Armored Vehicle Upgrade and Retrofit Market – Global Industry Size, Share, Trends, Opportunity, and Forecast, Segmented By Type (Armored Personnel Carrier [APC], Infantry Fighting Vehicle [IFV], Mine-resistant Ambush Protected [MRAP], Main Battle Tank [MBT]), By Design Type (Wheeled Armored Vehicles and Tracked Armored Vehicles) By Region, By Competition, 2019-2029F

Market Overview

The Global Armored Vehicle Upgrade and Retrofit Market was valued at USD 7.41 Billion in 2023 and is expected to reach USD 10.69 Billion by 2029 with a CAGR of 6.37% during the forecast period. The global armored vehicle upgrade and retrofit market is experiencing significant growth, driven by a combination of evolving geopolitical tensions, advancements in technology, and the need for cost-effective modernization. Geopolitical instability and increasing military conflicts worldwide have heightened the demand for upgraded and retrofitted armored vehicles. Nations are investing in modernizing their defense fleets to ensure they are equipped to handle emerging threats and maintain a tactical edge. As geopolitical tensions escalate, governments and defense organizations are prioritizing the enhancement of their armored vehicle capabilities, leading to a surge in market activity. Technological advancements are playing a pivotal role in shaping the market. Innovations in defense technology, such as advanced armor materials, improved surveillance systems, and cutting-edge communication technologies, are driving the demand for vehicle upgrades. These advancements enable armored vehicles to offer superior protection, enhanced operational efficiency, and greater adaptability to various combat scenarios. Additionally, the evolution of threat landscapes, including the rise of asymmetric warfare and new types of insurgent tactics, necessitates continuous upgrades to ensure armored vehicles remain effective in diverse operational environments.

As defense budgets grow, nations are modernizing their aging infantry fighting vehicles (IFVs) by enhancing their fire control systems, firepower, and overall capabilities. Many are also purchasing new vehicles, driving a surge in demand for upgrades and retrofits. For example, in March 2024, the Indian Ministry of Defence finalized a deal with Armoured Vehicles Nigam Limited (AVNL) for the upgrade of 693 BMP2 infantry combat vehicles to the BMP2M model. This comprehensive upgrade, classified as Buy (Indian-Indigenously Designed, Developed, and Manufactured), includes enhancements such as Night Enablement, a Gunner Main Sight, a Commander Panoramic Sight, and a Fire Control System (FCS) with an Automatic Target Tracker.

In March 2024, Nexter presented its latest VBCI infantry fighting vehicle to Qatar, aligning with the country’s post-2030 military modernization plans. The showcase suggested potential contracts for the VBCI II, an upgraded version designed for the French armed forces. Additionally, in December 2022, Sweden secured a USD 1.37 billion deal with the Slovak Ministry of Defense for 152 CV9035 infantry fighting vehicles from BAE Systems. Known as the CV90MkIV, the CV9035 features advanced capabilities, digital technology, and improved battlefield performance, including faster speeds, better handling, and a future-ready electronic architecture. These ongoing modernization initiatives, along with upcoming IFV upgrade programs, are expected to drive significant growth in the segment in the years ahead.

Key Market Drivers

Geopolitical Tensions and Conflict Zones

Geopolitical tensions and conflict zones have a significant impact on the demand for armored vehicle upgrades and retrofits. As nations face security threats, they often turn to enhancing the capabilities of their armored vehicles to ensure the safety of military personnel and assets. These tensions drive the need for armored vehicles that can withstand modern threats, such as improvised explosive devices (IEDs), rocket-propelled grenades (RPGs), and small arms fire. For instance, the conflict in Ukraine has led to a surge in demand for armored vehicle upgrades, as both the Ukrainian military and international actors seek to bolster the protection and performance of existing armored fleets. Additionally, the ongoing conflicts in the Middle East have underscored the importance of adapting armored vehicles to counter unconventional threats. Geopolitical shifts and evolving threat landscapes drive the need for cross-border mobility and interoperability. Nations are increasingly looking to standardize and upgrade their armored vehicle fleets to ensure compatibility in multinational military operations.

