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 the planned conclusion of vehicle production in 2027, the new owners 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 components. This deal safeguards approximately 1,200 to 1,400 skilled technical positions and offers a model for repurposing European automotive infrastructure to meet defense supply demands.
Under the joint ownership structure, Aurelius Capital, based in Tel Aviv, will hold the majority of shares in the plant, with the state government of Lower Saxony, Volkswagen’s second-largest stakeholder, maintaining a minority stake. The initial key project for the revamped site involves a manufacturing collaboration with Israel’s state-owned defense firm Rafael Advanced Defense Systems. The focus will be on producing specialized systems and mechanical parts for air defense systems, intended for procurement by Germany and other European allied nations.
This decision to reorient the Osnabrück plant follows Volkswagen’s 2024 strategic plan to cease passenger vehicle assembly there by mid-2027, citing ongoing industrial overcapacity. According to statements from the factory works council, the defense manufacturing partnership aims to secure roughly 1,200 specialized technical roles within the facility. Israel Aurelius German state to take over VWs Osnabrück plant defense projects as European automakers explore alternative industrial conversions to address excess manufacturing capacity.
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Volkswagen’s leadership emphasized that this sale supports wider corporate efficiency initiatives aimed at streamlining European operations. Volkswagen AG CEO Oliver Blume explained that the transaction creates a sustainable industrial outlook for Osnabrück while fulfilling corporate commitments to the regional workforce. Representatives from Aurelius Capital, led by Managing Director Tomer Jacob, highlighted that the facility’s capabilities in precision manufacturing and its skilled workforce are well-suited for advanced defense production.
This strategic shift comes amid financial pressures facing traditional European car manufacturers, including declining demand for battery-electric vehicles, high energy costs domestically, and increased competition from international automakers. Labor union representatives from IG Metall acknowledged that converting civil automotive lines for defense manufacturing provides essential long-term employment security for regional industrial workers after months of employment uncertainty.
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The deal remains subject to the finalization of contractual agreements, approval by relevant corporate supervisory boards, and formal regulatory approval from German antitrust authorities. Financial details, overall valuation, and specific ownership shares between Aurelius Capital and Lower Saxony have not been publicly disclosed.
Industry analysts note that shifting automotive infrastructure toward military hardware aligns with increasing defense budgets across European NATO countries. Regulatory bodies will oversee filings and transitional milestones as Volkswagen prepares to wind down vehicle production lines ahead of full handover. Official updates on approvals and plant conversions will be issued through regulatory disclosures.