Military Vehicle Sustainment Market

Market Overview

The global military vehicle sustainment market size was valued at USD 22.2 billion in 2023 and is projected to reach  USD 43.4 billion by 2032, registering a CAGR of 7.7% during the forecast period (2024-2032). Military Vehicle Sustainment market growth is fueled by government backing and rising investments in developing military vehicles.

Military vehicle sustainment refers to the continual support and repair actions required to guarantee that military vehicles remain operationally ready, reliable, and effective throughout their service lives. This comprises a variety of tasks, such as preventive and corrective maintenance, repairs, overhauls, upgrades, logistics support, and lifecycle management. Military vehicle sustainment aims to maximize the availability and capability of military vehicles while avoiding downtime, lowering lifecycle costs, and prolonging their operational lifespan.

Geopolitical tensions and regional wars drive up global defense spending, necessitating effective MRO solutions to keep fleets running in adverse situations. Furthermore, the increasing adoption of new military technologies demands frequent updates and upgrades to keep technologically advanced vehicles on the battlefield. However, the high expenses of maintaining advanced military platforms, which exceed budget allocations, may have a negative impact on the adoption of military vehicle maintenance services. Furthermore, developing innovative maintenance techniques that leverage digitalization tools such as predictive analytics and remote diagnostics systems can allow for more proactive approaches to the Military Vehicle Sustainment Market share in the coming years.

Top 3 Key Highlights

• Maintenance, Repair, and Overhaul generate the highest revenue share by service.
• Armored Fighting Vehicles occupy the maximum share of the market by vehicle type.
• Army dominates the market by application.

Market Dynamics

Market Drivers

Modernization Initiatives

Many countries worldwide are embarking on military modernization plans to improve the capabilities of their armed forces in response to increasing security challenges and operational requirements. As part of these measures, there is a strong emphasis on updating current military vehicle fleets to improve performance, survivability, and operational effectiveness. This drive for modernization drives demand for sustainment services such as maintenance, repair, overhaul, and upgrades to military vehicles.

Globally, total military spending reached USD 2,443 billion in 2023, up 6.8 percent from 2022. The research ascribed the spike to ongoing conflicts, growing tensions, and global instability. This increase in defense spending reflects continued modernization efforts by governments looking to improve their military capabilities across land, sea, and air domains. The Indian Army intends to replace its outdated T-72 tanks with 1,770 Future Ready Combat Vehicles (FRCVs) beginning in 2030. The FRCVs will have modern technology such as AI, drone integration, and active protection systems. The Indian Army has also submitted an RFP for the project, which is expected to cost INR 57,000 crore. Additionally, the United States Army received 24 new systems in 2023 as part of its vehicle modernization strategy, including the Mobile Protected Firepower (MPF) program, which is anticipated to deploy vehicles by the end of 2023. The MPF program is intended to neutralize enemy bunkers and positions and defeat armored vehicles and heavy machine guns in offensive and defensive operations. The emphasis on military vehicle modernization creates considerable potential for the worldwide sustainment market as defense organizations seek to extend the lifespan, upgrade capabilities, and increase the readiness of their vehicle fleets. Sustainment providers are essential in modernization efforts by providing specific solutions, expertise, and support services to guarantee that improved vehicles are successfully integrated and sustained throughout their lives.

Market Restraints

Budget Constraints

Limited defense budgets and competing financing objectives make it difficult for defense organizations to commit resources to military vehicle maintenance tasks. Sustainment activities can conflict with other defense modernization programs and operational requirements, limiting investment in vehicle maintenance, repair, and upgrade projects. The United States, the world's most lavish defense spender, is facing financial constraints that will influence military vehicle sustainment programs. Despite enormous defense spending, the US Department of Defense must prioritize investments in various defense capabilities, including personnel, operations, acquisitions, and sustainment. The Fiscal Responsibility Act of 2023, signed into law by President Biden in June 2023, limits the 2023 US defense budget to a 1% increase over the previous year's budget. The measure also suspends the debt ceiling until January 1, 2025, and caps defense and non-defense program spending. This means that defense funding will be limited to around USD 895 billion in FY 2025, which is 1% less than FY 2024 when adjusted for inflation.

