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 buyers will convert the factory into a security and defense production hub, partnering with Israel’s Rafael Advanced Defense Systems to manufacture air defense hardware. The deal preserves approximately 1,200 to 1,400 skilled technical jobs while serving as a blueprint for converting European auto infrastructure to meet defense supply needs.
Under the joint ownership framework, Tel Aviv-based investment firm Aurelius Capital will assume a majority equity stake in the facility, while the state government of Lower Saxony, Volkswagen’s second-largest shareholder, will hold a minority interest. The initial key project for the redeveloped site involves a manufacturing partnership with state-owned Israeli defense contractor Rafael Advanced Defense Systems. Plans focus on the domestic production of specialized systems and mechanical components for air defense infrastructure intended for procurement by Germany and European allied nations.
The decision to repurpose the Osnabrück plant follows Volkswagen’s strategic plan for 2024 to cease passenger vehicle assembly at the site by mid-2027, citing ongoing industrial overcapacity. According to statements from the factory works council, the defense manufacturing deal aims to secure roughly 1,200 specialized technical roles at the plant. Israel Aurelius German state to take over VWs Osnabrueck plant defense projects as European vehicle manufacturers explore alternative industrial conversions to absorb excess manufacturing capacity.
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Executives from the Wolfsburg-based automaker emphasized that this sale aligns with wider corporate efficiency initiatives aimed at streamlining European operations. Volkswagen AG CEO Oliver Blume explained that the deal creates a sustainable industrial outlook for the Osnabrück site while fulfilling the company’s regional employment commitments. Representatives from Aurelius Capital, headed by Managing Director Tomer Jacob, highlighted that the facility’s precision manufacturing expertise and seasoned technical workforce are well-suited for advanced defense production.
This restructuring occurs against a backdrop of economic challenges confronting European automakers, including declining demand for battery-electric vehicles, high domestic energy costs, and increased competition from international manufacturers. Labor representatives from IG Metall acknowledged that shifting automotive lines to defense production is crucial for long-term job security in the region, especially following months of employment uncertainty.
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The transaction remains contingent upon final contractual agreements, approval from relevant corporate supervisory boards, and formal regulatory authorization from German antitrust authorities. Financial details, overall valuation, and specific ownership share ratios between Aurelius Capital and Lower Saxony have not been publicly disclosed by the involved parties.
Industry analysts note that redirecting automotive manufacturing towards military hardware reflects increasing defense budgets across European NATO countries. Regulatory oversight committees will track filings and transitional milestones as Volkswagen plans to wind down vehicle production before completing the handover. Updates regarding approvals and plant conversion will be issued through official disclosures.