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 new owners plan to transform the site into a hub for security and defense manufacturing, collaborating with Israel’s Rafael Advanced Defense Systems to produce air defense equipment. This deal maintains approximately 1,200 to 1,400 skilled technical jobs and sets a precedent for repurposing European automotive facilities to support defense supply chains.
Under the joint ownership model, Aurelius Capital, based in Tel Aviv, will hold a majority stake, while Lower Saxony, Volkswagen’s second-largest shareholder, will retain a minority interest. The initial key project involves a manufacturing collaboration with Israeli state-owned defense firm Rafael Advanced Defense Systems. The focus will be on producing specialized systems and mechanical parts for air defense infrastructure intended for Germany and allied European countries.
The decision to repurpose the Osnabrück site follows Volkswagen’s 2024 strategic plan to cease passenger vehicle assembly there by mid-2027, due to ongoing overcapacity issues. According to statements from the factory works council, the defense manufacturing deal aims to safeguard about 1,200 specialized technical roles at the plant. Israel Aurelius German state to take over VWs Osnabrueck plant defense projects as European automakers explore alternative conversions to manage excess manufacturing capacity.
Volkswagen Secures Key Agreement in Broader Business Restructuring
Volkswagen’s leadership highlighted that the sale aligns with larger efficiency initiatives aimed at streamlining European operations. CEO Oliver Blume commented that the deal offers a sustainable industrial outlook for Osnabrück while fulfilling corporate duties toward regional employees. Aurelius Capital representatives, led by Managing Director Tomer Jacob, noted the plant’s capabilities in precision manufacturing and its skilled workforce, well-suited for advanced defense production.
This restructuring occurs amid broader financial challenges facing European car manufacturers, including declining demand for electric vehicles, high domestic energy prices, and stiff competition from overseas firms. IG Metall union representatives expressed support, emphasizing that converting automotive lines to defense production could secure long-term jobs for regional workers after months of employment uncertainty.
IG Metall Supports Employee Transition to Defense Industry
The transaction remains contingent upon final contractual details, approval by relevant supervisory boards, and regulatory clearance from German antitrust authorities. Financial details, valuation, and specific equity shares between Aurelius Capital and Lower Saxony have not been publicly disclosed.
Industry analysts note that shifting automotive infrastructure to military hardware reflects increasing defense budgets among European NATO members. Regulatory oversight committees will track filings and milestone achievements as Volkswagen prepares to wind down vehicle manufacturing before full operational transfer. Official updates on approvals and site conversions will be shared through official disclosures.