Argentina first foreign customer for the new Brazilian Guarani IVECO armoured vehicle 3110126.

Brazil has invested tens of billions of dollars in regenerating its shipyards and civilian and defense aviation industries. Commercial and defense aviation major Embraer is developing new tactical transport aircraft as part of that overall strategy and plans are afoot to build capacity for commercial and military helicopters.

Brazil's previously profitable defense vehicle industry suffered a major setback when demand for its products collapsed with the end of the Iran-Iraq war in 1988, bringing bankruptcies and ruin to Brazilian companies involved with the business.

The second Gulf War in 1990-91 and the shift to U.S.-supplied weapons in the battle zone decisively removed Brazil as a major supplier to the region.

Iveco, which has a wide customer base in Latin America, has been a partner to Brazilian companies in commercial transport vehicles.

A $3.2 billion contract gave the company a new start in Brazil to develop armored wheeled vehicles that could replace the obsolete EE-11 and EE-9 APCs marketed by Engesa before its 1993 bankruptcy.

Brazil's aims are two-fold: to modernize the army and lay the foundations for a robust, regenerated heavy vehicle industry.

The Iveco contract, signed in December 2009, will enable Brazil to renew its wheeled armored personnel carrier fleet and also facilitate access to new technologies as part of the plan to regenerate the local military vehicle industry.

The 6×6 Guarani Viatura Blindada Transporte de Pessoal, Media de Rodas will likely replace both EE-11 and EE-9, which are increasingly harder to operate because of shortage of spares and questions about the vehicles' protection levels, the Defense Industry Daily reported on its website.

Brazil hopes the VBTP-MR can be developed to a level where it can replace both of the outmoded vehicles in Brazilian military service.