Driving Changes for Rheinmetall: New Horizons, Auto Division Up for Grabs
Rheinmetall is planning for increased sales in the future.
Steering ahead in its quest for growth, Rheinmetall is revving up beyond traditional sectors like ammunition and tanks, venturing into drone defense, rockets, and battlefield digitization. The defense division is expected to touch an impressive 11 billion euros in revenue by 2025. However, the stagnating auto division, generating 2 billion euros, is on the chopping block.
A Shift in Perspectives
The Munich Security Conference in February 2025 at the Bayerischer Hof set the stage for a transformative change. US pressure on Europe echoed through the halls: "We must take our security into our own hands." Rheinmetall CEO Armin Papperger confirmed these sentiments at the virtual annual general meeting on Tuesday, expelling the notion of a "peace dividend."
Auto Division: Taking the Back Seat
Rheinmetall's civilian division, Power Systems, has seen tough times lately. In Q1 2025, Power Systems reported a dip in sales to €505 million, largely influenced by economic weaknesses in the automotive sector[5].
Gearing Up for Battle
Rheinmetall is experiencing a surge in its defense sector, fueled by regional uncertainties and elevated military budgets in Europe. With a mammoth order book of around €63 billion, the company is poised for expansion in the following key areas:
- Drone Defense: With Rheinmetall's focus on defense technology and new investments, it's plausible to suspect potential forays in drone defense.
- Rockets: Rheinmetall's substantial growth in artillery ammunition sales hints at a strong position in rocket systems.
- Battlefield Digitization: Rheinmetall's emphasis on digital and electronic solutions for modern battlefield requirements, as shown by the Electronic Solutions division's growth, suggests it's aiming for the frontlines of the digital battlefield.
Expansion: From National to Global
Rheinmetall is fully committed to becoming a global defense powerhouse, setting up new manufacturing plants and making strategic acquisitions[3][5]. This strategic expansion is anticipated to allow Rheinmetall to capitalize on increasing defense spending in Europe and play a pivotal role in modernizing European military capabilities[3].
In essence, Rheinmetall's objectives remain rooted in leveraging global geopolitical trends and defense budgets to drive growth, with a suggested strong potential for involvement in cutting-edge defense technologies.
Industries beyond the automotive sector are attracting Rheinmetall's attention, as the company seeks to where it sees potential growth, including defense, finance, aerospace, and business. With the auto division stagnating and the defense sector surging, Rheinmetall might consider diversifying its investments, particularly in drone defense, rockets, and battlefield digitization, given its focus on defense technology and growing order book.
