Market Trends of Latin America Defense Industry
The Vehicles Segment to Experience the Highest Growth During the Forecast Period
Latin American countries, including Chile, Colombia, and Brazil, are ramping up their defense capabilities, with a particular focus on their naval and land forces. Colombia, for instance, aims to bolster its navy, planning to increase its frigate fleet from the current four to six by 2025, with a further two frigates slated for 2030. Meanwhile, Brazil, Paraguay, and Peru are eyeing replacements for their aging armored vehicle fleets. The production of these vehicles is a cornerstone of the region's defense industry, providing essential mobility, protection, and firepower for ground forces.
In September 2023, the Brazilian government unveiled a dedicated fund under the Growth Acceleration Program (PAC) to enhance its army's capabilities. This initiative includes acquiring armored vehicles from Italian manufacturer Iveco Defence and the Astros missile system from Avibras, among other investments. The government has earmarked approximately BRL 53 billion (USD 11 billion) for defense, with a notable portion allocated to a strategic armored forces program.
Building on this momentum, Brazil is now in talks to procure advanced Centauro II 8x8 armored vehicles, with a contract expected to be finalized in July 2024. This decision follows a successful evaluation phase, showcasing Brazil's confidence in this cutting-edge technology. These vehicles are projected to undergo rigorous electromagnetic compatibility testing in Italy before deployment, ensuring seamless integration into Brazil's armed forces.
Brazil to Dominate Market Share During the Forecast Period
Brazil dominates the Latin American defense market, boasting the region's highest market share. As the largest defense spender in Latin America, Brazil has consistently contributed over 40% of the region's military expenditures. France, the United States, and the United Kingdom stand out as Brazil's primary arms suppliers, focusing on aircraft, armored vehicles, ships, missiles, and sensors. Brazil's military personnel numbers are robust, with 81,000 in the air force, 235,000 in the army, 80,500 in the navy, 400,000 in paramilitary forces, and 1,340,000 in the reserve force. As of December 2022, Brazil had approximately 360,000 active military personnel. Renowned for their capabilities, the country's armed forces are actively pursuing power-projection enhancements, particularly in the Amazon and coastal regions, alongside a drive to modernize their defense industry and platforms, including large-caliber weapons.
The Brazilian Army lacks wheeled self-propelled howitzers. In August 2023, the country initiated a procurement process for a 155 mm self-propelled wheeled artillery system to address this gap, aiming to replace its existing M114A1 howitzers. The envisioned artillery system features a 52-caliber NATO standard cannon, 12.7 mm or 7.62 mm machine gun provisions, and roof-mounted 76 mm smoke grenade launchers. Crucially, the system is designed to handle a range of ammunition, from conventional to precision, emphasizing the long-range capabilities of the wheeled artillery system. This strategic procurement, alongside Brazil's broader military platform upgrades, presents a significant growth opportunity for ammunition manufacturers in the country.
