AM General in South Bend was recently passed over for major contract to build a new combat vehicle for the U.S. military to Wisconsin-based Oshkosh Corp.

The Department of Defense on Tuesday awarded the $6.7 billion Joint Light Tactical Vehicle contract to Oshkosh Defense. The new vehicle is expected to replace a large share of the military’s Humvee troop carriers.

The AM General manufacturing plant in Mishawaka has produced the Humvee for about 30 years. While it was passed over for the new contract, the company still has contracts to produce Humvees, supply parts and refurbishment services to foreign militaries for at least a few years, the South Bend Tribune reported.

“It’s a setback, but also an opportunity,” Jeff Rea, president of the St. Joseph County Chamber of Commerce, told the Tribune. “They’ve handled military vehicles for an awful lot of years and they are used to the ups and downs of that.”

The AM General plant recently started manufacturing a luxury-class Mercedes Benz SUV that is sold exclusively in China. Rea told 95.3 MNC at the time that he hopes other manufacturers recognize the quality of vehicles that can be made in Mishawaka and bring their business here.

• RELATED: Mercedes Benz SUV sold exclusively in China is now in production in Mishawaka, Aug. 11, 2015

The JLTV would replace about 55,000 Humvees by 2040. Around 49,000 would be built for the Army with the rest going to the Marines. It’s designed to provide more protection against roadside bombs and mines than Humvees without being as big as another military vehicle produced by Oshkosh, the Mine Resistant Ambush Protected vehicle, or MRAP.

Winning the contract is a boost for Oshkosh Defense, which eliminated about 760 jobs last summer because of declining defense spending.

The Associated Press contributed to this report.