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 new owners plan to convert the facility into a hub for security and defense manufacturing, collaborating with Israel’s Rafael Advanced Defense Systems to produce air defense hardware. The arrangement safeguards roughly 1,200 to 1,400 skilled technical roles and exemplifies a strategy to transform European automotive infrastructure to support defense supply chains.
Under the joint ownership model, Aurelius Capital, based in Tel Aviv, will hold a majority stake in the plant, while the state government of Lower Saxony, Volkswagen’s second-largest shareholder, will retain a minority interest. The initial flagship project for the redeveloped site involves a manufacturing collaboration with the Israeli state-owned defense contractor Rafael Advanced Defense Systems. Plans focus on domestically producing specialized systems and mechanical components for air defense infrastructure, intended for procurement by Germany and allied European countries.
The decision to repurpose the Osnabrück plant follows Volkswagen’s 2024 strategic plan to cease passenger vehicle assembly at the site by mid-2027, citing ongoing industrial overcapacity. Factory works council disclosures indicate that the defense manufacturing agreement aims to secure approximately 1,200 specialized technical positions at the facility. Israel Aurelius German state to take over VWs Osnabrueck plant defense projects as European automakers explore alternative industrial conversions to address excess manufacturing capacity.
Volkswagen Achieves Key Agreement in Broader Corporate Restructuring Efforts
Volkswagen’s leadership emphasized that this sale supports broader efficiency initiatives aimed at optimizing European operations. Volkswagen AG’s CEO Oliver Blume stated that the transaction offers a sustainable industrial outlook for the Osnabrück location while fulfilling corporate commitments to regional workers. Representatives from Aurelius Capital, led by Managing Director Tomer Jacob, highlighted the plant’s precise manufacturing capabilities and skilled workforce as assets suitable for advanced defense production.
This restructuring occurs amidst broader economic challenges facing traditional European automakers, including declining consumer demand for battery-electric vehicles, high domestic energy prices, and increased competition from international manufacturers. Labor union representatives from IG Metall acknowledged that converting civil automotive lines into defense manufacturing provides vital long-term employment security for regional industrial workers after months of employment uncertainty.
IG Metall Support for Employee Transition to Defense Production
The deal remains contingent upon final contractual agreements, approval by relevant corporate supervisory boards, and formal clearance from German antitrust authorities. Details regarding the purchase price, overall valuation, and specific equity distribution between Aurelius Capital and Lower Saxony have not been publicly disclosed.
Industry analysts note that shifting automotive infrastructure toward military hardware reflects increasing defense budgets across European NATO countries. Monitoring committees will oversee regulatory filings and milestone achievements as Volkswagen transitions out of vehicle manufacturing ahead of the official facility handover. Updates regarding approvals and conversions will be announced through regulatory disclosures.