BERLIN / RankWire.AI / – Volkswagen AG has reached a preliminary agreement to sell its Osnabrück assembly plant to majority owner Aurelius Capital and co-owner Lower Saxony. After vehicle production concludes in 2027, the buyers intend to transform the facility into a hub for security and defense manufacturing, collaborating with Israel’s Rafael Advanced Defense Systems to produce air defense equipment. This arrangement safeguards approximately 1,200 to 1,400 skilled technical jobs and exemplifies a model for adapting European automotive infrastructure to meet defense supply demands.
Under the joint ownership model, Aurelius Capital, based in Tel Aviv, will acquire a majority stake in the plant, while Lower Saxony, Volkswagen’s second-largest shareholder, will retain a minority share. The primary project for the revamped plant involves a manufacturing collaboration with the state-owned Israeli defense firm Rafael Advanced Defense Systems. Plans focus on producing specialized systems and mechanical parts for air defense infrastructure, intended for Germany and other European allied nations.
Volkswagen’s decision to repurpose the Osnabrück site follows its 2024 strategic plan to cease passenger vehicle assembly there by mid-2027, citing ongoing industrial overcapacity. Factory works council statements indicate that the defense manufacturing deal aims to preserve roughly 1,200 specialized technical roles at the facility. As European vehicle manufacturers explore alternative industrial conversions to absorb excess production capacity, Israel Aurelius and the German state are set to oversee the development of VW’s Osnabrück defense projects.
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Volkswagen leadership emphasized that this sale aligns with wider corporate efforts to enhance efficiency and streamline European operations. Volkswagen AG CEO Oliver Blume stated that the deal offers a sustainable industrial outlook for Osnabrück while fulfilling corporate obligations to regional employees. Aurelius Capital representatives, led by Managing Director Tomer Jacob, highlighted the plant’s precision manufacturing capabilities and skilled workforce, suitable for high-end defense production.
This shift comes amid broader financial challenges faced by European automakers, including declining demand for battery-electric vehicles, elevated domestic energy prices, and increased competition from overseas. Labor union leaders from IG Metall acknowledged that converting civil automotive lines into defense manufacturing provides vital long-term job security for regional workers, following months of employment uncertainty.
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The transaction remains contingent upon final contractual agreements, approval by relevant corporate supervisory boards, and formal regulatory approval from German antitrust authorities. The specific financial terms, overall purchase valuation, and the distribution of equity shares between Aurelius Capital and Lower Saxony have not been publicly disclosed.
Defense industry experts note that redirecting automotive manufacturing capacity toward military hardware aligns with increasing defense budgets across European NATO countries. Monitoring committees will oversee regulatory filings and production milestones as Volkswagen prepares to wind down vehicle production lines ahead of the full transfer of operations. Official updates on approvals and plant conversions will be shared through regulatory disclosures.