German military giant Rheinmetall is considering taking over one of Volkswagen’s soon-to-be-unused plants, as the arms maker seeks additional production capacity in Germany while domestic carmakers struggle, Kallanish notes.
According to the company’s chief executive, Armin Paperge, VW’s Osnabrück plant is “suitable” for Rheinmetall’s operations, but stressed that any decision to acquire unused car plants would depend on securing more tank orders. “It is much more complicated to build something than to use something that is already there. We are in constant conversation with VW over the automaker’s military truck joint venture with MAN Truck & Bus,” he said during his company’s annual press conference last week.
“An era of rearmament has begun in Europe and for Rheinmetall it brings growth prospects in the coming years that we have never had before,” Paperge noted.
The Düsseldorf-based company reported a 30% on-year increase in its defence business last year, driving total sales to $10.6 billion.
Rheinmetall said that about 30% of its sales went to Germany’s armed forces – a figure likely to rise if incoming Chancellor Friedrich Merz succeeds in his plan to bypass the country’s strict debt rules to allow unlimited borrowing for defence spending.
The company expects sales to increase by up to 30% this year, adding that this would also “improve operating profit”.
Rheinmetall has been one of the biggest beneficiaries of Russia’s invasion of Ukraine as investors put aside ethical concerns about arms stockpiles. The company’s share price has risen more than ten-fold since the war began in 2022.
VW’s Osnabrück plant is one of three that will remain unused for the next two years after the automaker decided last December to halve its production capacity in the country due to slowing car sales in Europe.
Svetoslav Abrossimov Bulgaria
