North America Armored Fighting Vehicles Market Size & Share Analysis - Growth Trends and Forecast (2026 - 2031)

North America Armored Fighting Vehicles Market Trends and Insights

Surging US Next-Gen Combat Vehicle Procurement Pipeline

The XM30 Optionally Manned Fighting Vehicle is progressing toward a Milestone B decision in 2025, with low-rate initial production expected by early 2028. This program aims to replace approximately 2,000 Bradley vehicles, with a ceiling unit cost of USD 8 million.^{[1]Department of Defense, “Contract Awards Archive,” defense.gov} Dual-track development contracts awarded to General Dynamics and Rheinmetall Anduril are driving changes in supply chains, as bidders localize armor fabrication and implement open-systems architectures to enable autonomous operation, edge computing, and standardized datalinks. Localization efforts, such as Rheinmetall’s acquisition of a Michigan plant, are also mitigating risks associated with tariffs and Buy America Act requirements, ensuring smoother program execution.

Elevated US and Canadian Defense Budgets Post-2025

Ground-systems appropriations reached USD 13 billion in the US for FY 2025 and CAD 2.58 billion (USD 1.86 billion) in Canada, primarily for light-vehicle modernization. While the US is reallocating some funds to long-range fires and cyber capabilities, budget lines for tracked IFV upgrades and APS retrofits remain intact. This ensures continued demand for hull fabrication, suspension kits, and sensor packages. In Canada, a maintenance backlog resulting in only 52% serviceability for LAV 6.0 vehicles provides additional revenue opportunities for sustainment and retrofit suppliers, further strengthening the market outlook.

Intensifying Great-Power Competition in the Arctic Region

Exercises such as Arctic Edge and the US Army’s ATP 3-90.96 doctrine highlight the necessity for vehicles capable of operating in temperatures below -40 °C. As a result, tracked chassis, insulated fuel lines, and winterization kits have become mandatory in new procurement solicitations. The Army is conducting cold-weather testing at Alaska’s Cold Regions Test Center, which extends program schedules by 8-12 months but creates a niche market for thermal-management solutions.^{[2]Department of the Army, “Army Climate Strategy,” army.mil} These requirements underscore the growing importance of specialized capabilities in extreme environments.

Rapid Adoption of Active Protection Systems

The integration of Iron Fist on Bradley vehicles and Trophy systems on Abrams tanks achieved intercept rates exceeding 90% during 2024 live-fire trials. The mandate for fleet-wide APS implementation by 2028 is driving demand for radars, power-management upgrades, and software enhancements. However, challenges such as weight penalties and coverage arc limitations are driving the development of lighter, modular soft-kill alternatives. This shift is enabling new competitors to challenge established players, such as Rafael, Elbit, and Rheinmetall, thereby increasing competition in the APS market.

Budget Reallocations Toward Cyber/Space Domains

In FY 2026, the Space Force and cyber budgets increased by 15%, resulting in a USD 1.4 billion reduction in Army modernization funding. This led to the cancellation of the M10 Booker program and delays in Joint Light Tactical Vehicle (JLTV) acquisitions. Light and medium vehicle programs are the most affected, while funding for tracked IFVs and APS upgrades remains prioritized to address peer armor threats. These reallocations reflect the shifting focus of defense priorities toward emerging domains.

High Acquisition and Life-Cycle Costs of Heavy Platforms

The M1A2 SEPv3 tank costs approximately USD 9.5 million to procure and USD 30 million over its 40-year lifecycle. Similarly, each Leopard 2A6M in Canada incurs an annual sustainment cost of CAD 1.2 million (USD 0.86 million).^{[3]Government Accountability Office, “Armored Fighting Vehicle Sustainment Costs,” gao.gov} These high costs are prompting a shift in investment toward modular upgrades, armored recovery vehicles, and life-extension packages, rather than new MBT acquisitions. This trend underscores the increasing emphasis on cost efficiency and sustainability in defense procurement strategies.

Segment Analysis

By Platform Type: Versatile APCs Hold the Lead, Light Recon Gains Speed

APCs accounted for 31.34% of the North America armored fighting vehicles market share in 2025, supported by 4,900 Strykers in US inventories and 550 Canadian LAV 6.0 units. The modular hull design of the Stryker supports infantry, MEDEVAC, and command variants, ensuring a steady revenue stream for armor kits, drivetrain overhauls, and digital backbone upgrades.

Light protected/reconnaissance vehicles are projected to grow at the fastest rate, with a 6.98% CAGR, as Special Forces increasingly favor air-droppable GM Defense ISVs and Polaris MRZR vehicles for border security and Arctic patrols. Their 5,000-pound curb weight enables CH-47 sling loads and high-speed off-road mobility over tundra, highlighting how niche performance improvements drive growth in the North American armored fighting vehicles market.

IFVs are expected to grow at a 5.8% CAGR, driven by USD 1.6 billion in OMFV funding and USD 656 million in Bradley upgrades. These programs incorporate APS and 600-horsepower engines. The market share allocated to IFV programs is anticipated to increase steadily as peer-conflict scenarios demand enhanced firepower and networked sensors.

