Brazil is pushing ahead its armored personnel carrier production program both to modernize its army and to create a new defense export market.

Argentina is the first foreign customer to indicate interest in acquiring at least 14 of the six-wheel Guarani APC that Brazil is developing in a joint venture with Italy's Iveco S.p.A., which has headquarters in Turin.

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.

The defense vehicles are being developed through the Iveco Fiat Oto Melara joint venture.

The 20-ton VBTP-MR will likely have amphibious capacity and be powered by a FPT diesel engine coupled to an automatic gearbox.

The VBTP-MR will be able to carry a crew of 10 dismounts excluding the driver and will fit into a C-130 Hercules or the planned Brazilian KC-390 transport aircraft, increasingly seen as a rival to the C-130 range.

Brazil's recent contracts with foreign suppliers indicate the new APC will come a variety of remote-controlled weapon stations, guns and cannons, including Israeli manufacturer Elbit's ORCWS UT-30BR, and anti-tank missiles.

The Guarani also offers Iveco an attractive prospect of developing a new market in addition to its new Puma six-wheel and four-wheel armored personnel carriers.