Cars out, tanks in: Rheinmetall is now worth more than Volkswagen

There’s a changing of the guard in the German stock market.

The market value of Rheinmetall AG has surpassed that of Volkswagen, putting the defense company among the 10 largest stocks in Germany’s benchmark DAX Index.

The carmaker has been floundering amid intense competition from Chinese EV-making rivals. Meanwhile, Rheinmetall is seemingly the prime beneficiary of Germany’s decision to pursue a massive defense spending package, which may be passed this week.

It’s very poetic that Rheinmetall’s ascension over Volkswagen is coming at the precise time that it is also considering taking over some of Volkswagen’s operations. CEO Armin Papperger suggested that the EV company’s factory in Osnabrueck (which Volkwagen is considering selling) is an attractive site to be converted into a tank-producing plant.

That’s probably music to the ears of German politicians, as reframing “rearmament” as “reindustrialization” is a part of the sales pitch for defense spending.

“Defence plans are likely to increasingly be sold domestically to voters as a pathway to the reindustrialization of Europe,” Signum Global Advisors Senior Europe Analyst Nico Fitzroy wrote. “European countries suffering most deeply from the downturn in the auto sector (set to worsen with likely upcoming US tariffs), are already looking to shift spare capacity from car manufacturing into the defence sector.”