Mercedes-Benz Considers Defense Production if Profitable, CEO Says

Mercedes-Benz is considering engaging in defense production if it would make “business sense,” its CEO Ola Kallenius has told the Wall Street Journal.

The Munich-based company once manufactured military hardware on a large scale, before and during World War II. It began supplying trucks and airplane engines to the Nazis in 1937.

After Germany attacked the Soviet Union in 1941, all of the vehicles produced by Mercedes-Benz were sent to the army or to businesses viewed as essential for the war effort. During that period, almost half of the carmaker’s 63,000 employees were forced laborers, POWs and concentration camp inmates, according to the Mercedes-Benz’s website.

In his interview with the WSJ on Friday, Kallenius stressed that “the world has become a more unpredictable place, and I think it is absolutely clear that Europe needs to increase its defense profile. Should we be able to play a positive role in that, we would be willing to do so.”

According to the CEO, defense-related operations would likely constitute “a minor share” of Mercedes-Benz’s business, which would remain focused on making civilian cars.

However, he suggested that defense production could become “a growing niche” that could boost company profits. “So, we’ll see,” Kallenius added.

Germany and other EU states have accelerated military spending and defense procurement in recent years, with Brussels urging member states to expand arms production and reduce reliance on US military supplies.

The push toward rearmament comes as Germany’s industrial sector struggles with weak growth, high energy costs and falling competitiveness, prompting some manufacturers to look at defense contracts as a new source of revenue.

In February, Mercedes-Benz reported a 57% drop in profit in 2025 compared to the previous year as European carmakers continue to struggle amid rising production costs caused by growing energy prices, supply chain disruptions, regulatory pressure and competition from Chinese companies.

The Financial Times reported in March that another German carmaker, Volkswagen, was in talks with Israel’s Rafael Advanced Defense Systems to convert its failing Osnabrueck plant to the production of air-defense missiles. A spokesman for VW denied the report.

In 2022, then-Chancellor Olaf Scholz unveiled a €100 billion ($113 billion) military modernization plan for the German armed forces. Der Spiegel reported last month that the Defense Ministry in Berlin had signed some 47,000 procurement contracts since then.

Moscow has repeatedly said it has no plans to attack Germany or the rest of Europe, but promised a harsh response if it is attacked. Last month, Russian Foreign Minister Sergey Lavrov warned about the “danger of EU militarization,” which he said is happening “very fast and frenetically.”