Global Market Size, Forecast, and Trend Highlights Over 2025-2037
Armored Vehicle Upgrade and Retrofit Market size was valued at USD 28.5 billion in 2024 and is projected to reach USD 46.1 billion by the end of 2037, rising at a CAGR of 3.8% during the forecast period, i.e., 2025-2037. In 2025, the industry size of armored vehicle upgrade and retrofit is estimated at USD 29.5 billion.
The global armored vehicle upgrade and retrofit market is experiencing rapid growth owing to rising defense budgets and demand for cost-effective modernization. Governments worldwide are increasing defense expenditures to modernize military assets while managing costs. The Stockholm International Peace Research Institute (SIPRI) report of April 2024 states that the total global military expenditure was recorded as USD 2443 billion in 2023, marking an increase of 6.8% from 2022. More defense spending will potentially lead to more acquisition of armored vehicles.
The SIPRI report further stated that the U.S., China, and Russia were among the largest spenders along with other countries. China expended 1.2% of its GDP on the official defense budget and 1.7% of its GDP on military spending in 2023. In addition, the U.S. spent 3.4% of GDP on military spending. This rise in expenditure for military expenses is expected to fuel the armored vehicle upgrade and retrofit market growth. Upgrading existing armored vehicles presents a financially viable alternative to procuring new units. This approach allows defense budgets to be optimized, ensuring forces remain equipped with up-to-date technology without incurring the expenses of complete replacements.
Armored Vehicle Upgrade and Retrofit Sector: Growth Drivers and Challenges
Growth Drivers
- Evolving threat landscape and modern warfare needs: The nature of warfare is shifting towards asymmetric conflicts, urban combat, and cyber-enabled battlefields. This creates the need for advanced armored vehicle capabilities such as active protection systems (APS), electronic warfare resistance, and improved mobility for rapid deployment. For instance, in February 2025, DRDO improved the Arjun Mk1A with advanced defensive systems like the ALWCS and composite armor. Additionally, the future main battle tank (FMBT) is planned to feature an APS for intercepting threats. Nations prioritize retrofitting vehicles with counter-IED (Improvised Explosive Device) protection, better armor, and enhanced firepower to address these evolving threats.
- Technological advancements in defense systems: Rapid developments in defense technologies such as the integration of AI, autonomous systems, and digital battlefields are driving the need for upgrades. Enhanced situational awareness systems, next-generation communication networks, and remote weapon stations are increasingly being integrated into legacy platforms to improve operational efficiency. For instance, the Indian Army is highly focused on integrating AI to strengthen its defense forces. Additionally, investments from top tech giants for building an AI ecosystem are accelerating the integration of AI into defense. In January 2025, Microsoft invested approximately USD 3 billion for two years to enhance cloud and artificial intelligence (AI) infrastructure in India.
- Geopolitical tensions and regional security concerns: Growing security threats, territorial disputes, and military modernization programs worldwide are fueling demand for armored vehicle retrofits. The ongoing conflict in Ukraine has significantly influenced global defense strategies, accelerating demand for armored vehicle upgrades and retrofits. The SIPRI Report of March 2025 claims that Ukraine is the world’s largest importer of major arms throughout 2020-24, with its imports rising nearly 100 times as compared with 2015–19. The rising imports reflect the necessity of armored vehicles to enhance the survivability and safety of the nation. Additionally, countries in Eastern Europe, the Middle East, and the Indo Pacific are upgrading their fleets to enhance defense readiness against potential adversaries, ensuring strategic superiority in regional conflicts.
Challenges
- Technological integration and compatibility issues: Upgrading older armored vehicles with modern technologies such as active protection systems, digital battlefield networks, and hybrid electric propulsion poses significant engineering challenges. Thus, ensuring seamless integration while maintaining structural integrity, power efficiency, and operational effectiveness requires extensive testing, customization, and high development costs.
- Supply chain disruptions and compliance issues: The armored vehicle upgrade and retrofit market faces supply chain constraints due to geopolitical tensions, raw material shortages, and reliance on specialized defense components. Additionally, strict government regulations, export controls, and defense procurement policies vary by country, impacting project timelines and increasing costs for manufacturers and military agencies.
Armored Vehicle Upgrade and Retrofit Market: Key Insights
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Base Year |
2024 |
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Forecast Year |
2025-2037 |
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CAGR |
3.8% |
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Base Year Market Size (2024) |
USD 28.5 billion |
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Forecast Year Market Size (2037) |
USD 46.1 billion |
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Regional Scope |
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Armored Vehicle Upgrade and Retrofit Segmentation
Application (Military, Law Enforcement, Civilian Protection)
By 2037, military segment is estimated to capture armored vehicle upgrade and retrofit market share of over 53%, owing to rising asymmetric warfare threats, cost-effective modernization strategies, and evolving battlefield technologies. Upgrades in armor, firepower, and mobility improve battlefield survivability against emerging threats. Military forces prioritize cost-effective retrofits to extend vehicle lifespan and adapt to modern warfare requirements. Additionally, the integration of AI, active protection systems (APS), and digital communication networks ensures improved operational efficiency and strategic advantage.
End use (Government, Private Security, and Non-Governmental Organizations)
The government segment is predicted to hold a significant armored vehicle upgrade and retrofit market share through 2037 as governments are undertaking modernization efforts to enhance national defense capabilities. Military agencies prioritize cost-effective retrofits over new procurements to extend the operational life of existing fleets. Further, strategic partnerships with domestic and international defense contractors help governments implement advanced retrofit solutions efficiently. For instance, in December 2024, Sweden and Denmark jointly procured 205 CV9035MKIIIC infantry fighting vehicles from BAE systems Hagglunds, with Denmark acquiring 115 units. This coordinated acquisition highlights a commitment to enhance national defense capabilities by upgrading existing fleets with advanced technologies.