Technological Advancements and Threat Evolution

Rapid technological advancements are a driving force behind the need for armored vehicle upgrades and retrofits. The military landscape is constantly changing, with adversaries developing new and more sophisticated weapons and tactics. To address these evolving threats, armored vehicles must be equipped with state-of-the-art technology and systems. Advancements in armor materials, such as composite ceramics and nanotechnology, enable vehicles to withstand a broader range of threats while maintaining agility. Moreover, developments in situational awareness, communication systems, and electronic countermeasures enhance the survivability and effectiveness of armored units. The rise of unmanned systems and autonomous vehicles also plays a role in the market. Armored vehicles must be retrofitted with the necessary technology to interact with and protect against these emerging threats. In December 2023, the Army’s Program Executive Office, Combat Support & Combat Service Support (PEO CS&CSS) and the Defense Innovation Unit chose three vendors to transform the Palletized Load System into an optionally crewed autonomous vehicle. System into an optionally crewed autonomous vehicle. This move aimed to enhance the Army's operational reach by using advanced commercial autonomous technology, while reducing risks for soldiers in hazardous conditions.

Cost-Effective Modernization

In a budget-constrained environment, cost-effective modernization is a significant driver in the armored vehicle upgrade and retrofit market. Many countries seek to extend the service life of their existing armored fleets rather than investing in entirely new vehicles. Retrofitting offers a cost-efficient alternative, as it enables the integration of cutting-edge technologies into older platforms. The modularity of armored vehicles allows for incremental upgrades, making it easier for defense forces to adapt to changing requirements over time. Retrofitting also extends the operational lifespan of existing assets, reducing the financial burden of procuring new vehicles. Cost-effective modernization is particularly crucial for smaller or economically challenged nations looking to enhance their military capabilities without exhausting their budgets. These countries often seek affordable upgrades that will provide a substantial return on investment.

Environmental and Regulatory Compliance

Increasingly, environmental and regulatory concerns are influencing the design and operation of armored vehicles. Governments and international bodies are imposing stricter emissions standards and regulations on military vehicles. To meet these requirements, defense agencies are turning to armored vehicle upgrades that incorporate more fuel-efficient engines, emission control systems, and other environmentally friendly technologies. Moreover, armored vehicle upgrades may involve improving the energy efficiency and sustainability of the vehicle fleet. This can include the integration of hybrid or electric propulsion systems and the use of alternative fuels to reduce the environmental impact of military operations. Compliance with international arms control agreements also affects the upgrade and retrofit market, as nations must ensure that their armored vehicles meet treaty obligations and restrictions.

Urban Warfare and Counter-Terrorism Operations

The growing prevalence of urban warfare and counter-terrorism operations has driven the need for armored vehicles that are better suited to these environments. Traditional main battle tanks are often ill-suited for the challenges of urban warfare, where mobility, situational awareness, and precision firepower are critical. Armored personnel carriers (APCs) and infantry fighting vehicles (IFVs) are increasingly being upgraded to address the specific demands of urban combat. These retrofits may include improvements to agility, enhanced urban camouflage, advanced surveillance and targeting systems, and non-lethal crowd control measures. The threat of improvised explosive devices (IEDs) in urban areas has also necessitated retrofitting for improved blast protection and counter-IED measures. Urban operations often require vehicles to operate near civilians, emphasizing the importance of minimizing collateral damage and protecting both military and civilian populations.

