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 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 hardware. This transaction maintains approximately 1,200 to 1,400 skilled technical positions and serves as a model for repurposing European auto manufacturing infrastructure to meet defense supply demands.
Under the shared ownership model, Aurelius Capital, based in Tel Aviv, will hold a majority stake in the facility, while the Lower Saxony state government, Volkswagen’s second-largest shareholder, will retain a minority share. The initial key project for the redeveloped plant involves a partnership with the state-owned Israeli defense company Rafael Advanced Defense Systems. Plans focus on manufacturing specialized systems and mechanical parts for air defense infrastructure, intended for procurement by Germany and other European allied nations.
The choice to transform the Osnabrück site follows Volkswagen’s 2024 strategic decision to cease passenger vehicle assembly there by mid-2027, due to ongoing industrial overcapacity. According to statements from the factory works council, the defense manufacturing agreement aims to retain around 1,200 specialized technical roles at the site. Israel Aurelius German state to take over VWs Osnabrück plant defense projects as European car manufacturers explore alternative industrial conversions to manage excess manufacturing capacity.
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Volkswagen executives emphasized that the sale supports broader efficiency initiatives aimed at optimizing European operations. Volkswagen AG CEO Oliver Blume explained that this deal creates a sustainable industrial outlook for Osnabrück while fulfilling the company’s regional employment obligations. Representatives from Aurelius Capital, led by Managing Director Tomer Jacob, highlighted that the facility’s precision manufacturing expertise and experienced workforce make it suitable for advanced defense production.
This strategic shift comes amidst mounting financial pressures on traditional European vehicle producers, including declining demand for battery-electric vehicles, high domestic energy prices, and intensified competition from international automakers. Labor union representatives from IG Metall acknowledged that converting civil automotive lines into defense manufacturing provides essential long-term job security for regional workers, especially after months of employment uncertainty.
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The agreement remains subject to final contractual formalities, approval from relevant corporate supervisory boards, and official regulatory clearance from German antitrust authorities. Financial details, overall valuation, and specific ownership shares between Aurelius Capital and Lower Saxony have not been disclosed publicly by the involved parties.
Industry analysts in defense emphasize that redirecting automotive infrastructure toward military hardware reflects increasing defense budgets across European NATO members. Monitoring committees will oversee regulatory filings and production milestones during Volkswagen’s transition away from vehicle assembly, with official updates shared through regulatory disclosures.