Armored vehicle production at Rheinmetall Group © Stephan Pramme
Germany is experiencing a prolonged industrial slowdown – the worst since World War II. The auto industry, long a symbol of the German economy, is losing ground under pressure from China and falling global demand, according to The Wall Street Journal (WSJ).
The auto industry is losing profits
The figures show the scale of the downturn: the industry is cutting about 15,000 jobs every month. The largest automakers have a sharp drop in profits: Mercedes-Benz recorded a minus 49%, Volkswagen – minus 44%, Porsche – minus 98%.
Against this background, a reversal is taking place: Germany is betting on the defense industry as a new engine of growth. Production capacities and personnel are gradually shifting from the automotive sector to military programs.
Components for drones and Patriotsystems
The business is already adapting. Schaeffler produces components for drones and armored vehicles and plans to increase its defense share to 10% of revenue. Deutz AG supplies engines for Patriot systems and drones, recording business growth on the back of military orders.
Even auto giants are looking towards defense. For example, Volkswagen is discussing participation in the production of components for Iron Dome air defense systems.
According to WSJ sources, about 90% of venture capital investments in defense technologies in Europe today go to German companies, which strengthens their dominance in the sector.
According to experts, the combination of the crisis in the auto industry, government support and investment is rapidly turning Germany into Europe’s central defense industrial hub.