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Key Market Challenges

Technological Complexity and Integration Challenges

Modernizing armored vehicles often involves the integration of advanced technologies and systems to enhance their capabilities. However, this technological complexity can pose significant challenges. Integrating new components into existing vehicle platforms can be a complex and time-consuming process. Upgrading older armored vehicles with state-of-the-art technology can be difficult due to compatibility issues. New systems may not seamlessly integrate with older platforms, requiring extensive modifications and potentially affecting the vehicle's overall performance. As armored vehicles become more reliant on digital systems and connectivity, they become susceptible to cyber threats. Ensuring the cybersecurity of these vehicles and their integrated systems is a growing challenge, as they may be vulnerable to hacking and electronic warfare attacks. The personnel responsible for maintaining and operating retrofitted armored vehicles must be trained to use the new technology effectively. This training can be time-consuming and costly, and it's essential to address skill gaps among existing personnel. As threats evolve, armored vehicles require continuous technology upgrades. Staying ahead of potential threats and maintaining compatibility with emerging technologies are constant challenges in armored vehicle modernization.

Budget Constraints and Cost Overruns

One of the most significant challenges in the armored vehicle upgrade and retrofit market is budget constraints. Governments and defense agencies often face limited financial resources, and the cost of upgrading or retrofitting armored vehicles can be substantial. Allocating funding for vehicle upgrades can be a complex and politically driven process. Competition with other defense priorities, such as procurement of new equipment and personnel costs, can limit the available budget for retrofit programs. The cost of upgrading armored vehicles can often exceed initial estimates. Unexpected technical challenges, delays, and scope changes can lead to budget overruns, causing financial strain and delays in implementation. While upgrades are often considered more cost-effective than purchasing new vehicles, the long-term life-cycle costs must be considered. Maintaining and supporting retrofitted vehicles can be expensive, and this can strain budgets over the vehicle's extended service life. Smaller or economically challenged nations may struggle to afford advanced retrofit programs, limiting their ability to keep up with technological advancements in armored warfare.

Regulatory Hurdles and Export Restrictions

Armored vehicle upgrades and retrofits often involve the export or import of defense technology and equipment, which can be subject to strict regulatory and export control measures. These measures pose challenges to the global market. Nations must navigate international arms control agreements, such as the Arms Trade Treaty, the Wassenaar Arrangement, and the Missile Technology Control Regime. Compliance with these agreements can restrict the transfer of certain technologies and components. The International Traffic in Arms Regulations (ITAR) in the United States and similar regulations in other countries impose strict controls on the export of military technologies. Companies involved in armored vehicle retrofitting must navigate these regulations, which can be complex and time-consuming. Many countries require end-user verification to ensure that defense equipment is not diverted to unauthorized users or used inappropriately. This verification process adds administrative overhead and may delay retrofit programs. Export decisions can be influenced by political considerations, international relations, and diplomatic agreements. Political factors can lead to changes in export restrictions and impact the availability of certain technologies for retrofit programs.

Key Market Trends

Integration of Advanced Technologies

A significant trend in the armored vehicle upgrade and retrofit market is the integration of advanced technologies to enhance the capabilities of existing armored vehicles. Modern military operations demand vehicles that are not only well-armored but also equipped with sophisticated systems to improve situational awareness, communication, and survivability. Upgraded armored vehicles are increasingly equipped with advanced sensors, cameras, and data processing systems to provide real-time situational awareness to the crew. This includes features such as 360-degree camera systems, threat detection, and augmented reality displays. The integration of secure and robust communication systems is a vital trend. Upgraded armored vehicles are equipped with advanced radio systems, secure data links, and the ability to connect with other units and command centers, improving coordination in the field. To counter threats like improvised explosive devices (IEDs) and electronic warfare, retrofitted vehicles often include electronic countermeasure systems, such as jamming devices and signal detection tools. The trend toward autonomy and unmanned systems also impacts armored vehicles. Some retrofits include semi-autonomous or fully autonomous features for tasks like reconnaissance, surveillance, and logistics. AI and machine learning are being used to enhance the decision-making capabilities of armored vehicle crews. These technologies can process vast amounts of data and assist in identifying potential threats and optimal responses.

