{"text":[[{"start":6.15,"text":"Volkswagen, Renault, Mercedes-Benz, Porsche — the number of European carmakers eyeing the fast-growing defence sector for growth is increasing almost by the week."}],[{"start":15.75,"text":"The logic is simple: a struggling automotive industry with plenty of spare capacity because of weak sales could help fill its factories with booming defence orders as the entire continent re-arms. Germany is expected to spend more than €750bn on its military by the end of 2030."}],[{"start":34.55,"text":"But dig into the details and much of the activity seems more about generating headlines than actually saving carmakers. The alternative, however, could be worse for many manufacturers: renting out space in their plants to ferocious Chinese rivals."}],[{"start":50.449999999999996,"text":"For an industry so central to Europe’s prosperity but so mired in trouble, the issue of what to do with spare capacity merely highlights the depth of its difficulties. “It’s opportunistic. Spare capacity is one of the hardest things for manufacturers to deal with,” says Stephen Reitman, head of European automotive research at Bernstein."}],[{"start":70.19999999999999,"text":"Renault, in which the French state is a major shareholder, signed a deal in January with France’s Turgis Gaillard to make airborne drones at its factory in Le Mans, where it also makes car parts. That followed Porsche SE, the biggest shareholder of Volkswagen, saying last year that it wanted to diversify more into defence companies to ease its dependence on cars."}],[{"start":92.6,"text":"VW, Europe’s largest carmaker, has been in talks with Israel’s missile maker Rafael to produce parts for the country’s Iron Dome system at its Osnabrück factory. That plant is threatened with closure with the potential loss of 2,300 jobs in the German state of Lower Saxony, another of VW’s biggest shareholders, from next year when production of the T-Roc SUV is set to end."}],[{"start":117.39999999999999,"text":"And Mercedes-Benz signed a partnership this month with Tytan Technologies to use its Sprinter van and G-Class SUV to make a mobile air-defence system to take out small drones. The companies hope to make a cheaper system than the likes of Rheinmetall’s Skyranger which costs upwards of €10mn per vehicle."}],[{"start":137.35,"text":"Strikingly, both VW and Mercedes would return to weaponry after making armaments for Nazi Germany during the second world war."}],[{"start":144.9,"text":"Despite the noise created by the headlines, the impact of the defence investments on carmakers is limited. Ola Källenius, Mercedes’ chief executive, conceded as much, telling the Wall Street Journal that it would be a niche activity. Renault is capping revenues from its defence activities at just 5 per cent."}],[{"start":163.35,"text":"One reason is that carmakers such as VW and Mercedes have spun off their truck businesses, a more natural partner for the military than passenger cars. Reitman adds that the retooling and high specifications needed for defence work mean it is unlikely to work in carmakers’ large factories, such as VW’s underutilised and sprawling Wolfsburg plant. “It’s still peripheral. It doesn’t do very much for the manufacturers. It’s a small part of the overall business,” he adds. "}],[{"start":192.45,"text":"That leaves some carmakers with a more eyebrow-raising possibility: opening up their European factories to Chinese rivals. Stellantis, the European maker of the Fiat, Peugeot and Jeep brands, last month signed a deal with Dongfeng to build the Chinese group’s electric vehicles at its Rennes plant in France. And Xpeng, known as China’s answer to Tesla, told the FT a few weeks ago that it was in talks with VW and others about the possibility of buying a European factory."}],[{"start":221.79999999999998,"text":"Quite apart from the questionable logic of bringing the fox into the henhouse for European carmakers, it is debatable whether Chinese manufacturers want ageing factories with old workforces in often difficult locations. Reitman says Chinese groups are likely to prefer greenfield sites in Europe to brownfield ones as they seek to replicate their increasingly successful business model from home with fast innovation and decent infrastructure. "}],[{"start":245.35,"text":"The choices for a European car industry that is being squeezed more and more in China and the US and is facing fiercer competition at home are daunting. There is a clear attraction in flirting with the defence industry, especially as environmental, social and governance concerns about investing in military matters wane. But it is far from certain that the car industry has much to gain from defence, apart from creating some buzz in a sector long lacking in it."}],[{"start":279.2,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1781685915_2750.mp3"}