Crisis in the automotive industry Is VW now entering the production of military vehicles?
Because VW is selling fewer and fewer cars, there is a threat of plant closures. The booming defense industry in Germany, on the other hand, needs more capacity. Now a cooperation with Rheinmetall is coming into play.
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- While the automotive industry is in crisis, the defense industry is experiencing a boom.
- VW and Porsche CEO Oliver Blume is open to the production of armaments in order to utilize his plants to capacity.
- VW is reportedly in talks with Rheinmetall, whose CEO can imagine a cooperation.
- Not only car manufacturers, but also their suppliers are increasingly turning to the arms industry.
The Volkswagen Group is in crisis: despite a slight increase in sales, profits fell by 30.6 percent in 2024. The result of VW subsidiary Porsche fell by 30.3 percent year-on-year. A quick recovery is not in sight for either car brand.
The CEO in charge is therefore now prepared to break new ground: Oliver Blume can imagine the Group entering the defense industry: "In principle, we are also open to such topics," said the 56-year-old on ZDF television.
The problem children are the sites in Dresden and Osnabrück, whose production will end in 2026 and 2027: Their future is uncertain. However, VW is reportedly in ongoing talks with Rheinmetall: its CEO Armin Papperger considers the factory in Osnabrück to be "well suited" for the construction of military vehicles.
VW builds weapons? "We used to do that"
Blume states in the British "Telegraph" that it is "exactly the right decision" for Europe to invest more in armaments "in view of the current geopolitical situation". There are no concrete plans yet for VW to get involved, but the Group has experience in this area: "We used to do it."
VW last built the Iltis off-road vehicle for the Bundeswehr between 1978 and 1988. Both VW and Porsche were also involved in armaments production during the Third Reich.
It is not only the car manufacturers who are struggling, but also their suppliers: they are now also increasingly turning to arms production, according to the German news program "Tagesschau". Employees from Continental and Bosch are now working for Rheinmetall and Hensoldt.
Boom in the armaments industry
The tank manufacturer KNDS recently took over a plant from the rail technology group Alstom in Görlitz. The order books of German arms manufacturers are full to bursting: They are benefiting from the crisis in the automotive industry as they expand their capacities.
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Cookie SettingsDue to Donald Trump's foreign policy, the war in Ukraine and European investments in security, the arms business is flourishing. This also applies to smaller companies such as the handgun manufacturer Heckler und Koch: turnover increased by 18% in 2024.
The large companies in the sector are really taking off: Since the start of the war in Ukraine, the value of Hensoldt shares has tripled. Rheinmetall shares are now ten times more expensive.
