systems.

However, with the winding up of allied operations and the scheduled withdrawal of troops from Afghanistan through 2014 and the



commensurate defense spending cuts; the activity across almost all key North American OEMs has dropped substantially, topline across OEMs has shrunk by almost one third to half as compared against peak defense spending levels while the competitive intensity for new defense contracts award has risen tremendously with cost competitiveness becoming a critical parameter for new contract awards.

The defense spending situation across North America is likely to further tighten over near to medium term. In the United States alone, a 45% cut in defense spending on tactical wheeled vehicles is anticipated through the 2013 to 2017 period as per the President´s latest budget request with the situation likely to further worsen with the sequestration cuts coming into effect from March 2013. The industry, consequently, has been on the consolidation path and has already seen the acquisition of Force Protection by GDLS. Further, strategic alliances & collaboration trend amongst OEMs is on the rise aimed at sharing development costs as well as risks & enhanced cost competitiveness amid a difficult budgetary scenario.

Further, the U.S. Army faces significant overcapacity, in terms, of its inventory of tactical wheeled vehicles, especially, with the return of 20,000 MRAPs from Iraq & Afghanistan theatres coupled with lack of clarity over their future role & deployment protocol. The advent of the JLTV platform to replace U.S. Army´s existing fleet of HMMWVs, too, is likely to alter the industry dynamics tremendously with the estimated size of procurement pegged at about 55,000 units.

Most North American OEMs are working towards implementing an array of strategies and plans aimed at partially offsetting the ongoing spending cuts through a shift in focus towards key demand drivers, namely, replacement demand, vehicle upgrades & retrofitment, maintenance & repair, demand from international markets, especially, emerging markets & regions and technological developments offering superior manoeuvrability, enhanced degree of troop protection and survivability against a broad range of asymmetric threats.

Further, the OEMs are also working towards rationalizing & optimizing their overall cost base & industrial footprint with competitiveness becoming critical while continuing with their strong R&D focus directed at the development of cutting edge technologies & platforms offering enhanced capabilities & superior performance features as well as specifications.

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