Additionally, budgetary restrictions are compounded by legislative measures like sequestration and budget caps, which limit discretionary spending, including defense funds. These financial constraints can limit funds availability for sustainment efforts, resulting in deferred maintenance and decreased readiness. Denmark has the smallest military spending as a proportion of GDP in 2023, at 1.95%. In 2023, 11 of NATO's 31 members met the 2% GDP objective for military spending, four more than in 2022. Thus, budget limits frequently force defense organizations to make severe trade-offs, prioritizing urgent operating needs over long-term sustainment requirements. This can lead to lower financing for sustainment projects, delayed improvements, and deferred investments in buildings and capabilities that require maintenance, repair, and refurbishment.

Market Opportunity

Digitalization and Data Analytics

Implementing digitalization and data analytics in military vehicle sustainment operations provides substantial prospects for optimizing fleet management, increasing maintenance efficiency, and improving operational readiness. Defense organizations can get insights into vehicle health, performance patterns, and maintenance requirements by employing digital technologies, advanced analytics, and predictive algorithms, allowing them to make proactive decisions and allocate resources. Condition-based maintenance (CBM) systems use sensors, telemetry data, and predictive analytics to track the health and performance of military vehicles in real time.

According to a McKinsey & Company analysis, data-driven decision-making can unlock enormous value in the military industry, such as increased operational efficiency, lower costs, and higher mission performance. Defense organizations can use data analytics to optimize maintenance schedules, uncover performance bottlenecks, and apply predictive maintenance tactics to extend the operational lifespan of military equipment. Digital twin simulations allow virtual modeling and simulation of military vehicle components, systems, and operational scenarios. Defense companies may simulate maintenance situations, forecast equipment behavior, and improve maintenance plans without disrupting actual operations by developing digital replicas of physical assets and incorporating real-time data streams. This enables more effective resource allocation, less downtime, and better asset use.

As a result, digitalization and data analytics have emerged as critical strategic imperatives for global defense modernization efforts. Governments and defense agencies are investing in digital transformation programs to boost military readiness, operational effectiveness, and technical dominance. As a result, there is an increasing demand for digital sustainment solutions that can provide actionable insights, improve operational efficiencies, and support mission-critical decision-making processes.

Regional Analysis

The global military vehicle sustainment market analysis is conducted in North America, Europe, Asia-Pacific, the Middle East and Africa, and Latin America.

North America's military vehicle sustainment market share is estimated to grow at a CAGR of 7.8% over the forecast period. The military vehicle sustainment industry in North America is evolving due to defense spending on sophisticated military vehicles for its armed forces. The United States Department of Defense prioritizes modernizing vehicle fleets with cutting-edge technologies such as autonomous systems and enhanced survivability features. The US Department of Defense budget 2023 proposed USD 75.2 million for 161 Family of Medium Tactical Vehicles (FMTVs) and USD 22.2 million for RDT&E spending. The FMTVs are valued at USD 75.2 million. 

In January 2023, the Army awarded USD 24.25 million to Mack Defense, Navistar Defense, Oshkosh Defense, and a team of American Rheinmetall Vehicles and GM Defense to provide three prototypes of each variation for the CTT family of vehicles. Oshkosh Defense intends to supply an upgraded version of the FHTV, which has been in service with the United States Army since the 1980s. The FHTV's adaptable architecture supports various missions while requiring minor vehicle modifications. 

Asia-Pacific is anticipated to exhibit a CAGR of 8.0% over the forecast period. The Asia-Pacific region is quickly developing its military vehicle production capabilities, thanks to significant investments in R&D and coordinated policies to boost defense capabilities. The region's governments, particularly China, are investing heavily in cutting-edge technology to improve the mobility and survivability of their self-defense troops. Furthermore, integrating breakthrough technologies will likely improve vehicle efficiency and accelerate global acceptance of military vehicle sustainment services.

Europe has a moderate share of the market. EU countries devote large expenditures to military vehicle development and sustainment efforts to improve mission effectiveness. The presence of defense manufacturers in the EMEA area and an increased emphasis on indigenous production capabilities in response to rising demand for military vehicles are fostering growth in the military vehicle sustainment market.

The Middle East and Africa hold a significant market share. In 2023, Israel's military spending will rise from an average of USD 1.8 billion per month before October to USD 4.7 billion in December. This rise was partly caused by Israel's massive offensive in Gaza in response to Hamas' attack on southern Israel in October 2023. In December 2023, the Israeli Ministry of Defense (IMOD) ordered 75 JLTVs through Foreign Military Sales (FMS) and dozens more through Direct Commercial Sales (DCS), which is likely to fuel the regional market. 