Modularity and Scalability

Modularity and scalability have become essential trends in the armored vehicle upgrade and retrofit market. These concepts allow for cost-effective and flexible modernization of armored fleets. Modularity enables the integration of various components, while scalability ensures that upgrades can be adapted to different vehicle types and missions. Armored vehicles are being designed with standardized interfaces to allow for the easy integration of new components and systems. This reduces the cost and complexity of upgrades and facilitates future modifications. Modularity allows for mission-specific upgrades. For example, vehicles can be equipped with interchangeable mission kits for roles like command and control, reconnaissance, and combat support. Many nations seek commonality across their armored vehicle fleets to simplify maintenance and reduce logistics complexity. Modularity and scalability help achieve this by allowing different vehicles to share components and systems. Scalability ensures that armored vehicles can be continuously upgraded over their service life, adapting to changing mission requirements and threats without the need for a full replacement.

Environmental Considerations

A growing trend in the armored vehicle upgrade and retrofit market is the consideration of environmental factors. Defense agencies are increasingly focusing on reducing the environmental footprint of their armored fleets, both in terms of emissions and resource consumption. Armored vehicle retrofits often include improvements in fuel efficiency through more modern engine technology or the adoption of alternative propulsion systems, such as hybrid or electric powertrains. Emissions reduction technologies, including exhaust after-treatment systems, are being integrated into armored vehicles to comply with increasingly stringent emissions standards. The adoption of alternative fuels, such as biofuels, is a trend in retrofit programs. These fuels can reduce the carbon footprint and reliance on fossil fuels. The use of sustainable and lightweight materials in vehicle construction is gaining attention. Composite materials and advanced metals can reduce weight and improve fuel efficiency. Upgraded vehicles are often equipped with energy storage and regeneration systems, which can capture and store energy during braking or other operations to enhance overall efficiency.

International Collaboration and Joint Programs

A trend in the armored vehicle upgrade and retrofit market is an increasing focus on international collaboration and joint programs. Nations are recognizing the benefits of shared development and upgrading efforts, which can reduce costs and create common standards. Collaborative programs enable nations to share the costs of research, development, and production. This approach is particularly attractive for countries with limited defense budgets. International collaboration encourages the adoption of common standards and interfaces, which facilitates interoperability between the armored vehicles of different nations. Joint programs often involve technology transfer agreements, allowing participating nations to gain access to advanced technologies that they may not have had the resources to develop independently. For defense contractors and manufacturers, international collaboration expands the potential market for armored vehicle upgrades and retrofits. Joint programs create opportunities to provide services to multiple countries. Collaborative efforts in the defense sector can strengthen diplomatic ties and strategic partnerships between nations. This trend is not only about technology but also about fostering international relationships.

Segmental Insights

Type Insight

The Armored Personnel Carrier (APC) is a dominant segment in the global armored vehicle upgrade and retrofit market. APCs, designed to transport personnel safely through combat zones, are critical assets for military forces around the world. As modern warfare evolves, the need for upgraded APCs has intensified, driving the demand for retrofitting solutions to enhance their protection, mobility, and operational capabilities. Upgrading existing APCs involves enhancing armor protection, improving weapon systems, and integrating advanced communication and navigation technologies. These retrofits allow older APCs to meet current battlefield requirements without the need for costly new vehicle acquisitions. With the increasing complexity of modern threats, such as improvised explosive devices (IEDs), mines, and anti-tank guided missiles, armored vehicles must undergo regular upgrades to maintain their effectiveness. The retrofit market is also bolstered by the rising defense budgets globally, particularly in regions like North America, Europe, and Asia-Pacific. Additionally, the cost-effectiveness of upgrading existing fleets rather than purchasing entirely new vehicles is appealing to defense forces, contributing to APCs' dominance in the market. As defense organizations focus on improving operational efficiency and extending the life cycle of their armored fleets, the APC segment will continue to be a key driver in the growth of the armored vehicle upgrade and retrofit market.

