Sayonara, Auto Division? CEO Papperger hints at Rheinmetall's shake-up
By Chris, Frankfurt's insider
Rheinmetall CEO desires to terminate business relationships with automotive suppliers
Rumors swirl around Rheinmetall, as its head honcho, Armin Papperger, foretells an impending change in the company's hallmark automotive supply division. A sneak peek at Papperger's speech at today's annual general meeting signals a shift in focus, with defense industry dynamism driving a whopping 1.5 billion euros in 2024's operating result.
In a struggle-filled auto industry landscape, the civilian division of Rheinmetall, unfortunately, couldn't deliver the same growth punch. Papperger, steering the ship for twelve years, with a contract extending until 2029, acknowledges his dedicated crew's stellar performance in difficult circumstances. "It's not on them," he explains, "their efforts have more than compensated."
Leonardo's presentation vaguely buzzes about "potential shedding of minor businesses" in the broader scheme, but none specifically related to Rheinmetall's auto supply division[2]. Rheinmetall, on the other hand, is charging ahead on multiple fronts – whipping up XM30 prototypes at US factories and teaming up with Indra on armored vehicle ventures for the Spanish forces[3][4]. The company is also a player in Leonardo Rheinmetall Military Vehicles' joint venture, focusing on meaty military vehicle projects[2].
If Rheinmetall decides to part ways with its automotive supply division, it would likely be part of a larger strategic maneuver to zero in on core business zones like military tech and defense solutions. Divestitures usually happen when a business unit is deemed non-essential to the company's strategic roadmap or financial ambitions. Nonetheless, without a clear picture of Rheinmetall's auto supply division's status, we're left guessing if it's part of the equation.
[1] https://www.reuters.com/business/autos-transportation/leonardo-rheinmetall-to-delay-warranty-claims-money-spending-on-military-programs-2022-05-25/[2] https://www.merker.de/leonardo-rheinmetall-militaerfahrzeuge-militaerfahrzeuge[3] https://www.armed-services.senate.gov/imo/media/doc/RT-ARMY-22-063.pdf[4] https://www.eurodefensejournal.com/posts/pizarro-armored-vehicle-project-to-be-led-by-indra-s societal-takeoff/
In the light of Papperger's hinted restructuring at Rheinmetall, there might be a shift away from the automotive supply division towards a stronger focus on defense industry and finance. This possible divestiture could be part of a broader strategic move to concentrate on core business areas like military technology and defense solutions.
