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 factory 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 jobs and provides a model for converting European automotive infrastructure to meet defense supply demands.
In the joint ownership arrangement, Aurelius Capital, based in Tel Aviv, will hold a majority stake in the facility, while the Lower Saxony government, Volkswagen’s second-largest shareholder, will retain a minority interest. An initial key project involves a manufacturing partnership with the Israeli defense contractor Rafael Advanced Defense Systems, which is state-owned. Plans focus on domestic production of specialized systems and mechanical parts for air defense infrastructure aimed at procurement by Germany and allied European nations.
The choice to repurpose the Osnabrück facility follows Volkswagen’s strategic decision in 2024 to cease passenger vehicle assembly at the plant by mid-2027 due to ongoing industrial overcapacity. According to statements from the factory works council, the defense manufacturing deal is designed to secure about 1,200 specialized technical roles at the site. The move to convert European auto manufacturing capacity into defense production reflects a broader trend as Israel Aurelius and the German state aim to take over Volkswagen’s Osnabrück plant, addressing excess capacity while exploring alternative industrial conversions.
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Top executives at the Wolfsburg-based automaker emphasized that this sale aligns with wider efficiency initiatives intended to optimize European operations. Volkswagen AG CEO Oliver Blume explained that this transaction offers a sustainable industrial outlook for the Osnabrück site while honoring commitments to the local workforce. Representatives from Aurelius Capital, led by Managing Director Tomer Jacob, highlighted the site’s capabilities in precision manufacturing and its experienced technical workforce, suitable for advanced defense production.
This restructuring occurs amidst mounting economic challenges facing European vehicle manufacturers, including declining demand for battery-electric models, high domestic energy costs, and increased international competition. Labor union officials from IG Metall acknowledged that converting the automotive lines for defense manufacturing offers crucial long-term job stability for regional workers, especially after months of employment uncertainty.
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The completion of the deal remains contingent on final contractual agreements, approval by relevant supervisory bodies, and approval from German antitrust authorities. Details regarding the purchase price, overall valuation, and specific ownership shares between Aurelius Capital and Lower Saxony have not been publicly disclosed.
Industry analysts note that shifting automotive facilities toward military hardware production reflects increasing defense budgets across European NATO countries. Regulatory agencies will oversee filings and oversee transition milestones as Volkswagen prepares to phase out its vehicle manufacturing lines ahead of full operational transfer. Official announcements regarding approvals and plant conversions will be communicated through regulatory disclosures.