In March of last year, Sweden, which joined the North Atlantic Treaty Organization (NATO), recently decided to purchase German-made tanks. The decision was made without a separate bidding announcement or competition related to price and performance verification, which is interpreted as being in accordance with the practices for weapon transactions among NATO member countries. As a result, Hyundai Rotem, which had aimed to expand its business presence within NATO countries with the K2 tank, was left disappointed without even having the chance to compete.
According to foreign media and industry sources on the 13th, Sweden signed a contract on the 9th (local time) with KNDS to purchase 44 Leopard 2A8 tanks and retrofit 66 older tanks. The total contract value is approximately 17.2 billion kronor (about 2.26 trillion won). The new tanks are expected to be delivered between 2028 and 2031. KNDS is a company established in 2015 by the merger of Germany's Krauss-Maffei Wegmann (KMW) and France's Nexter Systems.
The Leopard 2A8 introduced by Sweden is the latest model in the Leopard 2 tank series developed jointly by Germany's KMW and Rheinmetall. It was first unveiled to the public at the Eurosatory 2024 defense exhibition last year and has garnered interest among NATO countries, including those in Europe.
NATO is a collective defense organization that was launched in 1949 based on the North Atlantic Treaty, which is a collective security treaty signed by the United States, Canada, and 10 European countries, among others, totaling 12 founding members. Sweden is the latest newly admitted member of NATO. Historically, it maintained a policy of military neutrality but opted to join a military alliance following Russia's invasion of Ukraine.
NATO includes leading defense companies such as Lockheed Martin and Boeing (U.S.), Airbus (EU), Leonardo (Italy), Thales (France), and KMW (Germany). These companies have enhanced interoperability in times of need through weapon transactions among member countries.
Even before joining NATO, Sweden had operated older Leopard series tanks introduced in the 1990s. Despite the high cost, interpretations have arisen that the choice to select the Leopard was made in consideration of operational unification and adherence to the transaction practices between member countries. The price of the Leopard 2A8, which is in the early stages of mass production, is reported to exceed 40 billion won per unit.
Hyundai Rotem previously attempted to sell the K2 tank to Norway, a NATO member, in 2023, but unfortunately lost out to the Leopard after competing. At that time, Norway grappled with choosing between the two models but ultimately selected the Leopard 2A7, and after the Leopard 2A8 was unveiled, changed its adopted model. Although the K2 tank received better evaluations in local testing, it could not overcome the barrier of transaction practices among NATO member countries.
Hyundai Rotem, which aimed to expand its presence in NATO through exports to Poland, has seen the significance of finalizing the second contract with Poland and the contract with Romania increase amid ongoing negotiations. The second contract with Poland includes the performance-upgraded K2PL (K2 Poland) model and local production conditions. The scale is reported to be the same as the first contract, with 180 units. The goal was to conclude the contract last year, but negotiations have been prolonged.
The business in Romania is also expected to be determined sometime this year. Romania plans to purchase 300 new tanks for military modernization and prioritized the acquisition of 54 U.S. Abrams tanks last November 2023. K2 and the German Leopard 2A8 are competing for the remaining procurement, with K2 reportedly receiving better evaluations regarding performance, price, and delivery speed.