The market is expected to increase during the forecast period, as major procurement programs of countries worldwide are expected to be undertaken during the forecast period (2013-23). The market is expected to register a CAGR of 2% during the forecast period, to reach US$28.7 billion by 2023. The cumulative market value for armored vehicles and counter IED vehicles during the forecast period is estimated at US$279 billion.
An increase in coalition missions, such as international peacekeeping missions, offshore operations, and disaster relief operations, have created a need for interoperable weapon systems that adhere to the standards set by NATO and other organizations. An increase in out-of-area operations has also created a need for participating nations to acquire interoperability with key coalition partners.
With the war in Iraq coming to an end and the US governments plans underway to withdraw its troops from Afghanistan as well, the MRAP segment is set to witness a drastic slump in demand. The US Department of Defense has stopped further procurement of MRAPs and is planning to move 60% of these vehicles into storage or prepositioned stocks, 30% to be fielded with the units and the remaining 10% of the fleet for troop training.
Advanced economies such as the US, the UK, France, Germany, and Japan are following strict austerity measures in allocating defense budgets. The US has already scheduled the decrease of the defense budget by US$ 487 billion over the next decade. These budget cuts warrant in cancellation of various programs as well as pose challenge towards equipping the army with modern warfare.
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Source: ASDReports - Market Research
Date: Feb 20, 2013