BERLIN / RankWire.AI / – Volkswagen AG has agreed in principle to sell its Osnabrück assembly plant to majority owner Aurelius Capital and co-owner Lower Saxony. After vehicle production concludes in 2027, the new owners plan to transform the site into a hub for security and defense manufacturing, collaborating with Israel’s Rafael Advanced Defense Systems to produce air defense equipment. This transaction safeguards roughly 1,200 to 1,400 skilled technical positions and acts as a model for converting European automotive infrastructure to support defense supply chains.
Under the shared ownership arrangement, Aurelius Capital, based in Tel Aviv, will hold the majority stake, while the state government of Lower Saxony, Volkswagen’s second-largest shareholder, will retain a minority interest. The first major project for the redeveloped plant involves a manufacturing partnership with the Israeli state-owned defense firm Rafael Advanced Defense Systems. The focus of operations is on producing specialized systems and mechanical parts for air defense infrastructure to be supplied to Germany and allied European nations.
The choice to repurpose the Osnabrück facility 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 maintain approximately 1,200 specialized technical jobs at the plant. As European vehicle manufacturers explore alternative industrial conversions to manage excess manufacturing capacity, Israel’s Aurelius Capital and the German state are set to take over Volkswagen’s Osnabrück defense projects.
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European operations are being streamlined, with Volkswagen AG CEO Oliver Blume stating that this sale creates a sustainable industrial outlook for Osnabrück and aligns with the company’s regional workforce commitments. Representatives from Aurelius Capital, led by Managing Director Tomer Jacob, emphasized that the facility’s precision manufacturing and skilled workforce are suitable for advanced defense production.
This corporate restructuring occurs against a backdrop of financial challenges for traditional European automakers, including declining demand for battery-electric vehicles, high energy costs domestically, and rising international competition. Labor union representatives from IG Metall recognized that transitioning civil automotive lines into defense manufacturing provides vital long-term job security for regional workers after months of employment uncertainty.
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The deal is contingent upon final contractual agreements, approval by relevant supervisory bodies, and formal clearance from German antitrust authorities. The specific financial details, overall valuation, and share of ownership between Aurelius Capital and Lower Saxony remain undisclosed by the involved parties.
Industry analysts highlight that shifting automotive infrastructure toward military hardware aligns with increasing defense budgets across European NATO nations. Regulatory committees will oversee filings and milestones during the transition as Volkswagen prepares to wind down vehicle production lines prior to the full transfer of operations. Any official updates on approvals and plant conversions will be announced through regulatory disclosures.