Increased defence spending creates new opportunities for Europe's automotive sector

In response to rising geopolitical tensions around the world, NATO allies in 2025 committed to increasing defence spending to 5% of GDP by 2035. From this date, NATO member countries will need to allocate at least 3.5% of GDP to resource core defence requirements and to meet NATO Capability Targets, while allocating up to 1.5% of GDP to broader defence- and security-related investments.

Furthermore, the European Commission last year presented its ReArm Europe Plan – a proposal to leverage more than €800 billion ($913bn) in defence spending through national fiscal flexibility, a new €150bn Security Action for Europe (SAFE) loan instrument for joint procurement, potential redirection of cohesion funds and expanded European Investment Bank support.

As NATO’s major general Ulf Häussler highlighted at the Association of European Vehicle Logistics' (ECG) annual conference in 2025, there are more and more opportunities today for vehicle logistics providers to cooperate more closely with defence organisations, especially in light of recent investment commitments and the volatility of the current geopolitical climate.

ACEA highlights how automotive can support defence

As Europe gears up for increased defence spending, the European Automobile Manufacturers' Association (ACEA) has also identified opportunities to deepen the automotive sector's collaboration with defence.

Speaking at the NATO Summit Defence Industry Forum on July 7, 2026, ACEA director general Sigrid de Vries claimed that "modern defence increasingly depends on the same industrial capabilities that underpin Europe's automotive sector", highlighting how the automotive industry's everyday capabilities can also contribute to Europe's defence resilience.

"Our sector represents one of Europe’s largest concentrations of advanced manufacturing capability," she said. "From large-scale production lines and highly skilled engineers to software-defined vehicles, battery technologies and connected systems, many of these capabilities are directly relevant to Europe’s evolving defence needs."

De Vries noted that the foundational requirements of a resilient defence supply chain are the same requirements the automotive industry has to ensure competitiveness: affordable energy, investment, skilled workers, secure access to critical raw materials and globally competitive manufacturing.

She reiterated the importance of attracting, developing and retaining highly skilled talent in Europe's supply chains – something that is already a prominent focus in automotive and logistics but will become increasingly critical for defence as investment increases over the next decade.

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Another matter at the intersection of automotive and defence that de Vries described as "essential" is reducing strategic dependencies to secure reliable access to batteries and critical raw materials. To achieve this, she emphasised the need for diversified international partnerships alongside investment in building a competitive battery value chain in Europe.

Diversifying raw material supply has been a strategic focus for many European nations, with new agreements being signed such as the UK's critical minerals Memorandum of Understanding (MoU) with the US. Meanwhile, automotive companies including Mercedes-Benz and Volkswagen (through PowerCo) – as well as logistics providers like FedEx and DHL – have already begun to invest in the European battery supply chain.

However, the business case for automotive crossing into defence must be strengthened, de Vries argued. She noted how the automotive sector's high volumes contrast with the generally lower volumes of defence, and explained that the complex requirements of military contracts must be simplified to make them more accessible to companies outside of the defence sector.

"Europe’s automotive industry stands ready to play its part," she concluded. "Europe must now ensure it has the conditions to do so."

Automotive logistics' transferrable capabilities

Over the past decade, automotive supply chains have had to contend with all manner of disruption, including the Covid-19 pandemic, semiconductor shortages, geopolitical tensions and trade restrictions. These challenges have forced automotive logistics operations to optimise for resilience, prioritising the agility and flexibility needed to overcome severe disruption.

Many of these capabilities are directly transferable to defence logistics, where the ability to move equipment quickly, maintain secure supply lines and respond to changing operational requirements is becoming increasingly important.

Vehicle logistics providers also possess extensive expertise in managing large-scale transport operations by road, rail and sea, supported by sophisticated transport management systems, customs knowledge and established relationships with ports, terminals and carriers. This kind of experience could be incredibly valuable if transferred to the movement of defence vehicles and equipment, particularly during periods of crisis.

