Struggling European Automakers Gain Timely Defense Relief-Report
European automakers are struggling with stagnating sales and increased competition from China, but may find relief in increased defense spending. Companies like Volkswagen and Renault are diversifying into military production to offset losses.
European automakers are under pressure from stagnating sales and increased competition from China. The industry has lost around 50,000 jobs in Germany alone in 2025, with 200,000 more predicted by 2030. Berenberg Bank reports that Europe's automotive sector faces chronic overcapacity, with manufacturers operating at low utilization rates. Volkswagen and Renault are diversifying into military production to capitalize on increased defense spending. The bank expects a major acceleration in defense spending, presenting a potentially lucrative lifeline for struggling automakers. GlobalData predicts Western European car sales will grow only 0.2% in 2026, remaining far below pre-Covid levels.
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