From Sprinters to Howitzers: KNDS Seizes Auto Plants as Defence Orders Surge

KNDS lands £1B UK howitzer order, scrambles for idle car factories as record €11.2B order backlog strains capacity. IPO plans hit political snags over state stake.

A single contract illustrates the pressure on KNDS: the UK has ordered 72 RCH 155 howitzers for roughly £1 billion, with first deliveries due in 2028. The systems marry an automated artillery module to the Boxer chassis — the same vehicle platform that has the German defence group scouring Europe for idle car factories.

The British deal alone secures more than 500 jobs across the supply chain. QinetiQ landed an £18 million contract to test the remote-controlled systems over several years. The UK army expects initial operating capability by 2030. But capacity constraints, not demand, now dictate KNDS’s pace.

That tension has pushed the company into negotiations with Mercedes-Benz over its Ludwigsfelde plant, where Sprinter vans have been built by roughly 1,800 workers. Mercedes is shifting that production to Jawor, Poland, and KNDS wants the site to assemble Boxer infantry fighting vehicles. Florian Hohenwarter, head of KNDS Deutschland, said the automaker’s experienced workforce would be a natural fit. A final decision — full or partial sale — is expected within weeks. The employment guarantee runs through 2029.

The factory hunt is not limited to Ludwigsfelde. In Osnabrück, Volkswagen plans to end car production by 2027. Israel’s Rafael Advanced Defense Systems has already signed a letter of intent for that plant, but KNDS has not ruled out interest. A company spokesman said the group is on a growth trajectory and looking for suitable partners to ramp up defence output.

Such urgency is fuelled by a record order intake. In 2024, KNDS booked new business worth €11.2 billion, more than 40% above the prior year. The order backlog climbed to roughly €23.5 billion, while revenue rose from €3.3 billion to €3.8 billion. Every division contributed.

The group is also expanding outside Germany. In Levanger, Norway, KNDS opened a factory on 4 May dedicated to the Leopard 2A8NO. The facility can build up to 36 main battle tanks annually and includes test tracks, a laser alignment bay, slopes and a water basin. Norway’s programme covers 54 tanks: 17 to be built in Germany and 37 locally. The first vehicles were delivered to the Norwegian army in late April.

Artillery modernisation is accelerating as well. In May, the first upgraded PzH 2000 A4 howitzers rolled off the line for the Bundeswehr. That order covers 22 systems, alongside a separate package for 123 Leopard 2 A8 tanks. Two years ago, KNDS already snapped up an Alstom plant in Görlitz and integrated it into Leopard 2 production — a template for the current conversion drive.

While operations hum, the planned summer IPO remains mired in political and regulatory snags. Berlin is divided over the state’s stake before the listing. The defence and finance ministries favour 40%, while the economy ministry and Chancellor Friedrich Merz argue 30% is enough to block critical resolutions.

A more immediate obstacle is the audit. PwC has not yet signed off on the annual accounts due to an independent probe into corruption allegations surrounding a 2013 contract in Qatar. Management expects the review to wrap up by the end of May. If the green light comes, a dual listing in Frankfurt and Paris could follow in June or July. Roughly a quarter of the capital would be floated, with bankers pencilling a valuation of €18 billion to €20 billion — below earlier estimates that topped €25 billion.

The contrast is stark: on one side, a defence contractor with a swelling order book and a hunger for factory space; on the other, a listing that hinges on a clean audit and a political compromise. KNDS must clear both hurdles if it wants to turn its industrial reinvention into a market story.