Spain’s automotive supplier industry is opening its doors to a groundbreaking collaboration with defense companies. In light of a significant increase in the country’s military spending, the sector aims to benefit from the growing investments. This was recently made clear at a summit of leading companies from both industries, organized by the Ministry of Industry and confirmed by the employer’s association of suppliers, Sernauto.
Synergies for Stronger Defense
José Portilla, Director General of Sernauto, emphasized the immense potential: “There are many component companies that could have synergies to work with the defense sector and solve specific needs, considering the type of companies in our sector.” This statement highlights the great interest of automotive suppliers in playing a crucial role in Spain’s current defense boom. This development is closely linked to the Spanish government’s strategic decision to increase military spending to 2% of GDP by 2025, which means additional investments of 10,471 million euros.
High-Level Meeting Paves the Way
The initial contact meeting, attended by heavyweights from both sectors according to La Tribuna de Automoción, was a complete success. On one side, leading automotive suppliers such as Antolin, CIE, Gonvarri, and Teknia were present. On the other side, significant players from the military industry, including Indra, Sapa, ITP Aero, Urovesa, Navantia, Oesía, Escribano Mechanical & Engineering (EM&E Group), and Airbus, participated. The positive results of this meeting lay the foundation for future cooperation agreements based on the similarities in the supply chains of both industries.
Automotive Sector as an Engine for the Defense Industry
It is only logical that defense companies are turning their attention to the automotive sector. Spain’s automotive industry is the second-largest car manufacturer in Europe and the eighth worldwide, bringing enormous production capacity and expertise. The connection between the two sectors has already been evident in recent years through significant personnel changes at the executive level, such as the appointment of José Vicente de los Mozos, formerly CEO of Renault, as CEO of Indra.
The Spanish defense industry is also experiencing a phase of inorganic growth, characterized by numerous collaborations and mergers. This was particularly evident at the recent Feindef arms fair in the Ifema pavilions, where a variety of strategic alliances were forged. These partnerships are intended to help Spanish companies optimally position themselves in national and international contract and investment programs.
Challenges and Opportunities: US Tariffs and Global Environment
This promising business opportunity comes at a time when the automotive supplier industry could be particularly affected by potential US tariffs. Sernauto analyzes engagement in the US market from two perspectives: directly, as the US is the eighth trading partner for Spanish exports (1,021 million in revenue last year), and indirectly, as a supplier to EU countries like France or Germany, which in turn are heavily exposed to the US. “If these countries reduce their sales, Spanish suppliers will also be affected,” Portilla warned, expressing hope for constructive dialogue between Washington and Brussels.
Despite these uncertainties, the sector expects to maintain last year’s sales of 41,238 million euros (0.7% less than in 2023) and the employment level of 325,000 people, directly and indirectly. Exports slowed last year to 25,065 million euros (0.3% less than a year ago), which is attributable to low production volumes, global uncertainties, tight margins, and low profitability. The new strategic orientation towards the defense industry could play an important stabilizing role here.
