VW and Rheinmetall are heading in different directions. The arms-maker is benefiting from the surge in European defense spending as the bloc rearms to deter Russia, support Ukraine and ensure its security amid fears that Trump will back away from the continent, while Volkswagen battles headwinds caused by problems in China, Trump’s tariffs and a bumpy transition to electric vehicles.
Cars powered Germany’s post-World War II recovery, making it the EU’s economic powerhouse and allowing defense to take a back seat — especially after the end of the Cold War. Now Germany’s economy could rely on tanks for growth.
“An era of rearmament has begun in Europe that will demand a lot from all of us,” Rheinmetall CEO Armin Papperger said in a statement Wednesday announcing the company’s record earnings. “It also brings us at Rheinmetall growth prospects for the coming years that we have never experienced before.”
In one sign of the transition, Volkswagen is planning to end production at its Osnabrück factory, and Papperger said Wednesday that the plant would be “very suitable” as a potential tank factory.
“One thing is clear: Before I build a new tank plant in Germany, we will certainly look at it,” Papperger said.
While the automotive sector’s problems dominated public discourse in the months leading up to Germany’s snap election in February, concerns around security are shifting attention — and funding — toward defense.