Infantry Fighting Vehicle Market Analysis

Infantry Fighting Vehicle Market (Global, 2023)

Introduction

The infantry fighting vehicle (IFV) market is set to undergo significant changes as the world’s armed forces seek to enhance their operational capabilities in the increasingly complex battlefield environment. With the rise of asymmetric warfare, urban combat, and the integration of advanced technology, the demand for IFVs with a high degree of versatility and resilience has never been greater. The IFV is a key component of mechanized infantry and not only provides troop transport, but also fire support and reconnaissance. Hence, as nations turn to the development of next-generation systems, the IFV market is experiencing a surge in innovation. Furthermore, geopolitical tensions and changing security threats are influencing procurement strategies, creating a dynamic landscape in which manufacturers must adapt to meet the diverse needs of their military clients. This report examines the current state of the IFV market, examining the key trends, technological developments, and competitive dynamics that are reshaping this vital part of the defense industry.

PESTLE Analysis

Political

In 2023, the world political scene has been marked by a rise in military expenditures due to the increased tension of the international situation. For example, NATO states have committed themselves to increasing their military expenditures to at least 2% of their GDP, and in the case of Poland, this meant that it would allocate about $ 20 billion to the modernization of its military, including the purchase of tanks. In addition, the US government has proposed a budget of 886 billion dollars for the defense industry, focusing on strengthening its ground forces, which will lead to an increase in the demand for IFVs.

Economic

The economic background of the combat vehicle market in 2023 is characterized by a fluctuating military budget that is influenced by inflation. In early 2024, the inflation rate in the United States was reported at 4.2%, affecting the cost of military equipment. In addition, the worldwide defense budget reached $ 2 , 1 0 billion in 2023, with a significant increase in the purchase of IFVs, as countries restructure their military equipment to meet the challenges of modern warfare.

Social

Social factors that affect the infantry fighting vehicle market include the growing public awareness of and advocacy for military transparency and accountability. Surveys show that as of 2023, 65% of the U.S. population supported an increase in military spending, as long as there was clear communication about how that spending would be used. Also, recruitment difficulties in the military, with a 25,000-person shortfall in the U.S. Army, have led to discussions about the role of advanced military technology, such as infantry fighting vehicles, in attracting new recruits.

Technological

In the world of infantry fighting vehicles, technical progress is rapidly changing the field of business. Artificial intelligence and the introduction of unmanned systems in combat vehicles have become the norm. Some 30 percent of new IFV models now include such systems, which give the vehicle greater situational awareness and decision-making capabilities. In addition, the development of advanced armour systems, such as active and composite protection, has led to the allocation of billions of dollars to the research and development of these new materials in order to improve the survivability of the vehicle on the battlefield.

Legal

The international arms regulations and the export regulations also affect the infantry fighting vehicle market. In 2023, 110 states ratified the Arms Trade Treaty, which imposes strict guidelines on the international trade in conventional weapons, including infantry fighting vehicles. Consequently, the manufacturers are obliged to invest in legal frameworks and compliance systems. It is estimated that the costs of ensuring compliance with domestic and international laws may reach up to 500 million dollars per year for major defense contractors.

Environmental

The infantry fighting vehicle market is increasingly influenced by considerations of the environment, especially in the areas of energy consumption and exhaust emissions. In 2023 the European Union imposes stricter limits on exhaust emissions from military vehicles, requiring a 30 per cent reduction in greenhouse gas emissions by 2030. Consequently, the defence industry has invested some $300 million in developing hybrid and electric drive systems for infantry fighting vehicles, in the hope of meeting the new standards while maintaining their combat capability.

Porter's Five Forces

Threat of New Entrants

The market for infantry fighting vehicles is characterized by high entry barriers, including substantial capital investment, advanced technology requirements, and stringent regulatory standards. Existing players have a strong brand awareness and economies of scale, which make it difficult for new entrants to compete effectively.

Bargaining Power of Suppliers

Suppliers of IFVs have medium bargaining power, as a result of the specialized nature of the components used in the manufacture of the vehicles. However, the presence of alternative suppliers of other components somewhat reduces the suppliers’ power.

Bargaining Power of Buyers

The buyers of the IFV market, the government-owned military departments, have high bargaining power because of the limited number of large-scale contracts and the competition in the industry. The buyers can negotiate favorable terms and prices, especially when there are several bidders.

Threat of Substitutes

The threat of substitutes in the IFV market is moderate, as alternative military vehicles and technology, such as unmanned ground vehicles and advanced armored personnel carriers, can perform similar roles. But the unique capabilities of IFVs, such as troop transport and firepower, limit the scope of this threat.

Competitive Rivalry

Competition in the IFV market is intense, with several established defence contractors competing for the business. In the process of trying to meet the ever-changing needs of the military, companies are constantly trying to improve their products and this leads to fierce competition and frequent bidding wars.

SWOT Analysis

Strengths

• Advanced technology integration enhancing combat capabilities.
• Strong demand from defense sectors globally due to rising geopolitical tensions.
• Robust government funding and investment in military modernization programs.

Weaknesses

• High development and production costs limiting market entry for new players.
• Complexity in maintenance and operational training for personnel.
• Potential delays in procurement processes due to bureaucratic hurdles.

Opportunities

• Growing interest in unmanned and autonomous vehicle technologies.
• Emerging markets increasing defense budgets and seeking modernization.
• Partnerships with tech firms for innovative solutions in vehicle design and functionality.

Threats

• Intense competition among established defense contractors.
• Shifts in defense spending priorities due to economic pressures.
• Potential regulatory changes affecting defense procurement and export.

Summary

In 2023, the Infantry Fighting Vehicles market is characterized by strong demand, which is driven by the prevailing tension in the world and the substantial investments of governments. But high costs and complex operational requirements are also a challenge. Opportunities are offered by the technological development and the emergence of new markets. Competition and regulatory changes remain the main threat. Strategic alliances and innovation are therefore crucial for companies to navigate this dynamic market.