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Market Research Report

Future of the Mexican Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2024

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Future of the Mexican Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2024
Published: March 25, 2019 Content info: 84 Pages
Description

Mexican defense expenditure recorded a CAGR of 0.83% during the historic period and stood at US$6.4 billion in 2019. Over the forecast period, it is anticipated to register a CAGR of 4.45% to value US$8.0 billion in 2024. Being one of the largest oil and gas exporters in the North American and Latin American region, Mexico was hit hard by the fall in energy prices, which prompted the government to cut back on overall government spending. Due to this, the Mexican defense budget contracted for three consecutive years, 2015, 2016 and 2017, by -8.21%, -13.84% and -5.02%, respectively. The Mexican defense budget is set to register a forecast-period CAGR of 4.45% to reach US$8.0 billion in 2024.

Mexican homeland security (HLS) expenditure stands at US$3.2 billion in 2019 and recorded a CAGR of -10.23% during the historic period. It is expected to grow at a CAGR of 5.87% over the forecast period to reach US$4.8 billion in 2024. Mexico has historically focused on its defense spending on countering drug cartels. "Plan 2030" was initiated to equip the country's defense forces to better combat drug cartels and other related groups.

The country's capital expenditure allocation, which stood at an average of 13.3% during 2015-2019, is anticipated to increase to an average of 15.2% over the forecast period. This increase is primarily due to the procurement of advanced defense equipment and a focus on increasing the capabilities of the country's indigenous defense industry.

Various procurements that are expected to fuel the growth of the capital budget allocation over the forecast period include RGM-84L Harpoon Block II anti-ship missiles, Rolling Airframe Missile (RAM) systems, Super Puma H225M military aircraft, POLA corvettes, SandCat-APVs, Sigma 10514 frigates, Evolved Seasparrow tactical missiles, Damen Stan Patrol 4207 vessels, and FX-05 Xicoatl (Fire Serpent) assault rifles, among many others.

The underdeveloped indigenous defense sector is a major challenge for Mexican military requirements, which makes it an import oriented country for its arms and equipment. Historically, the country has procured the majority of its military equipment from the US, France, the Netherlands and Spain, accounting for 63.1%, 9.5%, 8.9% and 8.1% of total defense imports respectively. Aircraft accounted for the largest share of imports during the historic period, occupying a 73.6% share.

The report "Future of the Mexican Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2024", provides readers with detailed analysis of both historic and forecast defense industry values, factors influencing demand, the challenges faced by industry participants, analysis of industry leading companies, and key news.

In particular, it provides an in-depth analysis of the following -

  • The defense industry market size and drivers: detailed analysis of the Mexican defense industry during 2020-2024, including highlights of the demand drivers and growth stimulators for the industry. It also provides a snapshot of the country's expenditure and modernization patterns
  • Budget allocation and key challenges: insights into procurement schedules formulated within the country and a breakdown of the defense budget with respect to capital expenditure and revenue expenditure. It also details the key challenges faced by defense market participants within the country
  • Porter's Five Force analysis of the Mexican defense industry: analysis of the market characteristics by determining the bargaining power of suppliers, bargaining power of buyers, threat of substitution, intensity of rivalry, and barriers to entry
  • Import and Export Dynamics: analysis of prevalent trends in the country's imports and exports over the last five years
  • Market opportunities: details of the top five defense investment opportunities
  • Competitive landscape and strategic insights: analysis of the competitive landscape of the Mexican defense industry. It provides an overview of key players, together with insights such as key alliances, strategic initiatives, and a brief financial analysis

Companies mentioned: Productos Mendoza, Aviabaltika de Mexico Company

Scope

  • Mexican defense expenditure recorded a CAGR of 0.83% during the historic period and stood at US$6.4 billion in 2019.
  • Over the forecast period, it is anticipated to register a CAGR of 4.45% to value US$8.0 billion in 2024.
  • Being one of the largest oil and gas exporters in the North American and Latin American region, Mexico was hit hard by the fall in energy prices, which prompted the government to cut back on overall government spending.
  • Due to this, the Mexican defense budget contracted for three consecutive years, 2015, 2016 and 2017, by -8.21%, -13.84% and -5.02%, respectively.
  • This had an impact on the overall CAGR during the historic period.
  • The defense budget as a percentage of GDP is expected to remain almost the same at an average of 0.49% over the forecast period, compared to an average of 0.49% during the historic period.

