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 structure, Tel Aviv-based investment firm Aurelius Capital will take a majority stake in the facility, with the state government of Lower Saxony, Volkswagen’s second-largest shareholder, maintaining a minority share. The initial key project for the reconfigured site involves a manufacturing partnership with Israeli state-owned defense contractor Rafael Advanced Defense Systems. Plans focus on producing specialized systems and mechanical components domestically for air defense infrastructure intended for procurement by Germany and other European allies.
Volkswagen’s decision to repurpose the Osnabrück plant follows its 2024 strategic choice to cease passenger vehicle assembly there by mid-2027 due to ongoing industrial excess capacity. According to statements from the factory works council, the defense manufacturing agreement aims to safeguard about 1,200 specialized technical roles at the site. Israel Aurelius German state to take over VWs Osnabrueck plant defense projects as European automakers seek alternative industrial conversions to address surplus manufacturing capacity.
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Executives from the Wolfsburg-based automaker emphasized that the 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 workforce responsibilities. Representatives from Aurelius Capital, led by Managing Director Tomer Jacob, highlighted that the facility offers precision manufacturing and an experienced technical workforce suitable for advanced defense production.
This restructuring effort responds to broader financial challenges faced by traditional European vehicle manufacturers, including declining consumer interest in battery-electric models, high domestic energy prices, and intensified international competition. Labor union representatives from IG Metall acknowledged that converting civil automotive lines into defense manufacturing helps ensure long-term employment security for regional workers amid months of job uncertainty.
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The transaction remains contingent upon final contractual agreements, approval from relevant supervisory boards, and official regulatory clearance from German authorities. Specifics regarding purchase valuation, total valuation, and the equity split between Aurelius Capital and Lower Saxony have not been publicly disclosed by the involved parties.
Industry analysts note that shifting automotive manufacturing infrastructure toward defense hardware aligns with increasing defense budgets across European NATO countries. Regulatory oversight committees will oversee filings and monitor transition milestones as Volkswagen prepares to exit vehicle production at the site. Official updates regarding approvals and plant conversions will be issued through official disclosures.