Service parts logistics represents another area of significant overlap. Providing vehicles is not the only way the automotive sector can support the needs of the defence industry – it also needs to ensure a reliable supply of spare parts, repair capabilities and maintenance support throughout a vehicle's lifespan. Automotive manufacturers and logistics providers already operate complex service parts networks designed to keep vehicles on the road for longer, making their expertise highly relevant as armed forces look to improve the availability and resilience of military vehicle fleets.

As NATO and European governments continue to increase defence spending, the challenge will extend beyond manufacturing vehicles and equipment. Building resilient defence supply chains will require efficient logistics networks capable of supporting production, distribution and long-term fleet maintainance. For Europe's automotive logistics sector, that presents an opportunity to apply decades of experience in managing complex international supply chains to an increasingly strategic area of national and regional security.

Links between truckmaking and the defence sector

In June this year, Daimler Truck announced the launch of its Daimler Truck Defence brand, confirming it will invest "a mid-three-digit million-euro amount" over the coming years to expand its engineering, manufacturing, sales and service capabilities.

Investments will further improve parts availability and service responsiveness across key regions, expanding Daimler Truck's global service and support network, which currently includes around 5,000 service locations across more than 160 countries and a "comprehensive" spare parts supply chain.

It noted that defence is becoming an increasingly important business area for the company and explained that by bringing together its global defence activities under the newly established brand, it can better provide governments around the world with a broader range of military mobility and logistics solutions.

Daimler Truck has set a target of €1bn ($1.1bn) in defence revenue by 2028, with the company's defence growth strategy set to be driven primarily from its site in Wörth am Rhein, Germany.

“Defence is a key pillar of Daimler Truck’s growth strategy," said Karin Rådström, CEO of Daimler Truck. "We are making targeted investments in our production facilities, the development of new solutions, and the expansion of our sales and service network. At the same time, we are leveraging Daimler Truck’s global strengths across regions and brands to scale our defence business significantly.”

With this announcement, Daimler Truck made clear its ambition to become one of the leading providers of military mobility solutions through its global technology and production network.

"Demand for reliable military mobility is growing worldwide," added Dennis Kinzelmann, CEO of Daimler Truck Defence. "With our global manufacturing network, resilient supply chains, strong partnerships and expanded product portfolio, we can deliver military vehicles and mobility solutions quickly, at scale and with high standards."

The demand Kinzelmann alluded to has been evidenced in Daimler Truck's recent defence contracts, including a deal with the armed forces of Germany, France and Canada. These three deals combined represent orders for several thousand units.

Another truckmaker with strong links to defence is Scania. The Sweden-based heavy-duty vehicle manufacturer has a history spanning more than a century of supporting the defence sector. It manufactures trucks, buses and power solutions for the defence sector.

In 2025, Scania Sweden received its largest order from the Swedish Defence Materiel Administration since the 1980s, totalling 475 heavy-duty vehicles with an option for an additional 375 units.

Under this contract, it will supply the Swedish military through to 2027 with box body trucks, flatbed trucks, and hooklift trucks that will be used to transport goods, vehicles and other equipment.

Last month, Scania unveiled its new protected cab, designed for resilient and mission-critical defence logistics. The truck with the protected cab is built within Scania’s standard modular and production system, integrated into its regular production flow. Final vehicle assembly takes place alongside other defence truck variants at Scania’s production facilities in Sweden.

“The new modular protected cab is not a separate platform outside the Scania system," explained Sara Forsberg, CTO and head of Scania R&D. "It is developed according to the same principles that define Scania’s approach to modularity, uptime and operational efficiency. That gives customers a scalable and adaptable solution with strong long-term support.” 

Adapting existing vehicle architectures, manufacturing systems and supply chains for defence applications is just one example of how Europe's automotive sector could help governments expand military capability without having to build entirely new industrial ecosystems from scratch.