VOL. XCIV, NO. 247
★ WIDE MOAT STOCKS & COMPETITIVE ADVANTAGES ★
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Sunday, December 28, 2025
Rheinmetall Aktiengesellschaft
RHM · Xetra
Weighted average of segment moat scores, combining moat strength, durability, confidence, market structure, pricing power, and market share.
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Overview
Rheinmetall is a German defense and technology group with three core defense segments (Vehicle Systems, Weapon and Ammunition, Electronic Solutions). Its main moat mechanisms are government procurement relationships/compliance, long platform qualification cycles, and constrained capacity/supply chains in critical munitions. The civilian Power Systems business is being prepared for sale as the group focuses on military operations. Revenue/profit shares are normalized from FY2024 segment sales/operating results disclosed in Rheinmetall press releases (segment sales include intercompany sales).
Primary segment
Vehicle Systems
Market structure
Oligopoly
Market share
—
HHI: —
Coverage
4 segments · 5 tags
Updated 2025-12-28
Segments
Vehicle Systems
Armored and tactical wheeled/tracked military vehicles
Revenue
36.7%
Structure
Oligopoly
Pricing
moderate
Share
—
Peers
Weapon and Ammunition
Medium & large caliber ammunition and weapon systems
Revenue
26.9%
Structure
Oligopoly
Pricing
strong
Share
—
Peers
Electronic Solutions
Defense electronics and short-range air defense systems
Revenue
16.7%
Structure
Oligopoly
Pricing
moderate
Share
—
Peers
Power Systems (civilian; planned divestiture)
Auto/industrial components + aftermarket trade
Revenue
19.7%
Structure
Competitive
Pricing
weak
Share
—
Peers
Moat Claims
Vehicle Systems
Armored and tactical wheeled/tracked military vehicles
Government Contracting Relationships
Legal
Government Contracting Relationships
Strength: 4/5 · Durability: durable · Confidence: 4/5 · 1 evidence
Multi-year government programs/framework agreements drive volume visibility; limited qualified bidders.
Erosion risks
- Budget shifts or delayed procurement
- Local-content rules favoring domestic primes
Counterarguments
- Tenders can compress margins
- Program awards can rotate with politics/performance
Design In Qualification
Demand
Design In Qualification
Strength: 4/5 · Durability: durable · Confidence: 3/5 · 1 evidence
Platform selection + sustainment/service work increase switching costs over a vehicle life cycle.
Erosion risks
- Open architectures reduce lock-in
- Sustainment re-competed among suppliers
Counterarguments
- Next-gen vehicle programs can reset incumbency
- Governments can mandate multi-sourcing
Weapon and Ammunition
Medium & large caliber ammunition and weapon systems
Capacity Moat
Supply
Capacity Moat
Strength: 5/5 · Durability: medium · Confidence: 4/5 · 1 evidence
Munitions capacity is a binding constraint; large frameworks support expansion and utilization.
Erosion risks
- Competitor capacity build-out (often state-backed)
- Demand normalization after surge
Counterarguments
- Capacity is buildable with enough capital/subsidy
- Governments can impose pricing constraints
Supply Chain Control
Supply
Supply Chain Control
Strength: 4/5 · Durability: medium · Confidence: 3/5 · 1 evidence
Securing energetics/components reduces delivery risk when inputs are scarce.
Erosion risks
- Upstream input shocks/export bans
- Safety/regulatory incidents impacting output
Counterarguments
- Peers can vertically integrate too
- Supply constraints may ease over time
Electronic Solutions
Defense electronics and short-range air defense systems
Government Contracting Relationships
Legal
Government Contracting Relationships
Strength: 4/5 · Durability: durable · Confidence: 4/5 · 1 evidence
Defense electronics awards depend on security/compliance and government customer relationships.
Erosion risks
- Procurement reforms increasing competition
- Program delays/cancellations
Counterarguments
- Large primes compete aggressively in air defense/C4ISR
- Buyers can dual-source and pressure pricing
Design In Qualification
Demand
Design In Qualification
Strength: 4/5 · Durability: durable · Confidence: 3/5 · 1 evidence
Systems integration/testing creates long qualification cycles; fielded systems require upgrades and support.
Erosion risks
- Open interfaces reduce lock-in
- Fast tech cycles (drones/EW) shorten system life
Counterarguments
- Next program cycles can displace incumbents
- Open-architecture mandates reduce switching costs
Power Systems (civilian; planned divestiture)
Auto/industrial components + aftermarket trade
Long Term Contracts
Demand
Long Term Contracts
Strength: 3/5 · Durability: medium · Confidence: 3/5 · 2 evidence
Auto platform wins can create multi-year production and service tails, but pricing is competitive.
Erosion risks
- Divestiture reducing reinvestment
- OEM price-down pressure
Counterarguments
- Auto suppliers can be re-bid at refresh cycles
- Multi-sourcing is common
Distribution Control
Supply
Distribution Control
Strength: 3/5 · Durability: medium · Confidence: 3/5 · 1 evidence
Trade/aftermarket footprint can provide channel access, but distribution is still competitive.
Erosion risks
- E-commerce disintermediation
- OEMs expanding direct channels
Counterarguments
- Aftermarket distribution has many capable players
- Scale advantage may be limited for commoditized parts
Evidence
Vehicle Systems: order intake (incl. frameworks) EUR 8,349m; largest projects include EUR 2,935m framework + EUR 1,666m Heavy Weapon Carrier Boxer + service.
Shows scale and government contracting intensity.
Vehicle Systems: 'Heavy Weapon Carrier' order referenced with an associated service contract; FY2024 operating margin 11.2%.
Service-tail dynamics + value capture support moderate pricing power.
Weapon & Ammunition: nomination EUR 12,307m; artillery ammo framework increase EUR 7.1bn; FY2024 operating margin 28.4%.
Indicates very strong demand pull and high value capture during tight supply.
CEO: invested nearly EUR 8bn in two years to build plants, make acquisitions and secure supply chains.
Direct link between investment program and supply-chain security.
Electronic Solutions: nomination EUR 5,065m; major orders included LVS NNbS development + Skyranger 30 deliveries; FY2024 operating margin 12.6%.
Record order intake + value capture supports relationship moat.
Showing 5 of 9 sources.
Risks & Indicators
Erosion risks
- Budget shifts or delayed procurement
- Local-content rules favoring domestic primes
- Open architectures reduce lock-in
- Sustainment re-competed among suppliers
- Competitor capacity build-out (often state-backed)
- Demand normalization after surge
Leading indicators
No indicators listed yet.
Curation & Accuracy
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