Reasons to buy

  • This report will give the user confidence to make the correct business decisions based on a detailed analysis of the Mexican defense industry market trends for the coming five years
  • The market opportunity section will inform the user about the various military requirements that are expected to generate revenues during the forecast period. The description includes technical specifications, recent orders, and the expected investment pattern by the country during the forecast period
  • Detailed profiles of the top domestic and foreign defense manufacturers with information about their products, alliances, recent contract wins, and financial analysis wherever available. This will provide the user with a total competitive landscape of the sector
  • A deep qualitative analysis of the Mexican defense industry covering sections including demand drivers, Porter's Five Forces Analysis, Key Trends and Growth Stimulators, and latest industry contracts.
Table of Contents
Product Code: GDDF0562MR

Table of Contents

1. Introduction

  • 1.1. What is this Report About?
  • 1.2. Definitions
  • 1.3. Summary Methodology
  • 1.4. About GlobalData

2. Executive Summary

3. Market Attractiveness and Emerging Opportunities

  • 3.1. Current Market Scenario
    • 3.1.1. Primary Threat Perception
    • 3.1.2. Military Doctrine and Strategy
    • 3.1.3. Mexican Military Equipment
    • 3.1.4. Procurement Programs
      • 3.1.4.1. Ongoing Procurement Programs
      • 3.1.4.2. Future Procurement Programs
      • 3.1.4.3. Top Procurement Programs by Value (US$ Million), 2019-2024
    • 3.1.5. Geopolitical, Social, and Economic Scenario
    • 3.1.6. Political and Strategic Alliances
  • 3.2. Defense Market Size Historical and Forecast
    • 3.2.1. Mexican defense budget to grow at a forecast-period CAGR of 4.45%
    • 3.2.2. The government's fight against drug trafficking is set to drive defense expenditure over the forecast period
    • 3.2.3. Defense budget as a percentage of GDP to remain at an average of 0.49% over the forecast period
  • 3.3. Analysis of Defense Budget Allocation
    • 3.3.1. Capital expenditure will increase over the forecast period
    • 3.3.2. Capital expenditure is anticipated to record a forecast-period CAGR of 4.84%
    • 3.3.3. Per capita defense expenditure to rise over the forecast period
  • 3.4. Homeland Security Market Size and Forecast
    • 3.4.1. Homeland security will post a forecast-period CAGR of 5.87%
    • 3.4.2. Organized crime and money laundering to drive the HLS market
  • 3.5. Benchmarking with Key Global Markets
    • 3.5.1. Mexico's defense budget is expected to increase over the forecast period
    • 3.5.2. Mexico's military expenditure is limited compared to countries with the largest defense expenditures
    • 3.5.3. The country's defense budget as a percentage of GDP is set to remain the same over the forecast period
  • 3.6. Market Opportunities: Key Trends
    • 3.6.1. Critical Infrastructure Protection (CIP) - Physical Security
    • 3.6.2. Multi-mission and Maritime Helicopters
    • 3.6.3. Corvettes

4. Defense Procurement Market Dynamics

  • 4.1. Import Market Dynamics
    • 4.1.1. Limited domestic defense capabilities to drive the country's defense imports
    • 4.1.2. The US, France and the Netherlands are Mexico's major suppliers
    • 4.1.3. Aircraft and armored vehicles accounted for 83.3% of defense imports
  • 4.2. Export Market Dynamics
    • 4.2.1. Mexico does not export arms due to an underdeveloped domestic arms industry

