Rheinmetall Leaves the Auto Business Behind as the Market Watches for Delivery

Rheinmetall has finished one of the most consequential shifts in its corporate history, but the stock market is still waiting for proof that the new pure-play defence model can translate into faster growth. The group signed the sale of Power Systems to AEQUITA on 3 June, ending its last remaining car-supplier activity and arriving at the ILA Berlin air show as a different company from the one investors knew a few weeks ago.

The transaction covers about 6,200 employees, who will move to the new owner once the deal clears regulatory approval. IG Metall negotiated a three-year employment guarantee. Rheinmetall expects closing in the fourth quarter of 2026. The divestment also removes the final vestige of its automotive business from the books, leaving roughly 34,000 employees in the defence core out of a total of around 40,000.

For the company, the strategic clean-up comes with a 200 million euro accounting charge, but management is betting that the simpler structure will sharpen execution. From now on, the focus is squarely on weapons, ammunition and air defence. That is where the group expects its next phase of expansion to come from.

The order book gives the story substance. As of 31 March 2026, Rheinmetall reported an order backlog of 73 billion euros, up from 56 billion euros a year earlier. The company says that is roughly five times the sales it plans for 2026. Full-year guidance calls for revenue of 14.0 billion euros to 14.5 billion euros and an operating margin of around 19 percent.

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Yet the first-quarter numbers were a reminder that execution still matters. Consolidated revenue came in at 1.94 billion euros, about 15 percent below analyst expectations. Management said production ramp-ups and contract deliveries are concentrated in the second half of the year.

That second-half push is what the market is now watching most closely. In the first quarter, the Air Defence segment grew 43 percent, underlining where demand is strongest. The broader political backdrop also favours higher military spending, but investors are looking for harder evidence that the pipeline will turn into sales quickly.

Rheinmetall is using the ILA in Berlin, running from 10 to 14 June, to present its new identity. The company has around 840 square metres of exhibition space and is putting more than tanks on display. Among the highlights is the FV-014 loitering munition system, which can circle over a target area for up to 70 minutes. Its subsidiary ICEYE is also showing new radar satellites that provide weather-independent real-time data for the battlefield.

Another centrepiece is the F-35 centre fuselage production facility in Weeze on the Lower Rhine. Built in less than one and a half years, it has been producing since summer 2025 and is already on its eighth centre fuselage section. The project is meant to reinforce Rheinmetall’s case that it can convert defence demand into industrial output.

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The share price, however, has not kept pace with the transformation story. The stock most recently finished trading at 1,204.00 euros on Monday, around 39 percent below its 52-week high of 1,995 euros. Since the start of the year, it has lost about 25 percent. It has recovered almost 10 percent from the May low, and the Relative Strength Index stands at 42, which points to some easing of pressure. Even so, the 50-day line is still more than 10 percent above the current level.

The next test comes on 6 August, when Rheinmetall reports second-quarter numbers. Until then, the Berlin air show will serve as the first real stage for a company that has completed its breakup with the auto industry and is now asking investors to judge it purely on defence.

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