German car production remains flat, weapon production booms
The CEE region has been seen as a highly efficient automotive manufacturing hub. Passenger cars comprise almost 90% of car production in EU27 and in the CEE region, roughly 30% of passenger cars are produced in terms of total car production in Europe. Although the production dynamics in the post-COVID era were mixed, in 2022, the region surpassed Germany in finished vehicle production. However, the manufacturing of motor vehicles in Germany has been rather sluggish since 2021 as evidenced by the index moving rather sideways. That comes in contrast to production of ammunition and weapons where the index (2021=100) has been visibly rising. In the first half of 2025 the index was close to 170 suggesting quite a surge in production of ammunition and weapons since 2021. That comes in line with data showing a substantial increase in military spending as well. While the defense sector remains smaller compared to automotive in the region, recent developments create new opportunities for local defense companies and suppliers, including those with automotive backgrounds.