They began a private development of what would become the Challenger 2 in 1986, while deliveries of the Challenger 1 were still taking place (a similar story to the Tiger 1 and Tiger 11 from 50 years earlier).
Despite the commonality of the name, the two tanks are really very different sharing only about 5% of their components. The Perkins engine is retained, as is the 120mm rifled gun. However these carry over items are modified. Perhaps most importantly the Challenger 2 featured the so-called Chobham armour. This classified development is a form of composite said to offer better protection aganist both kinetic and hollow charge projectiles, than steel armour. Furthermore, this protection can be tactically nhanced by adding Explosive Reactive Armour packs.
Initial trials fully vindicated the claims of the manufacturer and exceeded the specifications laid down by the Army. Challenger 2 started entering service in 1998.
Challenger 2 has seen service in various peace-keeping operations and also the Second Gulf War. During the latter conflict, one Challenger 2 was hit by 14 RPGs at close range and a MILAN anti tank missile. All the crew remained in the tank and were unharmed. The tank was recovered, repaired and back in action 6 hours later.
Typical of the current times, the Challenger is the subject of many modifications and upgrades to its systems to ensure it remains viable for a long time, and to try and secure export orders. Fire control, sighting and a new gun all feature. The issue of the gun is interesting.
Alone among the larger NATO nations, the UK stayed with a rifled 120mm gun. The main competitor is the Rheinmetall L55 smooth bore 120mm fitted to the Leopard 2, firing fin-stabilised rounds. The question mark over the furutre of rifled 120mm ammunition and the desirability of NATO commonality has led to the Rheinmetall gun being trialled and installed. Although the gun fitted the existing installation, changes had to be made to accommodate the large, fixed case ammunition (as opposed to the separate ammunition of the earlier gun). An export version (Challenger 2E) with an MTU powerpack has also been trialled. This offers more power from a physically smaller engine. Engineer, recovery and bridgelaying derivatives have also been produced. There are no current plans to develop a successor to Challenger 2.
Really the Challenger 2 should be looked at in conjunction with the Challenger 1, since their genesis resulted from the same set of circumstances: the cancellation of the MBT80 programme and the availability of useful alternatives for development. Since the Challenger 1 was generally seen as a stopgap (albeit a very competent one), it was clear to all, especially the manufacturer Vickers, that a longer term replacement would be necessary.