Daimler and Mercedes-Benz Australia have finalized contract negotiations with the Australian government for 2,146 G-Wagens whose delivery is to start in July.

The four-wheel drive G-Wagen is a light utility military support vehicle whose boxy design dates from the 1970s. The "G" comes from the German word Gelandewagen, meaning cross-country vehicle.

The G-Wagen is a joint Steyr-Daimler-Puch development and is assembled by Magna Steyr in Graz, Austria. Mercedes provides some interior design as well as the drivetrain.

The G-Wagens are being manufactured in Europe and supplied to Mercedes-Benz Australia in Mulgrave, Victoria, where Australian-made modules and tray bodies will be fitted, the Defense Materiel Organization said.

The G-Wagens will be used as tactical training vehicles for a range of operations as well as activities such as supporting disaster relief and securing Australia's coastline, a statement from the Australian Defense Material Organization said.

The G-Wagens and Australian-made trailers and modules will be rolled out to Defense units as part of Project Overlander, a $7.5 billion program providing more than 7,500 new protected and unprotected vehicles to the Australia's defense force in the next 10 years.

Minister for Defense Materiel Kim Carr said the G-Wagen contract is part of the government's ongoing Land 121 Phase 3A program, the next step in Project Overlander -- the replacement of army truck, patrol vehicles, trailers and modules.

"This will provide the Australian army with enhanced training capability to prepare for operations in protected vehicles, ensuring that Australian soldiers are better prepared and equipped," Carr said.

"The modules and tray bodies for these vehicles, as well as the trailers, will be designed and manufactured by Australian companies Varley and Haulmark in contracts worth approximately $196 million," Carr said.

G.H. Varley in Newcastle, New South Wales, is designing and manufacturing around 540 modules and 810 tray bodies in a contract worth nearly $100 million.

Under a contract worth $96 million Queensland's Haulmark Trailers Australia is making nearly 1,800 trailers.

"These companies are among the world's best, with advanced capabilities in manufacturing," Carr said. "That is why they are helping ensure that the Australian defense force has the best kit."

The G-Wagens are replacing Land Rover 4x4 and 6x6 vehicles and final deliveries are expected in mid 2015, a DMO update on the Land 121 Phase 3A program said.

Also under the Ministry of Defense's Land 121 Phase 3 program, the Defense Material Organization is in negotiations with Rheinmetall MAN Military Vehicles Australia for medium-heavy vehicles. Haulmark Trailers Australia will provide the medium-heavy trailers for the MAN vehicles.

Nearly 300 additional Bushmaster protected mobility vehicles will be bought from Thales Australia under the sister program Land 116.