By Thomas Dolzall, Forecast International
Although the Italian armed forces maintain a steady level of annual procurement, the Italian government has not traditionally placed a high priority on the acquisition of wheeled support and logistics vehicles.
The relative dearth of contracts from the Italian government has inhibited the ability of Italian automotive and defense contractors to pursue the large-scale production and development opportunities that have proven so lucrative for many other European vehicle manufacturers – transforming them into some of the most influential forces on the international market for wheeled tactical vehicles.
As a result of this relative paucity of domestic contracts, Italian manufacturers continue to find themselves at a competitive disadvantage internationally in the defense and automotive sphere.
Nevertheless, Italian defense and automotive contractor Iveco has risen to become one of the most potent forces on the international marketplace for wheeled logistics vehicles, and it continues to provide a robust challenge to Europe’s most established logistics vehicle brands.
Iveco’s international reach has expanded considerably in recent years, with the contractor exerting influence through an array of foreign subsidiaries and a number of vehicle licensing agreements.
Although it will still require several more years of sustained marketing efforts for Iveco tactical vehicles to achieve the brand-name cachet of some of its U.S. and European competitors, the contractor’s recent track record indicates that its market ascent will continue unabated through the forecast period.
Astra VI SpA operates as a component of Iveco Defence Vehicles Division. In turn, Iveco itself acts as a subsidiary of Fiat SpA. Through these subsidiaries, Fiat effectively controls the Italian tactical vehicles market and grants its subsidiary contractors access to an extensive and established international network.
In February 2014, the French Division of General Armaments (DGA) announced that the Ministry of Defense had signed a supplementary contract for the procurement of an additional 250 Iveco PPT logistics vehicles. This latest order builds off a prior contract signed in 2010 for the acquisition of 200 PPT series vehicles. Delivery of the 200-vehicle order began in 2013 and is scheduled for completion by the end of 2014.
Both the 2010 and 2014 procurement contracts are organized under the framework of the French Army’s Porteurs Polyvalents Terrestre (PPT) initiative. The PPT program aims to replace much of the French Army’s logistics inventories with a new family of modern, modular vehicle designs. The French Army could acquire as many as 1,800 new vehicles over the length of the program.
This latest order of 250 vehicles will be outfitted with stock, unprotected driver’s cabs of the PPLOG variant, but are capable of accommodating an armored cabin configuration if the operator requires it. Deliveries of this second order are scheduled to begin in 2016.
Iveco Looks to Possible Turkish Acqiuisiton
In February 2014, the Turkish government and Cukurova Holding announced that in April of the same year they would place the long-beleaguered Turkish automotive giant BMC on the market for international sale.
BMC’s assets were seized by Turkey’s Savings Deposit Insurance Fund (TMSF) in 2013 after the contractor declared bankruptcy and failed to deliver a significant Turkish government order for Kirpi wheeled armored vehicles within the agreed-upon timeline.
Despite these past setbacks, however, BMC holds substantial value as one of the region’s largest automotive contractors, with a significant independent product line and robust infrastructure of modern production facilities. As such, open-source reporting indicates that a number of international automotive contractors, including Iveco, are now considering the acquisition of BMC.
The domestic procurement of logistics vehicles by the Italian military will remain a secondary source of revenue for Italian defense contractors through the forecast period. Nevertheless, the Italian Army is undertaking a modest re-equipping and modernization cycle for its wheeled tactical and logistics vehicle inventories that will provide select contractors with regular business through the forecast period. Primarily, this effort will result in the steady acquisition of Iveco 40-10 WM logistics vehicles. This re-equipping program is one of the few to emerge relatively unscathed with the implementation of wide-reaching austerity measures and the contraction of Italian defense spending.
Expanded long-term planning on the part of the Italian MoD has helped mitigate some of austerity’s impact on the Italian military’s logistics capabilities, and over the past year the Italian economy has shown signs of modest stabilization. But despite these improvements, the overall economic situation in Italy remains deeply tenuous, and recent months have seen an unexpected contraction of the Italian GDP that is likely to instill further uncertainty among economic planners and lawmakers in Rome.