Franco-German armoured vehicle manufacturer KNDS is pursuing additional production capacity beyond its traditional defence supply chain, opening discussions with other sectors such as the automotive industry as it looks to raise output across Europe, Chief Executive Jean-Paul Alary said on Tuesday.
Speaking after the group disclosed a revenue increase for 2025, Alary said the firm faces a need to expand its manufacturing footprint markedly across the continent, with Germany identified as a priority. When asked directly about conversations with automakers, he confirmed that talks are ongoing.
"We need to increase very significantly all our capacity in Europe and in particular in Germany," Alary said, adding that further specifics will be revealed in the weeks and months ahead.
The comments came as defence contractors, including KNDS and Rheinmetall, reported robust order books amid a rise in European military spending. Those order flows have coincided with a separate trend in the region's automotive sector, where some factories are operating below full capacity.
Executives at major carmakers have pointed to defence partnerships as a possible avenue for redeploying underutilised capacity. Volkswagen and Mercedes-Benz chief executives have both recently identified engagements with defence suppliers as an opportunity for the auto industry, which the executives say is navigating challenges such as tariffs, competition from Chinese manufacturers and the industry-wide transition to electric vehicles.
KNDS's strategy to seek capacity outside defence-specific plants reflects an effort to bridge the gap between growing demand for military equipment and the available production footprint. The timing and scope of any agreements with non-defence manufacturers have not been disclosed; Alary indicated that additional details would surface over the coming weeks and months.
The juxtaposition of strong defence orders and underused automotive facilities highlights cross-sector dynamics in European manufacturing capacity. For KNDS, leveraging alternative production sources could be a faster route to scaling output than building new plants from scratch, though the company has not outlined definitive partners or a timetable for implementation.
Context and implications
KNDS's pursuit of extra capacity signals an operational focus on meeting elevated demand while utilising available industrial resources in Europe. The approach underscores the interplay between defence procurement trends and broader manufacturing utilisation across related sectors, notably automotive production.