Defense Giant KNDS Eyes Mercedes Factory to Boost European Armor Production

The French-German defense manufacturer KNDS is looking to acquire a major factory from Mercedes-Benz located near Berlin.

The military equipment producer is currently in talks to take over the site in Ludwigsfelde as part of a strategy to expand its industrial footprint, according to Der Spiegel on May 14.

The company intends to invest €1 billion into new production lines to meet the increasing demand for military hardware across European armies following Russia’s full-scale invasion of Ukraine.

The move comes as the German military considers a major purchase of up to 3,000 Boxer wheeled armored vehicles. The Ludwigsfelde plant currently builds chassis for Sprinter vans, but Mercedes-Benz plans to move this production to Poland by 2030.

The two companies are discussing several ways to complete the deal, including the potential transfer of approximately 2,000 employees to KNDS. One option involves a shared transition period where the factory would produce both military vehicles and commercial vans at the same time. KNDS has also expressed interest in another site, the Volkswagen factory in Osnabrück.

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Recent reports suggest policy changes in Germany could increase France’s stake in KNDS. The defense group recently secured contracts from five different nations to build 350 Leopard-2 tanks.

At the same time, the German government is moving forward with plans for a significant acquisition of Boxer armored vehicles from the company.

The European defense giant KNDS officially established its Ukrainian subsidiary, KNDS Ukraine, on October 1, 2024. This joint venture between Germany’s Krauss-Maffei Wegmann and France’s Nexter Systems launched its local operations to provide immediate maintenance and support for a wide range of armored vehicles and artillery.

Based directly in Ukraine, the facility focused on performing repairs and producing spare parts for equipment such as Leopard tanks and CAESAR howitzers, which significantly reduced logistics times by eliminating the need to ship damaged machinery abroad for servicing.

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