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 transform the factory into a hub for security and defense manufacturing, collaborating with Israel’s Rafael Advanced Defense Systems to produce air defense components. This deal safeguards roughly 1,200 to 1,400 skilled technical roles and exemplifies a broader strategy to adapt European automotive infrastructure for defense supply needs.
Under the shared ownership model, Aurelius Capital, based in Tel Aviv, will hold the majority equity stake, while the state government of Lower Saxony, Volkswagen’s second-largest shareholder, will retain a minority interest. The initial key project for the revamped site involves a manufacturing collaboration with the state-owned Israeli defense contractor Rafael Advanced Defense Systems. The operational focus is on producing specialized systems and mechanical parts for air defense infrastructure intended for procurement by Germany and other European allied nations.
The decision to repurpose the Osnabrück facility 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 agreement aims to maintain approximately 1,200 specialized technical positions at the plant. Israel Aurelius German state to take over VWs Osnabrück plant defense projects as European automakers seek alternative industrial conversions to manage excess manufacturing capacity.
Volkswagen Achieves Key Agreement in Broader Corporate Restructuring Efforts
Volkswagen’s leadership highlighted that this sale supports larger 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, aligning with the company’s regional commitments. Representatives from Aurelius Capital, led by Managing Director Tomer Jacob, emphasized that the plant provides precise manufacturing capabilities and a well-established technical workforce suitable for advanced defense production.
This restructuring initiative occurs amid broader financial challenges faced by traditional European automakers, including declining consumer interest in battery-electric vehicles, high energy costs within Germany, and increased international market competition. Labor union representatives from IG Metall acknowledged that converting civil automotive lines into defense manufacturing offers critical long-term job security for regional workers after months of employment uncertainty.
IG Metall Representatives Endorse Transition Plan for Employee Welfare
The deal remains contingent upon final contractual agreements, approval by the relevant corporate supervisory boards, and formal regulatory approval from German antitrust authorities. Financial details, overall valuation, and specific equity split between Aurelius Capital and Lower Saxony have not been publicly disclosed by the involved parties.
Experts in the defense sector highlight that shifting automotive infrastructure toward military hardware reflects increasing defense procurement budgets across European NATO countries. Regulatory oversight committees will oversee filings and transition milestones as Volkswagen prepares to wind down vehicle production lines ahead of the official facility handover. Official updates regarding approvals and facility conversions will be communicated through regulatory disclosures.