MRAP fleets are downsizing, while MBTs remain stable, relying on sustainment contracts rather than new production. However, hybrid-electric demonstrators and unmanned turrets could stimulate demand if they reduce operating costs and enhance crew survivability.

Note: Segment shares of all individual segments available upon report purchase

By Mobility: Wheeled Dominance, Tracked Revival

Wheeled chassis accounted for 65.43% of the market value in 2025, favored for their 60 mph road speeds and lower fuel consumption. Oshkosh FHTV V upgrades and Canada’s light-truck modernization programs sustain demand for 4x4, 6x6, and 8x8 logistics vehicles. Features such as rubber-insert run-flat tires, anti-lock braking systems, and digital dash retrofits further expand aftermarket opportunities.

Tracked vehicles are experiencing a resurgence, with a 5.89% CAGR, as Arctic operations require snow-capable hulls. The XM30 is designed to clear 6-foot obstacles at 40 mph cross-country, while Bradley E1 retrofits enhance torsion bars and idler wheels to accommodate the added weight of the Iron Fist system. Innovations such as rubber band tracks and in-arm suspension systems reduce vibration, narrowing the maintenance gap between tracked and wheeled systems.

Hybrid-electric prototypes are blurring the traditional boundaries of mobility categories. A battery-equipped Stryker prototype demonstrated 25% additional off-road torque and a 40% reduction in thermal signature, challenging the advantages of tracked vehicles. The Army’s 2026 mobility study anticipates mixed fleets, with wheeled vehicles prioritized for rapid deployment and tracked assets for assault operations, ensuring both segments remain integral to the North American armored fighting vehicles market.

By Propulsion: Diesel Still Dominant, Hybrids Accelerate

Conventional propulsion systems, including diesel and turbine engines, retained an 89.46% market share due to their compatibility with JP-8 supply chains. However, high acoustic and infrared signatures reduce survivability, and emissions regulations increase operational costs. Efficiency improvements, such as common-rail injection, synthetic fuels, and idle-stop systems, provide only partial mitigation of these challenges.

Electric and hybrid platforms are growing at a 12.43% CAGR, led by innovations like the Extended Range Hybrid Electric Tank and Oshkosh eLTV. A hybrid Abrams tank, equipped with a 1,000 kW battery, reduces idle fuel consumption by 20% and extends silent-watch capabilities by 30%. The market for battery packs, 800 V inverters, and high-voltage harnesses is expected to expand rapidly as charging infrastructure develops at forward operating bases.

Light vehicles are trending toward full electrification, while heavier platforms are adopting diesel-electric hybrids until battery energy density surpasses 500 Wh/kg. Standardizing battery interfaces under NATO Generic Vehicle Architecture is becoming a key procurement requirement, giving interoperable suppliers a competitive advantage in upcoming contracts.

By End-User: Army Remains Anchor, Special Forces Propel Innovation

The Army operated over 30,000 armored vehicles in 2025, supported by USD 11.60 billion in FY 2026 funding for ground systems. Modernization programs for OMFV, Bradley, and Stryker vehicles ensure consistent demand for these vehicles. However, brigade combat teams are shrinking as the Multi-Domain Task Force reallocates personnel to cyber and long-range fires capabilities.

Special Forces represent the fastest-growing segment, with a 6.57% CAGR. SOCOM’s ISV deliveries, expanded MRZR production, and a USD 400 million GMV sustainment contract support lighter, air-droppable fleets. Their preference for low-signature, autonomous scouting platforms is influencing broader design trends across the North American armored fighting vehicles market.

The demand for Marine/Naval Infantry is declining as the Marine Corps shifts its focus from tanks to littoral mission sets. Homeland Security applications remain niche, with private-sector integrators targeting smaller batch orders for border patrol vehicles. These orders face fewer certification hurdles, offering opportunities for specialized suppliers.

Geography Analysis

The United States accounted for 82.12% of 2025 spending, supported by USD 13 billion in FY 2025 ground-systems appropriations and USD 11.60 billion in FY 2026. Contracts for XM30, Bradley E1, and Stryker systems contribute to significant backlogs. Additionally, Arctic-focused winterization kits and track conversions are allocated USD 180 million in FY 2026, linking mobility upgrades to strategic objectives in the high north.

Canada, with a 6.01% CAGR, is investing CAD 2.58 billion (USD 1.86 billion) in light-truck modernization while addressing a 52% readiness rate for LAV 6.0 vehicles. Sustainment budgets allocate CAD 1.2 million (USD 0.86 million) annually per Leopard 2 tank. Interoperability requirements with US forces drive the adoption of APS, NGVA-compliant electronics, and cold-weather packages, ensuring the North American armored fighting vehicles market maintains allied compatibility.

Mexico plays a minor role, focusing on internal security rather than expanding its conventional fleet. It consists of approximately 200 armored vehicles, primarily comprising DN-XI Caballo APCs and surplus Humvees. Budgetary constraints and import challenges limit short-term procurement; however, ongoing cartel violence sustains demand for MRAP-derived patrol vehicles and armored SUVs.