German car giants shake off their Nazi past to prepare for war

Telegraph

05-04-2025

Ferdinand Porsche became widely known as the brilliant engineer behind the bestselling Volkswagen Beetle and some of Porsche's first sports cars.
But like his creations, the German industrialist had a dark side that is impossible to separate from his technical achievements.
During the Second World War, Porsche's manufacturing business, along with many others, became a key pillar of the Third Reich – helping to sustain Adolf Hitler's war effort by churning out tens of thousands of militarised versions of what would later be renamed the Beetle.
Porsche, who became the Fuhrer's friend and favourite inventor, also played key roles in tank design, turret production and even a brief spell working on the V2 rocket.
It's a history that his descendants have tried to leave behind ever since, while Porsche SE – the powerful holding company of the modern Porsche family – has generally avoided military contracting since the 1960s.
Yet amid a new era of European instability, the Porsche clan has revealed it is mulling a return to the defence business as part of a new 'core investment' plan.
'The focus is really on defence, because this is what it is all about,' said Lutz Meschke, head of investments at Porsche SE. He did not say how large the investment would be or where it would be targeted, suggesting that the company may also look at infrastructure.
And if the company's existing core holdings are anything to go by, the investment shift could herald a significant move.
Porsche SE's main investments today include a 32pc stake in Volkswagen Group (with more than 50pc voting rights) as well as a 12.5pc stake in luxury car maker Porsche AG (which is 75pc owned by VW). In addition to the flagship brands, the company's automotive empire also spans Audi, Bentley, Bugatti, Lamborghini, Škoda and SEAT.
But these have been struggling of late. Meanwhile, a major German rearmament push has taken place, following Russia's invasion of Ukraine and Donald Trump's election as US president.
Frederick Merz, Germany's incoming chancellor, secured support in March for an easing of his country's long-standing 'debt brake', turning the taps on for €500bn (£425bn) of infrastructure spending and for any defence spending above 1pc of GDP to be exempt from borrowing restrictions.
It's no coincidence that Porsche's interest in new investments extends to both of these areas.
But the company's new direction is also just a sign of the times: While carmakers such as VW – long the engine of the national economy – have been struggling, rearmament has seen huge sums of money flow into the likes of tank maker Rheinmetall.
'The mood in Germany is one where the excess capacity in the car sector, which has long been an issue, is now morphing into a debate about how car makers can switch into defence production,' says Sander Tordoir, the chief economist at the Centre for European Reform.
'What would Porsche do? It's not quite clear. But it's understandable that they're moving into that space.
'Their empire of investments today has some weak links, including Volkswagen. And of course, it's not good for Porsche to be hit with US tariffs either.
'So this makes sense for them, I think, because defence is where the dynamism in German industry will now be.'
At the end of last year, executives at VW announced plans to slash 35,000 jobs as they battled sluggish consumer demand and brutal competition from China – sending the company's shares down by a third compared to a year ago.
The picture is much rosier at Rheinmetall, however, with shares up 160pc in just the past six months alone. The company was valued at more than €60bn on Friday, having overtaken VW (currently valued at €49bn), just last month.
For German defence companies, which have been the poorer industrial relations of car makers since the end of the Cold War, it is a major turnaround.
And the reversal has prompted discussions about cannibalising German car making capacity to produce arms and ammunition instead – given the voracious demand for artillery shells in Ukraine and across the Continent where stockpiles have become depleted.
Rheinmetall, which is Europe's biggest producer of ammunition, has already revealed plans to turn automotive component factories in Berlin and Neuss into 'hybrid' hubs that will become part of its weapons and munitions business.
Last week, chief executive Armin Papperger also toured Volkswagen's under-utilised plant in Osnabrueck, north-west Germany, to discuss its potential for defence production.
VW has also expressed openness to considering defence production but suggested it would wait to be approached by military partners.
Moving the Porsche family's existing businesses into defence at this late stage is likely to be risky, however. More likely, Tordoir believes, is that the clan will seek to expand its holdings in defence start-ups and contractors through targeted investments.
'There's a certain degree of myopia and desperation', he says. 'There are plenty of other German defence companies, including quite a few that are doing well in the space and have an innovation lead on carmakers.
'So investing in German defence startups should be easier, in many ways, than re-rigging existing industrial sites.'
But even then, there is no sure-fire guarantee of success – or that the boom in defence, traditionally a 'feast and famine' industry, will last.
Still, 'to the Porsche family, with its empire of industrial investments, a short-term feast doesn't look too bad', notes Tordoir.
Meanwhile, like BMW, Daimler and other German industrial titans, the family is no stranger to the military business – an entanglement that has become a source of shame today.
Under Hitler's regime, Ferdinand Porsche was elevated from a respected designer to top German industrialist, with the Nazi leader bringing him in to develop the first Volkswagen ('people's car') for the populace – originally under a wholly state-owned enterprise.
The car was not put into mass production before the Second World War erupted. But it had always been designed with possible military applications in mind, leading to a more rugged, wartime version known as the Kübelsitzwagen to be produced in the tens of thousands and even a boat-like, amphibious version known as the Schwimmwagen.
Porsche was also brought in by Hitler to chair Germany's Panzer tank commission, suggest designs for the Tiger 1 tank – although his version was never adopted – support development of the Panzer 38 tank and eventually to produce the heavy tank destroyer known as the Ferdinand (later the Elefant).
During the war, Porsche's business was one of those that used forced labourers from concentration camps, with some of these victims also allegedly being made to work as servants in his family's home.
The tycoon has also been accused of taking advantage of the desperate situation of his Jewish former business partner Adolf Rosenberger, to transfer his shares at a cut-price during the 1930s when he fled Germany.
After the war Porsche was imprisoned by the French as a war criminal but later released without being convicted. By this point, his son Ferry Porsche – himself a controversial figure – had taken over the running of the business, taking the company into sports car production.
Both father and son had been members of the Nazi Party. But Ferry Porsche – still feted by Porsche as the man who saved the business – has also been accused of becoming an officer of Hitler's feared SS paramilitary organisation, and of hiring and promoting former SS officers within Porsche after the war.
Dutch journalist David de Jong, author of the book Nazi Billionaires: The Dark History of Germany's Wealthiest Dynasties, has claimed the Porsche family 'laid the foundations for their wealth during the Third Reich' but have since engaged in 'brazen whitewashing'.
For example, the website of the Ferry Porsche Foundation – chaired by Porsche patriarch Wolfgang Porsche – describes its namesake as 'a passionate entrepreneur who took his social responsibility seriously', according to an English translation.
An official company history, produced to celebrate the brand's 75th anniversary, also started in 1948 – the year Porsche's 356 car entered production.
The Porsche business has since agreed to undertake academic studies to examine the company's Nazi legacy and the history of Rosenberger, who claimed he had tried to return after the war but was refused. He died in 1967.
On Friday, Porsche said the company was 'open to the past of its predecessor companies and sees engaging with its history as a permanent task'.
'Porsche AG is an open-minded company in which there is no room for discrimination, anti-Semitism and exclusion,' a spokesman said.
They said there was 'no evidence' Ferry Porsche had willingly collaborated with the Nazi regime, or that he had associated with former SS officers after the war and made anti-Semitic remarks. His party memberships were 'not optional'.
'We believe it is important to take into account not only these memberships, but above all Ferry Porsche's concrete behaviour,' she said, pointing to his decision to work 'closely and trustingly' with American businessman Max Hoffman and former Porsche boss Peter Schutz, both of whom were Jewish by ancestry and fled Europe to escape the Nazis.
'Both cases show that origins and religion played no role for Ferry Porsche,' the spokesman added.