German automaker Mercedes-Benz is not ruling out entering the defense production market if it makes “business sense”, CEO Ola Källenius said in an interview with The Wall Street Journal.
“The world has become a more unpredictable place and I think it is absolutely clear that Europe needs to strengthen its defense profile. If we can play a positive role in that, we are ready to do so,” he said.
The newspaper notes that the German manufacturing sector has been stagnant for years and some companies are starting to aspire to become major players in the West's arsenal. Volkswagen is currently in talks with Israeli companies to produce components for the Iron Dome artillery defense system, which would use unused plant capacity.
Germany's largest weapons manufacturer, Rheinmetall, announced plans to start producing cruise missiles this year in collaboration with a Dutch company. The company also announced a partnership with Deutsche Telekom to develop a defense system against drones.
At the same time, the newspaper notes, the Trump administration has held talks with General Motors and Ford about using their employees and capacity to increase ammunition production.
In 2021, Mercedes spun off its truck division, which produces vehicles for military use. The company also offers various modifications of its G-Class SUVs for military use.
According to Källenius, Mercedes' strengths as a major manufacturer could help it engage more actively in the production of military equipment.
„What car companies do exceptionally well – and "We are good at that - producing high-quality, precision-engineered vehicles in large volumes," he said.
The Mercedes CEO also said that in the future the defense industry would represent "a small share of our business" compared to the production of passenger cars and vans, but noted that "it could become a growing niche that will also affect our business results." "We'll see," added Källenius.
In April, Armin Paperger, head of German defense company Rheinmetall, said that Germany had more capacity to produce conventional munitions than the United States.
In December last year, the Wall Street Journal, citing economists, reported that the reorganization of German civilian industry into defense-oriented industries was a significant change, but that arms production had limited export potential. Therefore, the defense sector will not be able to replace other sectors in the German economy.