Volkswagen and Mercedes-Benz pivot toward military production amid global tensions
Two of Germany’s biggest carmakers are exploring opportunities in the defence sector. Volkswagen and Mercedes-Benz have both signalled willingness to support military production as global security concerns rise. The shift comes amid financial pressures and changing market conditions for the automotive industry. Volkswagen’s CEO, Oliver Blume, confirmed the company is ready to manufacture military equipment for the German armed forces. Discussions are already underway with Israel’s Rafael Advanced Defense Systems about possible collaboration on the Iron Dome missile defence system.
Meanwhile, Mercedes-Benz has also shown interest in expanding its defence involvement. CEO Ola Källenius stated the company would consider defence projects if it could make a meaningful contribution. The brand already produces heavy-duty military trucks and specialised versions of its G-Class SUVs for armed forces.
The move towards defence comes as Mercedes-Benz faces financial challenges. The company reported a profit decline of around $1.2 billion in 2025, partly due to rising U.S. tariffs and stronger competition from Chinese manufacturers. While military production would remain a secondary focus, it could offer a new revenue stream in an increasingly unstable global security environment. Both Volkswagen and Mercedes-Benz see defence as a potential growth area. For Volkswagen, talks with Rafael Advanced Defense Systems mark a concrete step toward military collaboration. Mercedes-Benz, despite its profit struggles, views defence as a niche opportunity rather than a core business shift.
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