5. Industry Dynamics

  • 5.1. Five Forces Analysis
    • 5.1.1. Bargaining Power of the Supplier: Low
    • 5.1.2. Bargaining Power of the Buyer: Medium
    • 5.1.3. Barriers to Entry: Low
    • 5.1.4. Intensity of Rivalry: Low
    • 5.1.5. Threat of Substitution: Medium to High

6. Market Entry strategy

  • 6.1. Market Regulation
    • 6.1.1. Mexico has not disclosed any offset obligations
    • 6.1.2. Mexico allows 100% FDI in the defense industry
  • 6.2. Market Entry Route
    • 6.2.1. Budgeting process
    • 6.2.2. Procurement Policy and Process
    • 6.2.3. Military collaborations provide virtuous market entry opportunities
  • 6.3. Key Challenges
    • 6.3.1. The completion of military modernization plans, project delays, and cost escalation to limit new projects
    • 6.3.2. Lack of domestic defense technological know-how acts as a deterrent to market entry
    • 6.3.3. Corruption and lack of transparency impedes the growth of Mexico's defense industry

7. Competitive Landscape and Strategic Insights

  • 7.1. Competitive Landscape Overview
  • 7.2. Mexican Market Share Analysis, 2019-2024
  • 7.3. Key Domestic Companies
    • 7.3.1. Productos Mendoza: Overview
    • 7.3.2. Productos Mendoza: Products
    • 7.3.3. Aviabaltika de Mexico Company: Overview
    • 7.3.4. Aviabaltika de Mexico Company: Products and Services

8. Business Environment and Country Risk

  • 8.1. Economic Performance
    • 8.1.1. GDP Per Capita at Constant Prices (US$)
    • 8.1.2. GDP at Current Prices (US$)
    • 8.1.3. Exports of Goods and Services
    • 8.1.4. Imports of Goods and Services
    • 8.1.5. Gross National Disposable Income
    • 8.1.6. LCU per US$ (Period Average)
    • 8.1.7. Market Capitalization of Listed Companies
    • 8.1.8. Market Capitalization of Listed Companies (% of GDP)
    • 8.1.9. Goods Exports (% of GDP)
    • 8.1.10. Goods Imports (% of GDP)
    • 8.1.11. Services Imports (% of GDP)
    • 8.1.12. Services Exports (% of GDP)
    • 8.1.13. Foreign Direct Investment (FDI), net (BoP, current US$ Billion)
    • 8.1.14. Net FDI (% of GDP)
    • 8.1.15. Mining, Manufacturing, Utilities Output

9. Appendix

  • 9.1. About GlobalData
  • 9.2. Disclaimer

List of Tables

  • Table 1: Mexican Army Strength
  • Table 2: Mexican Navy Strength
  • Table 3: Mexican Air Force Strength
  • Table 4: Mexican Ongoing Development and Procurement Programs (US$ Million)
  • Table 5: Mexican Future Procurement Programs
  • Table 6: Top Mexican Defense Procurement Programs by Value (US$ Million), 2019-2024
  • Table 7: Mexican Defense Expenditure (MXN Billion and US$ Billion), 2015-2024
  • Table 8: Mexican GDP Growth and Defense Expenditure as a Percentage of GDP Growth (%), 2015-2024
  • Table 9: Mexican Defense Budget Split Between Capital and Revenue Expenditure (%), 2015-2024
  • Table 10: Mexican Defense Capital Expenditure (MXN Billion and US$ Billion), 2015-2024
  • Table 11: Mexican Per Capita Defense Expenditure (US$), 2015-2024
  • Table 12: Mexican Homeland Security Expenditure (MXN Billion and US$ Billion), 2015-2024
  • Table 13: Benchmarking with Key Markets - 2015-2019 vs 2020-2024
  • Table 14: Top Mexican Defense Sectors by Value (US$ Million), 2019-2024
  • Table 15: Mexican - Competitive Landscape of Defense Industry, 2019
  • Table 16: Top Defense Suppliers in Mexican Defense Industry By Value (US$ Million), 2019-2024
  • Table 17: Productos Mendoza - Products
  • Table 18: Aviabaltika de Mexico Company - Products and Services

