WSJ: German carmakers are shifting toward weapons production

Germany’s automotive industry is shifting toward the production of weapons instead of cars and auto parts because of falling demand and amid Europe’s militarization.

This was reported by The Wall Street Journal (WSJ), citing official government statistics.

“Factories across Germany’s industrial belt, which once powered the country’s export miracle, are now being retooled to become the engine of Europe’s rearmament,” the paper writes.

According to the report, German industry is facing its longest period of stagnation since World War II because of falling demand and competition from China. Statistics show that the country is losing about 15,000 industrial jobs every month, including in car manufacturing. According to the same data, automakers Mercedes-Benz and Volkswagen saw their profits in 2025 fall by 49% and 44% respectively. Porsche’s operating profit dropped by 98% over the same period compared with 2024.

The newspaper notes that against this backdrop, Volkswagen is in talks with Israeli manufacturers about producing components for the Iron Dome missile defense system. The German auto-parts maker Schaeffler has also begun producing drone engines, onboard systems for armored vehicles, and components for military aircraft. Employees at many defense firms have begun manufacturing weapons for Ukraine in three shifts. German factories may also soon start producing interceptor missiles for U.S.-made Patriot air defense systems.

These changes are also being driven by state defense contracts totaling up to €1 trillion. According to the paper, nearly 90% of European defense investment is going to German companies.

According to data from the Stockholm International Peace Research Institute, over the period 2021–2025 compared with 2016–2020, Germany displaced China from fourth place in global arms exports, with a 5.7% share. Twenty-four percent of its exports went to Ukraine, and 17% to other Eastern European countries. In recent years, Munich has become the center of Germany’s defense production.