Mercedes-Benz Eyes Growth in Defense Manufacturing
Mercedes-Benz CEO Ola Källenius has signaled the company's willingness to expand its military production capabilities as European defense spending rises.
“If we can play a positive role in this, we will be ready to do so,” Källenius stated.He noted that the world has become more unpredictable and that Europe must strengthen its defense capacity. Currently, Mercedes-Benz already manufactures heavy-duty trucks for military use, as well as military-grade versions of its G-Class SUVs.
Volkswagen in Talks as Defense Budgets Surge
Meanwhile, Volkswagen, led by CEO Oliver Blume, is in negotiations with Israel's Rafael Advanced Defense Systems. The talks aim to produce components for the Iron Dome air defense system at a plant in Osnabrück. This underscores automakers' growing interest in contributing to the defense sector.
Both companies are under pressure from expanding defense budgets that are reshaping the European market. At the same time, Mercedes-Benz has suffered major financial setbacks, with its 2025 profit nearly halving. In the used-car market, April 2026 saw 19,323 imported second-hand vehicles registered—the highest monthly total so far that year—though this represented a 9.1% drop compared to April 2025. In the first quarter of 2026, 50,100 imported used cars were registered, while new cars accounted for just 7% of all registrations, a sharp decline from 50% in 2008.
These developments highlight shifts in both the automotive market and defense industry amid modern challenges. Rising European defense spending reflects new political and security realities, forcing car companies to adapt and explore opportunities in the defense sector. For manufacturers like Mercedes-Benz and Volkswagen, this could be a crucial step toward maintaining stability and growth in the face of economic headwinds and changing automotive demand.
As the automotive industry navigates the challenges posed by fluctuating markets, the surge in used car purchases reflects a significant shift in consumer behavior. This trend is particularly evident in Ukraine, where a record number of second-hand vehicles were acquired in April. To explore how these developments are influencing both the automotive and defense sectors, read more about the increase in used car sales.