Porsche Automobil Holding SE, the holding company run by the Porsche-Piëch family that holds controlling shares of Volkswagen Group and the Porsche car brand, this week announced that it intends to diversify its investment portfolio to include the defense sector. This is a major expansion of the company’s area of interest, which up until now has focused on its automotive empire as well as investments in mobility and industrial companies. It will do so by building “a platform for investments… in cooperation with other investors and strong partners,” according to a statement.
This is all in line with what Porsche SE said during an earnings call last March, and it now looks like it is solidifying this strategy. The holding company says that it will soon hold a “Defense Day,” which will be “a networking opportunity for German and European family offices interested in investing in the defense sector.” So while it clearly won’t be going it alone, the message is pretty clear: “Porsche SE sees considerable development potential in the defense and security sector and intends to capitalize on this.”
Two things are true at once here. First, Volkswagen Group and Porsche aren’t exactly doing great right now. VW saw a 29% decline in year over year sales in the U.S. in Q2, and Porsche saw a 28% decline in China in H1. Growing competition in the latter and trade wars with the former make for a bleak outlook for the German auto giant. It needs to find a new leg to stand on. Sadly, the second truth is that the business that is booming right now is the military.
Germany flexes its military-industrial complex (2025 edition)
As Politico lays out, Germany’s economic focus is starting to shift from its traditional automotive sector to its defense one. One telling sign here is that Rheinmetall, which manufactures tanks and other military vehicles, just overtook Volkswagen Group in market cap in March. And just to really hammer the point home, Rheinmetall needs to find some new plants to make those tanks. Where is it looking to do that? Unused VW plants. Shifting winds, indeed.
This is all against the backdrop of Russia’s current aggression in Europe and America’s growing reluctance to counter it. Across the continent, governments are coming to the conclusion that they are going to have to invest more in their own militaries, rather than simply assume that the U.S. will deal with whatever crises might arise. That makes the business of deterrence a boom market at the exact same time the business of car exports is getting thorny.
Non-lethal investments (for now)
In September 2024, Porsche SE invested in German drone manufacturer Quantum Systems, which makes intelligence, reconnaissance, and surveillance (ISR) drones for both commercial and defense sectors. That appears to be the overall direction Porsche wants to go now: military, but non-lethal. In its statement, it said that “the focus is on technology-driven areas such as satellite surveillance, reconnaissance and sensor systems, cybersecurity or logistics and supply systems.”
Whether that’s a moral stance or an attempt to avoid a PR nightmare, it does make sense that the company wouldn’t want potential casualties on its head. The question, of course, is whether that direction will continue, or whether Porsche will eventually want some munitions euros as well.
The company’s founder, Ferdinand Porsche, was himself deeply involved with the German military-industrial complex of his day (which, unfortunately, was the Nazi war machine). His most famous design, the Volkswagen Beetle, was the basis for the Kuebelwagen, essentially the Nazi Jeep. He also designed several tanks, though these never went into production. So the idea of Porsche getting into military work isn’t without precedent. It’s just that, like much of the rest of Germany after World War II, it has mostly tried to avoid it ever since. But the world and the country are changing, and Porsche wants to change along with it.