Rheinmetall Converts Auto Plants to Munitions as Stock Hovers Near 52-Week Low After Mercedes Rivalry Signal

Rheinmetall repurposes two German auto factories for defense production amid strong military demand, but shares languish near 52-week low despite €135B backlog, with technical weakness and potential auto-sector competition weighing.

Rheinmetall is repurposing two of its German automotive factories into defence production hubs, a strategic pivot designed to capitalise on booming military demand while its traditional car-parts business struggles. The sites in Berlin and Neuss will manufacture mechanical components for artillery and ammunition systems — no explosives, but the critical hardware behind them. The move creates what the company calls “hybrid plants”, retaining existing industrial infrastructure while swapping auto parts for armaments. This allows capacity to ramp up quickly without building greenfield facilities.

The logic is straightforward: auto sales are sagging, but defence orders are piling up. Analysts estimate the total order backlog, including framework agreements, could reach €135 billion. Yet this operational strength has done little for the share price. The stock closed Friday at €1,123.80, barely above its 52-week low of €1,118.00. Since the start of the year, the shares have shed nearly 30%, partly due to the dividend ex-date after the annual general meeting approved a payout of €11.50 per share.

The technical picture is even more grim. Friday’s close represented a single-session loss of 2.01%, extending the weekly decline to 6.91%. The sell signal triggered on 13 May continues to weigh on the chart, leaving the stock just 0.52% away from its trough. The distance from key moving averages is wide, underscoring a broken near-term trend. Systematic traders and short-term players are eyeing the same support levels, amplifying the pressure.

Adding to the bearish sentiment, Mercedes-Benz CEO Ola Källenius recently signalled openness for his company to participate in defence production. While no concrete threat to Rheinmetall has emerged, the remark shifts the market debate. If automotive heavyweights redirect capacity toward military goods, the competitive landscape could change, potentially eroding the valuation premium that established defence players enjoy. For now, Rheinmetall still benefits from intense NATO and Ukraine-related demand, but the prospect of auto-sector rivals entering the fray is unsettling investors.

Analysts are not yet abandoning ship, however. Bernstein Research maintains an “Outperform” rating but trimmed its price target to €1,900, signalling long-term conviction tempered by short-term caution. Warburg Research remains on the buy side, and both Deutsche Bank and UBS have issued positive assessments in recent weeks, while JPMorgan holds a neutral stance. The market, though, is currently more concerned with whether the stock can find a technical floor than with analyst recommendations.

A small counterpoint came via a regulatory filing: Georgi Vermögensverwaltungs GmbH added to its Rheinmetall stake, indicating that some buyers are stepping in at lower levels. That does little to alter the chart, but it shows that value-seeking money is circling.

Next week provides a potential catalyst. On 21 May, Rheinmetall management will present at two investor conferences simultaneously. In New York, the focus will be on the US expansion strategy; in London, management will address institutional investors about scaling production. Concrete details on loitering munitions or the Leonardo partnership in Italy could help bridge the gap between a brimming order book and cautious equity holders.

For the immediate term, the zone around €1,118.00 sets the tone. If that level holds, the stock may stabilise and begin to recover lost ground. A break below it, however, would intensify the chart-driven selling pressure in the new trading week.