Back to Its Roots: Volkswagen Flirts With Building Military Equipment Amid Sliding Car Sales, European Rearmament

The winds of war might blow a surprising — and, for some, potentially ominous — opportunity toward Volkswagen. CEO Oliver Blume has declared that the iconic German car giant would “consider” building military equipment if asked — despite no formal offers from defense firms. With Europe racing to rearm amid geopolitical instability, Volkswagen, famous for its Beetles and Passats, could soon become a key cog in Europe’s weapons manufacturing machine. Mr. Blume’s declaration comes as Germany’s automakers face a serious identity crisis. Once an export powerhouse, Germany’s car industry is now stumbling under the weight of halved car exports, stiff competition from Communist China, and the lingering evaporation of demand during the pandemic era. Some factories, desperate to keep the lights on, are now churning out weapons rather than wheels. “Given the current geopolitical situation, investing in defense is the right decision,” Mr. Blume said, according to the Telegraph. “We haven’t had specific discussions, but military vehicles could be an area of exploration for us.”This potential crystal ball vision for Volkswagen is partly inspired by other German manufacturers like Rheinmetall and KNDS, who already have pivoted parts of their facilities to weapon production. Economists believe underused automotive assembly lines — idle due to plunging car sales — offer these plants a second lease on life.Things are grim for auto producers in Europe, where car sales have nosedived to 10.6 million a year from 15.1 million annually pre-pandemic. Meanwhile, German car exports fell by 50 percent, to a dismal 1.2 million units annually, with Chinese automakers now strutting as the world’s biggest exporters, CBT News reported.Volkswagen reported a sobering 15 percent drop in its annual operating profits, sliding to $20.8 billion in 2024 from $24.5 billion in 2023. Vehicle sales also slumped by 3.5 percent last year. In some ways, it would be a return to the company’s roots. Volkswagen was established in 1932 by the German Labour Front as part of the Strength Through Joy program at Berlin. In 1934, Adolf Hitler became involved, ordering the production of a basic vehicle. By 1939, war changed the company’s production to military vehicles, including a “bucket car” utility vehicle, along with an amphibious truck. As with much of the wartime production in Nazi Germany, slave labor was used at some Volkswagen plants, drawing from the Arbeitsdorf concentration camp. In 1998, the company finally admitted it used 15,000 slaves during the war effort, amounting to 80 percent of Volkswagen’s wartime workforce. Volkswagen later set up a voluntary restitution fund.Some say shifting resources to military production could be a lifeline in tumultuous times. An economist at the Centre for European Reform, Sander Tordoir, told the Telegraph that entering the defense market is “a logical business move.” He said manufacturers like Volkswagen can run on dual tracks — ramping up both military and electric vehicle production — thanks to the idle capacity suffocating Germany’s colossal factories.

Back to Its Roots: Volkswagen Flirts With Building Military Equipment Amid Sliding Car Sales, European Rearmament

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