Our in-depth analysis of the global armored vehicle upgrade and retrofit market includes the following segments:
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Application |
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End-use |
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Type of upgrade |
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Vehicle Type |
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Customize this ReportArmored Vehicle Upgrade and Retrofit Industry - Regional Scope
North America Market Analysis
By 2037, North America armored vehicle upgrade and retrofit market is set to dominate over 38.5% revenue share, due to military modernization programs and the need to maintain combat-ready fleets. The efforts to enhance legacy platforms such as Stryker, Bradley, and Abrams have been a key driving force for growth. The U.S. Army’s Stryker and Bradley vehicle upgrade programs focus on enhancing mobility, protection, and digital warfare capabilities. For instance, in September 2024, BAE Systems secured a USD 440 million contract from the U.S. Army to produce over 200 additional Bradley Fighting Vehicles, specifically the advanced Bradley A4 variant to replace units supplied to Ukraine.
The armored vehicle upgrade and retrofit market in the U.S. is expanding due to increased military aid commitments that require the replacement and enhancement of aging fleets. The U.S. Amy is prioritizing next-generation combat vehicle programs, upgrading platforms such as the M1 Abrams and Stryker with AI-driven systems and advanced survivability features. Rising threats from drone warfare and electronic attacks are driving investments in active protection systems and communication networks.
The armored vehicle upgrade and retrofit market in Canada is primarily driven by its focus on military fleet sustainability and Arctic defense readiness. With extreme terrain and harsh weather conditions, the Canadian Armed Forces are modernizing Light Armored Vehicles (LAVs) and Leopard 2 tanks for enhanced mobility and durability. Canada’s commitment to NATO operations and peacekeeping missions is driving investments in retrofitting vehicles with advanced armor and communication systems. Additionally, domestic defense manufacturing partnerships boost large-scale upgrade programs to strengthen national security. For instance, in February 2025, Canada-based company INKAS invested USD 18.75 million to manufacture armored vehicles in Florida.
Asia Pacific Market Analysis
Asia Pacific is expected to hold a remarkable armored vehicle upgrade and retrofit market share through 2037 owing to rising border tensions and military modernization initiatives across India, China, and South Korea. Nations are prioritizing upgrades to enhance mobility, firepower, and survivability against evolving threats. Additionally, local defense manufacturing and technology transfer agreements are accelerating retrofit programs that reduce reliance on imports and strengthen defense capabilities.
China's armored vehicle upgrade and retrofit market is rising speedily due to its push for military self-reliance and next-generation warfare capabilities. The People’s Liberation Army (PLA) is modernizing older tanks and armored personnel carriers (APCs) with advanced sensors, modular armor, and AI-driven battlefield systems to maintain technological superiority. The rise in defense spending in China is a key factor fueling market growth. In 2022, China became the world’s second-largest military spender by allocating USD 296 billion to the military. Recently, in March 2025, it announced a 7.2% increase in its 2025 defense budget raising total military expenditure to approximately USD 249 billion. The increased budget aims to enhance military modernization.
The armored vehicle upgrade and retrofit market in India is rising due to its focus on indigenous defense production under the Make in India initiative, reducing reliance on imports. In February 2025, the Ministry of Defense (MoD) announced a 9.5% increase in the 2025-26 defense budget. This rise in investments helps to modernize military fleets. Further, the Army is upgrading aging T-72 and T-90 tanks with advanced fire control systems, active protection, and mobility to counter evolving threats. The ongoing border tensions and the need for high-altitude warfare capabilities are driving retrofits to enhance performance in extreme terrains.
Companies Dominating the Armored Vehicle Upgrade and Retrofit Landscape:
- BAE Systems PLC
- Company Overview
- Business Strategy
- Key Product Offerings
- Financial Performance
- Key Performance Indicators
- Risk Analysis
- Recent Development
- Regional Presence
- SWOT Analysis
- Rheinmetall AG
- General Dynamics Corporation
- Elbit Systems Ltd
- Textron Inc.
- Oshkosh Corporation
- FNSS Savunma Sistemleri
- Nexter Group
- Thales Group
- RUAG Group
- Patria Group
- Bharat Electronics Limited (BEL)
The armored vehicle upgrade and retrofit market is dominated by key defense players who focus on enhancing survivability, mobility, and firepower. Technological advancements in active protection systems, digital warfare, and hybrid electric propulsion are driving competition among major players. These key players are focused on enhancing their product base and strengthening their market position with strategic alliances such as product launches, partnerships, mergers and acquisitions, and license agreements. Here are some leading players in the armored vehicle upgrade and retrofit market:
In the News
- In January 2025, GM Defense announced that it will supply Suburban Shield armored vehicles to Qatar’s military and Special Forces Command for secure diplomatic transport. These vehicles are based on General Motors' full-size pickup truck and SUV designs.
- In January 2025, The UK Ministry of Defense (MoD) introduced the first British-made 8×8 Boxer armored vehicle at the International Armored Vehicle (IAV) conference in Farnborough. This is the first time the UK has built an armored vehicle locally.
Author Credits: Dhruv Bhatia
- Report ID: 7396
- Published Date: Mar 26, 2025
- Report Format: PDF, PPT
