The Impact of the Top 3 Strategic Imperatives on the European Military Ground Vehicle Industry

Geopolitical Chaos

Why:

• The Russo-Ukrainian War caused several European countries to increase their defense expenditures; thus, military spending in the region reached a modern-era peak.
• The land domain is a crucial battleground in this war.

Frost Perspective:

• Both Russia and Ukraine heavily rely on combined land forces including mechanized infantry, tanks, and artillery.
• Ukraine has and will continue to leverage funding and equipment from its European counterparts, to enhance its land warfare capabilities. These donations include military ground vehicles.

Transformative Mega Trends

Why:

• In Europe, the heightened conversation around climate change and the implementation of green regulations has impacted the defense industry.
• For example, the European Union (EU) introduced a project to reduce energy consumption and carbon emissions in military installations across the region called INDY.

Frost Perspective:

• Military ground vehicle manufacturers prioritize using hybrid or electric propulsion in some of their end products. One example is French company Texelis’ MR400 armored vehicle, which includes an electric-hub drive jointly developed with British enterprise QinetiQ.

Industry Convergence

Why:

• Unmanned systems have disrupted the military market, thanks to their application and domain versatility.
• The introduction of autonomous military ground vehicles can help with tasks such as optimal path planning, collision avoidance, and target identification.

Frost Perspective:

• Manned-unmanned teaming (MUM-T) will become more prominent in European militaries, given that ground robots can engage with other uncrewed systems such as aerial drone swarms.
• Artificial Intelligence (AI) can also be integrated into this concept to provide autonomous decision-making.

Scope of Analysis

This Study provides an outlook on regional conflicts and recent developments in the field. In addition, the report contains an analysis of the market’s competitive environment.

Spending data was obtained from official international organizations’ and defense departments’ websites and news outlets (in cases where defense departments do not disclose contract information).

The study does not include classified spending information, making a portion of the total military ground vehicle market spending information unreportable.

Segmentation

Military Ground Vehicles (MGVs)

• Armored Fighting Vehicles (AFV)
  • This segment includes infantry fighting vehicles (IFV) and main battle tanks (MBT).
  • Defense companies exclusively manufacture these vehicles.
    • Example: Germany’s Leopard tank

• Amphibious Combat Vehicles (ACV)

  • This segment includes vehicles designed to perform in and smoothly transition between the land and naval domain.
  • These vehicles are also crafted exclusively by defense companies.
    • Example: Sweden’s BvS 10

• Specialized Vehicles

  • This segment includes combat engineering vehicles (CEV), trailers, construction and material handlers, and rescue and recovery vehicles.
  • Some of these can be sourced from commercial companies.
    • Example: Germany’s Kodiak CEV

• Various Class for Distinctive Roles

  • This segment includes cargo and utility vehicles, maintenance support vehicles, transport trucks, and emergency response vehicles.
  • Some of these can be sourced from commercial companies.
    • Example: The United Kingdom’s Land Rover

These categories include unmanned or optionally-manned vehicles.

Growth Drivers

Driver

Some European countries are carrying out large-scale military modernization programs, where they greatly invest in the sustainment of legacy ground vehicles and acquire new, modern platforms. For this reason, procuring upgrade kits, spare parts (especially those with modular components), and MRO services, ensures long-term growth.

In the context of the Russo-Ukrainian War, European countries splurged on military equipment and urged the defense industry for an unprecedented production ramp-up. Ground vehicles, especially battle tanks, were highly requested by European armies to be quickly deployed in Ukrainian trenches and to replenish other nation’s stockpiles.

International organizations (the EU and NATO) and local defense departments often fund research projects related to land warfare and military ground vehicles. In most cases, these initiatives are targeted at small businesses to increase their participation in a highly competitive industry.

Growth Restraints

Restraint

Ever since Russia invaded Ukraine in early 2022, several countries have diverted resources from their defense arsenal to produce and send equipment to Ukraine. Consequently, some nations are now experiencing shortages of military ground vehicles and ammunition that greatly affect their military power projection capabilities.

The development of advanced military ground vehicles requires a significant investment and complex infrastructure. Countries often partner to jointly develop these products, but internal policy disagreements and constrained technology sharing can halt growth. This is the case with the main ground combat system (MGCS) built by France and Germany.

Inflation will most likely affect future defense spending plans and the long-term development and procurement of military ground vehicles. These limitations to the European defense department’s spending power can negatively affect the local defense industry, even more so those that had capability gaps pre-existent to the Russo-Ukrainian War.