Mercedes-Benz & Volkswagen Consider Manufacturing for War Efforts as Interests Expand

Mercedes and War Automobiles?


The Mercedes-Benz chief said that the company is considering supporting Europe’s growing defense and war efforts.

“The world has become more unpredictable, and I think it is quite clear that Europe needs to strengthen its defence capabilities,” CEO Ola Källenius said in an interview. Källenius did not give any serious goals or outline any concrete plans, but he considered that any defence-related business would remain small compared to Mercedes-Benz’s automotive operations.

The company itself has not issued any official statements regarding the matter.

As the German car market has been struggling, companies are considering moving into more sectors to make up for lost profits.

German automakers such as Mercedes and Volkswagen are battling crises, caught between Chinese competition and tariffs.



Consideration of Defence Manufacturing

Volkswagen is exploring opportunities to introduce itself into the defence sector. CEO Oliver Blume said the company plans to decide later in the year whether military vehicles would be manufactured at Volkswagen manufacturing plants.

Oliver Blume claimed Volkswagen will not manufacture tanks or weapons and will only limit itself to transportation vehicles.

Oliver Blume said he was in contact with defence companies to discuss possibilities of converting a German factory into producing military transportation equipment.

Defence company Rheinmetall is considering taking over entire factories from carmakers facing economic pressure, mainly considering the struggling Volkswagen plant in Osnabrück.

Rheinmetall CEO Armin Papperger noted that existing automotive plants are not fully suitable for defence manufacturing and that converting them would come at a high cost.


Current state of the German Automotive Industry

The current state of the German automotive industry is rough, to say the least. High production costs, weak demand, Chinese competition, as well as tariffs from the United States are putting a heavy load on German automobile manufacturers.

Mercedes reported a 49% decrease in profits, from €10.4 billion down to €5.3 billion.

Although the automotive industry is struggling, the defence industry is growing rapidly. Reportedly, the world’s 100 largest arms manufacturers reached record revenues. The scale of the two industries remains vastly different. Germany’s automotive sector generated more than €540 billion in revenue alone.


Mercedes Manufacturing History

A Mercedes-Benz spokesperson said the firm “has for many years been supplying chassis to specialised firms which equip and market them under their own responsibility and under their own brand for military applications”.

“Our activities in the security and defence sector constitute a strategic development focus that we will continue to actively pursue, in collaboration with our partners,” the spokesperson added.

They also stated that defence could be “a rapidly growing niche that could also contribute to the group’s financial results.”


Overall


With the German automotive industry struggling due to economic pressure, tariffs, Chinese competition, and companies looking for answers, car manufacturers are looking to get involved in the defence industry. With main players such as Volkswagen and Mercedes looking to produce transportation vehicles.




Disclaimer: The following scenarios reflect forward-looking analysis and market opinions based on currently available information. They are not guarantees of future performance and should not be considered financial or investment advice. Thesis Journal is not responsible for any decisions made based on this analysis.



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