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 arrangement, investment firm Aurelius Capital, based in Tel Aviv, will assume the majority shareholding in the plant, while the state government of Lower Saxony, Volkswagen’s second-largest shareholder, will retain a minority stake. The initial key project for the new focus at the site involves a manufacturing alliance with the Israeli state-owned defense contractor Rafael Advanced Defense Systems. Plans focus on locally producing specialized systems and mechanical parts for air defense infrastructure intended for procurement by Germany and European allied nations.
The move to repurpose the Osnabrück plant 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 secure about 1,200 specialized technical roles at the site. Israel Aurelius German state will oversee VWs Osnabrück plant defense projects as European automakers explore alternative industrial conversions to absorb surplus manufacturing capacity.
Volkswagen Achieves Significant Milestone in Broader Restructuring Effort
Volkswagen executives emphasized that this sale aligns with broader corporate efficiency initiatives aimed at streamlining European operations. CEO Oliver Blume stated that the transaction creates a viable industrial outlook for the Osnabrück facility while fulfilling the company’s responsibilities toward the regional workforce. Representatives from Aurelius Capital, led by Managing Director Tomer Jacob, highlighted that the plant offers precise manufacturing capabilities and an experienced technical workforce suitable for advanced defense production.
This restructuring occurs amid broader financial challenges faced by traditional European vehicle manufacturers, including declining demand for battery-electric models, high domestic energy prices, and increased competition from overseas producers. Labor union representatives from IG Metall acknowledged that converting civil automotive lines into defense manufacturing is crucial for long-term job security for regional industrial workers, especially after months of employment uncertainty.
IG Metall Labor Leaders Back Transition Plan for Workforce
The agreement remains pending final contractual documentation, approval from the relevant corporate supervisory boards, and formal approval from German antitrust authorities. Details on the financial terms, overall valuation, and specific equity ratios between Aurelius Capital and Lower Saxony have not been publicly disclosed.
Industry analysts note that redirecting automotive infrastructure toward military hardware reflects increasing defense procurement budgets across European NATO members. Regulatory oversight committees will monitor filings and transition milestones as Volkswagen prepares to phase out vehicle production lines before full operational transfer. Official updates on approvals and plant conversions will be shared through official disclosures.