Tank maker KNDS seeking spare production capacity from other sectors, CEO says

Volkswagen AG

26/05/2026 18:06

    BERLIN, May 26 (Reuters) - The chief executive of KNDS said the Franco-German tank maker is in talks to secure additional production capacity from other sectors as it looks to expand output in Europe, with the automotive industry considered a potential target.
His comments come as defence groups like KNDS and Rheinmetall RHMG.DE report strong orders amid a surge in European military spending, while the region's automakers struggle with underutilised factories.
"We need to increase very significantly all our capacity in Europe and in particular in Germany," KNDS CEO Jean-Paul Alary said on Tuesday after the group reported a jump in revenue in 2025.
KNDS is also looking for capacity externally, Alary said in response to a reporter's question about possible talks with the auto industry.
"Discussions are ongoing," he said, adding that there would be more to report in the coming weeks and months, but declining to give further details.
The chief executives of Volkswagen VOWG_p.DE and Mercedes-Benz MBGn.DE have in recent weeks pointed to defence partnerships as an opportunity for the auto sector, which has been hit by tariffs, rising Chinese competition and a rocky transition to electric vehicles.
KNDS has been in talks with Mercedes-Benz about its Ludwigsfelde plant as an option to scale up production, a source familiar with the matter told Reuters.
Spiegel and other German media reported on the talks earlier this month.
Volkswagen has also been in talks with defence companies over potential uses for its Osnabrueck plant.

(Reporting by Christina Amann and Rachel More; Editing by Hugh Lawson)
((rachel.more@thomsonreuters.com;))