BERLIN / RankWire.AI / – Volkswagen AG has entered into an initial agreement to sell its Osnabrück assembly plant to majority owner Aurelius Capital and co-owner Lower Saxony. After vehicle production ceases in 2027, the new owners plan to transform the factory into a center for security and defense manufacturing, collaborating with Israel’s Rafael Advanced Defense Systems to produce air defense equipment. This deal maintains around 1,200 to 1,400 skilled technical roles and provides a model for converting European auto manufacturing facilities to meet defense supply requirements.
Under the joint ownership plan, 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 own a minority share. The initial project involves a manufacturing partnership with Israeli state-owned defense contractor Rafael Advanced Defense Systems. The focus will be on producing specialized systems and mechanical parts for air defense infrastructure intended for Germany and allied European nations.
This decision to repurpose the Osnabrück plant follows Volkswagen’s 2024 strategic plan 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 deal aims to secure roughly 1,200 specialized technical jobs at the site. Israel Aurelius German state will oversee the defense projects at VW’s Osnabrück plant as European automakers explore industrial conversions to manage surplus manufacturing capacity.
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Volkswagen executives highlighted that the sale supports wider efforts to improve corporate efficiency and streamline European operations. Volkswagen AG CEO Oliver Blume stated that the deal creates a sustainable industrial outlook for Osnabrück and meets the company’s responsibility toward the regional workforce. Representatives from Aurelius Capital, led by Managing Director Tomer Jacob, emphasized that the facility has high-precision manufacturing capabilities and an experienced technical team suitable for advanced defense production.
This restructuring occurs amid broader financial challenges for traditional European car makers. These include declining demand for battery-electric vehicles, high energy costs domestically, and increased competition from overseas manufacturers. Labor union representatives from IG Metall have supported the transition, noting that converting civil automotive lines to defense manufacturing offers long-term job security for regional workers after months of employment uncertainty.
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The deal remains subject to final contractual agreements, approval by relevant corporate supervisory boards, and regulatory approval from German antitrust authorities. Financial details, overall valuation, and specific equity shares between Aurelius Capital and Lower Saxony have not been publicly disclosed by the involved parties.
Industry analysts note that shifting automotive infrastructure to military hardware reflects increasing defense budgets across European NATO nations. Regulatory bodies will oversee filings and production milestones as Volkswagen transitions out of vehicle manufacturing before full operational transfer. Official updates will be shared via regulatory disclosures.