Segmental Analysis

The global military vehicle sustainment market is segmented based on service, vehicle type, and application.

The market is further segmented by service into maintenance, repair, overhaul, parts and components supply, training and support, upgrades, and modernization.

Maintenance, Repair, and Overhaul (MRO) commands most of the market. Maintenance, Repair, and Overhaul (MRO) services cover various tasks to ensure operational readiness, durability, and longevity of military vehicles. This comprises scheduled preventive maintenance to avoid equipment failure, corrective maintenance to remedy problems or inadequacies, and complete overhauls to extend vehicle life and update systems. MRO services are critical for ensuring fleet availability, optimizing performance, and meeting operational needs across various mission scenarios.

Parts and component supply services include acquiring, providing, and distributing spare parts, consumables, and essential components for military vehicle maintenance. This involves obtaining OEM parts, aftermarket components, and specialized materials to assist in maintenance, repair, and overhaul operations. Parts and component supply services enable the timely availability of vital resources, reduce downtime, and improve the dependability and effectiveness of military vehicle fleets.

Based on vehicle type, the market is fragmented into Armored Fighting Vehicles, Engineering and Recovery Vehicles, Ground Support Vehicles, Landing Craft and Amphibious Vehicles, Light Tactical Vehicles, Military Trucks, Mine-Resistant Ambush Protected (MRAP) Vehicles, Self-Propelled Artillery.

Armored fighting vehicles (AFVs) are front-line combat vehicles with armor, firepower, and mobility capabilities. These vehicles consist of main battle tanks (MBTs), infantry fighting vehicles (IFVs), armored personnel carriers (APCs), and reconnaissance vehicles. To maintain combat readiness, AFVs require specialized sustainment services such as armor system maintenance, repair, upgrades, and mobility components.

Light tactical vehicles are adaptable off-road vehicles that serve as reconnaissance, patrol, and light transport in military missions. Light utility vehicles, reconnaissance vehicles, and special operations vehicles are all built for rapid deployment and agility in various terrain situations. Maintenance, repair, and upgrade activities are used in light tactical vehicle sustainment to provide mobility, reliability, and survivability in tactical conditions.

The market can be bifurcated by application into Air Force, Army, and Navy.

The Army section includes military vehicle sustainment activities in support of ground forces, such as infantry, armored, and mechanized formations. Army vehicles include armored fighting vehicles (AFVs), such as tanks and infantry fighting vehicles, and logistics vehicles, such as trucks, transporters, and recovery vehicles. Army vehicle sustainment services include maintenance, repair, and overhaul (MRO), parts supply, training, and upgrades to assure fleet readiness, mobility, and combat effectiveness in various operational settings.

The Air Force segment focuses on military vehicle sustainment activities that support the operations and missions of air forces worldwide. While airplanes are the principal assets of air forces, they frequently require ground support vehicles for various tasks, including aircraft repair, logistics support, and airport operations. The Air Force deploys ground support vehicles such as aircraft tugs, fuel trucks, maintenance platforms, and mobile airfield lighting systems. Sustainment services for Air Force vehicles are designed to ensure that ground support equipment is operationally ready to support aircraft operations and maintenance.

Recent Developments

• April 2024- Babcock and Roshel, a renowned manufacturer of armored special-purpose vehicles, signed a memorandum of understanding (MOU) to explore the joint potential to serve the Canadian Armed Forces.
• April 2024- BAE Systems obtained a USD 79 million contract from the US Marine Corps to manufacture and deliver ACV-R test vehicles.
• February 2024- EDGE Introduced JAIS Mark 2 in Milestone Upgrade of Entire Armoured Vehicle Line.
• February 2024- Elbit Systems, a global defense technology pioneer, introduced the latest addition to its market-leading Hermes family. This Next Generation Unmanned Aerial System (UAS) provides exceptional endurance, versatility, and cost-effective performance in land, air, and marine operations.
• April 2024- L3Harris Communications Australia Field Service assistance expanded with a new contract to maintain the Wideband Command/Control Communications Subsystem for the AIR7000-1B (MQ-4C Triton) program.