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. Following the scheduled end of vehicle production in 2027, the new owners plan to convert the factory into a hub for security and defense manufacturing, collaborating with Israel’s Rafael Advanced Defense Systems to produce air defense equipment. This move aims to retain about 1,200 to 1,400 skilled technical jobs and serves as a model for repurposing European automotive infrastructure to support defense supply chains.
Under the shared ownership arrangement, Aurelius Capital, based in Tel Aviv, will hold a majority stake, while Lower Saxony, Volkswagen’s second-largest shareholder, will keep a minority interest. The primary project at the revamped site involves a partnership with Israeli state-owned defense contractor Rafael Advanced Defense Systems. The focus is on producing specialized systems and mechanical parts for air defense infrastructure intended for use by Germany and allied European nations.
This decision follows Volkswagen’s strategic plan announced in 2024 to cease passenger vehicle assembly at the Osnabrück plant by mid-2027, citing ongoing overcapacity issues. According to statements from the factory works council, the defense manufacturing deal aims to preserve approximately 1,200 specialized technical roles at the facility. The transition reflects a broader trend among European automakers to convert manufacturing sites into defense-related facilities to address excess production capacity.
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European operations are part of Volkswagen AG’s broader efficiency initiatives, according to senior executives. CEO Oliver Blume explained that the sale provides a sustainable industrial outlook for Osnabrück while fulfilling the company’s commitments to the local workforce. Representatives from Aurelius Capital, led by Managing Director Tomer Jacob, noted the facility’s expertise in precision manufacturing and its seasoned technical staff, making it suitable for advanced defense production.
Amidst financial challenges such as declining demand for battery-electric vehicles, rising energy costs in Germany, and stiff competition from international automakers, this shift is seen as a strategic response. Labor leaders from IG Metall have emphasized that converting civil automotive lines into defense manufacturing offers long-term job security for regional workers after months of employment uncertainty.
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The deal is still pending finalization of contractual details, approval from the relevant corporate supervisory boards, and regulatory clearance from German authorities. Details regarding the purchase valuation, financial terms, and the distribution of equity shares between Aurelius Capital and Lower Saxony have not been publicly disclosed.
Defense analysts highlight that converting automotive factories into military manufacturing facilities aligns with increasing defense budgets across European NATO member states. Regulatory bodies and oversight committees will oversee the transition process, including production milestones and compliance measures as Volkswagen prepares to wind down vehicle production lines. Official updates will be shared through formal disclosures.