In This Article:
Volkswagen (VOW3.DE) has said it is willing to consider building equipment for the German military as part of Europe’s efforts to rearm.
Oliver Blume, the chief executive of Europe’s biggest car manufacturer, said the company had not yet been approached by potential partners but was willing to “look at the concepts”.
His comments come as a shift towards German rearmament – prompted by fears that Donald Trump’s United States is pulling support away from the Continent – have led manufacturers including Rheinmetall and KNDS Group to retool car parts factories to make weapons.
According to economists, automotive factories are able to spare the capacity given that Germany’s car exports have halved since their pre-Covid pandemic peak.
Asked on Tuesday whether VW, which has been running plants at below capacity, was open to making military equipment, Mr Blume said: “First off, I think, given the current geopolitical situation, what we are seeing now in Germany and Europe is exactly the right decisions, in the sense that we need to invest more in order to be safe again.
“We are not in specific talks about what Volkswagen can do. My take on it is, if there was the option of military vehicles going forward, we would have to look at the concepts.
“We did that in the past. Volkswagen Group has automotive competence. We are ready to provide consultancy and advice.
“But where we are, this is just open-ended and initiatives will be brought forward by the defence industry more than anything.”
Increased demand caused by the prospect of European rearmament has sent shares in German defence companies surging as they ramp up production.
Against this backdrop, some car factories in Germany are being repurposed to make weapons as European manufacturers battle a market that has failed to recover to its pre-Covid levels.
Since 2019, the number of new cars sold across the European Union has plunged from 15.1m to 10.6m, according to the European Automobile Manufacturers’ Association.
German annual car exports have also fallen by half to about 1.2m, amid fierce competition from China – which is now the world’s biggest exporter of cars.
Sander Tordoir, the chief economist at the Centre for European Reform, said building military equipment could provide “a new line of business” for struggling carmakers.
Pledges to stoke German consumer demand by easing “debt brake” budget rules and unleashing government stimulus were unlikely to push factories back up to full capacity, he added.
“They can do both. Germany has lost half its net car exports, so there is lots of idle capacity to ramp up electric vehicle and military production,” Mr Tordoir said.