List of Figures

  • Figure 1: Mexican Defense Budget: 2020 and 2024
  • Figure 2: Mexican Defense Imports: 2014 and 2018
  • Figure 3: Mexican Top Prospective Procurements/Developments
  • Figure 4: Mexican National Security Threats
  • Figure 5: Mexico's Partner Countries for Defense Cooperation and Military Training
  • Figure 6: Mexican Defense Expenditure (MXN Billion), 2015-2024
  • Figure 7: Mexican Defense Expenditure (US$ Billion), 2015-2024
  • Figure 8: Mexican GDP Growth and Defense Expenditure as a Percentage of GDP Growth (%), 2015-2024
  • Figure 9: Mexican Defense Budget Split Between Capital and Revenue Expenditure (%), 2015-2024
  • Figure 10: Mexican Defense Capital Expenditure (MXN Billion), 2015-2024
  • Figure 11: Mexican Defense Capital Expenditure (US$ Billion), 2015-2024
  • Figure 12: Mexican Per Capita Defense Expenditure (US$), 2015-2024
  • Figure 13: Mexican Homeland Security Expenditure (MXN Billion), 2015-2024
  • Figure 14: Mexican Homeland Security Expenditure (US$ Billion), 2015-2024
  • Figure 15: Mexico - Benchmarked Against Key Markets (%), 2015-2019 vs 2020-2024
  • Figure 16: Defense Expenditure of the World's Largest Military Spenders (US$ Billion), 2019 and 2024
  • Figure 17: Defense Expenditure as a Percentage of GDP of Largest Military Spenders (%), 2019
  • Figure 18: Mexican Critical Infrastructure Protection- Physical Security Market Size (US$ Million), 2019-2024
  • Figure 19: Mexican Multi-mission and Maritime Helicopter Market Size (US$ Million), 2019-2024
  • Figure 20: Mexican Corvettes Market Size (US$ Million), 2019-2024
  • Figure 21: Mexican Defense Imports (US$ Million), 2014-2018 (TIV Values*)
  • Figure 22: Mexican Defense Imports by Country (%), 2014-2018
  • Figure 23: Mexican Defense Imports by Category (%), 2014-2018
  • Figure 24: Industry Dynamics Porter's Five Forces Analysis
  • Figure 25: Mexican Budgeting Process
  • Figure 26: Key Challenges in Mexican Defense Market
  • Figure 27: Mexican Market Share Analysis, 2019-2024
  • Figure 28: Mexican GDP Per Capita at Constant Prices (US$), 2015-2025
  • Figure 29: Mexican GDP at Current Prices (US$ Billion), 2015-2025
  • Figure 30: Mexican Exports of Goods and Services (LCU Trillion), 2005-2014
  • Figure 31: Mexican Imports of Goods and Services (LCU Trillion), 2005-2014
  • Figure 32: Mexican Gross National Disposable Income (US$ Billion), 2005-2012
  • Figure 33: Mexican LCU per US$, 2015-2024
  • Figure 34: Mexican Market Capitalization of Listed Companies (US$ Billion), 2005-2012
  • Figure 35: Mexican Market Capitalization of Listed Companies (% of GDP), 2005-2012
  • Figure 36: Mexican Goods Exports (% of GDP), 2005-2014
  • Figure 37: Mexican Goods Imports (% of GDP), 2005-2014
  • Figure 38: Mexican Services Imports (% of GDP), 2005-2014
  • Figure 39: Mexican Services Exports (% of GDP), 2005-2014
  • Figure 40: Mexican FDI, Net (BoP, Current US$ Billion), 2005-2014
  • Figure 41: Mexican Net FDI (% of GDP), 2005-2014
  • Figure 42: Mexican Mining, Manufacturing, Utilities Output (LCU Trillion), 2005-2014
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