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Regional Insights

North America, particularly the United States, dominates the armored vehicle upgrade and retrofit market due to a combination of significant defense spending, technological innovation, and the need to maintain a robust and modernized military force. The U.S. Department of Defense (DoD) consistently allocates substantial budgets for the modernization of its military assets, including armored vehicles, which has made North America a key player in this market. One of the primary factors  contributing to North America's dominance is its advanced defense industry, which includes major defense contractors like Lockheed Martin, General Dynamics, and BAE Systems. These companies lead in developing cutting-edge technology for armored vehicle upgrades, such as advanced sensors, communication systems, improved armor, and enhanced firepower. The expertise and innovation provided by these defense giants enable the U.S. military to continuously retrofit its existing fleet to meet evolving operational demands without investing in entirely new platforms.

U.S. military’s global presence and its involvement in various operations around the world require a highly capable and modernized armored vehicle fleet. Retrofitting and upgrading existing vehicles is a cost-effective way to maintain readiness and ensure that U.S. forces can operate in diverse and challenging environments. This need drives constant investments in the armored vehicle upgrade and retrofit market, solidifying North America's leadership position. Geopolitical factors also play a role in this dominance. As tensions rise in regions like Eastern Europe and the Asia-Pacific, the U.S. continues to upgrade its military capabilities to counter potential threats, further boosting demand in the retrofit market. Additionally, North America's commitment to supporting its NATO allies includes sharing upgraded technology and providing retrofitted vehicles, amplifying its influence globally. North America's strong defense spending, leading defense contractors, and global military responsibilities position it as the dominant market in the armored vehicle upgrade and retrofit sector.

Recent Developments

• In May 2023, FNSS Defence Systems of Turkey was contracted to enhance the ACV-15 advanced armored personnel carriers (AAPCs) of the Turkish Army. This agreement aims to boost the vehicles' performance and extend their service life by 20 years. The AAPCs will receive updated subsystems.
• In March 2023, Germany contracted Projekt System & Management GmbH in March 2023 for USD 831.6 million to bring 143 Puma infantry fighting vehicles up to the S1 standard by 2029. The retrofit will involve new camera systems, MELLS missile system, and updated digital radios.
• In June 2023, the Pentagon's GEARS program aimed to retrofit military vehicles for autonomous driving, reducing driver vulnerability. The initiative sought to convert trucks like the Heavy Expanded Mobility Tactical Truck into self-driving machines, with a June 13 deadline for technology proposals.

Key Market Players

• General Dynamics Corporation
• RHEINMETALL AG
• BAE Systems PLC
• Textron Inc.
• Elbit Systems Ltd
• Oshkosh Corporation
• KNDS N.V.
• FNSS Savunma Sistemleri A.Ş.
• Thales S.A.
• Ruag International Holding AG

Report Scope:

In this report, the Global Armored Vehicle Upgrade and Retrofit Market has been segmented into the following categories, in addition to the industry trends which have also been detailed below:

• Armored Vehicle Upgrade and Retrofit Market, By Type:

o   Armored Personnel Carrier [APC]

o   Infantry Fighting Vehicle [IFV]

o   Mine-resistant Ambush Protected [MRAP]

o   Main Battle Tank [MBT]

• Armored Vehicle Upgrade and Retrofit Market, By Design Type:

o   Wheeled Armored Vehicles

o   Tracked Armored Vehicles

• Armored Vehicle Upgrade and Retrofit Market, By Region:

o   Asia-Pacific

§  China

§  India

§  Japan

§  Indonesia

§  Thailand

§  South Korea

§  Australia

o   Europe & CIS

§  Germany

§  Spain

§  France

§  Russia

§  Italy

§  United Kingdom

§  Belgium

o   North America

§  United States

§  Canada

§  Mexico

o   South America

§  Brazil

§  Argentina

§  Colombia

o   Middle East & Africa

§  South Africa

§  Turkey

§  Saudi Arabia

§  UAE

Competitive Landscape

Company Profiles: Detailed analysis of the major companies present in the Global Armored Vehicle Upgrade and Retrofit Market.

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Global Armored Vehicle Upgrade and Retrofit market report with the given market data, Tech Sci Research offers customizations according to a company's specific needs. The following customization options are available for the report:

Company Information

• Detailed analysis and profiling of additional market players (up to five).

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