BERLIN / RankWire.AI / – Volkswagen AG has agreed in principle to transfer ownership of its Osnabrück assembly facility to the majority owner Aurelius Capital and the state of Lower Saxony. After vehicle production concludes in 2027, the new owners plan to transform the site into a center for security and defense manufacturing, collaborating with Israel’s Rafael Advanced Defense Systems to produce air defense equipment. This arrangement maintains roughly 1,200 to 1,400 skilled technical jobs and serves as a model for repurposing European automotive infrastructure to meet defense supply demands.
Under the joint ownership agreement, Aurelius Capital, based in Tel Aviv, will hold the majority of shares in the plant, while Lower Saxony, Volkswagen’s second-largest shareholder, will retain a minority stake. The initial key project involves a manufacturing partnership with the state-owned Israeli defense company Rafael Advanced Defense Systems. The focus of operations is on producing specialized systems and mechanical parts for air defense infrastructure, intended for use by Germany and other European allied nations.
Volkswagen’s decision to repurpose the Osnabrück plant follows a strategic plan for 2024, which includes ending passenger vehicle assembly at the factory by mid-2027 due to ongoing industrial overcapacity. According to statements from the factory works council, the defense manufacturing deal aims to preserve around 1,200 specialized technical positions at the facility. This move reflects a broader trend among European vehicle manufacturers exploring industrial conversions to address excess manufacturing capacity, including plans for defense projects in Germany and beyond.
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Volkswagen’s leadership emphasized that this sale aligns with wider efficiency initiatives aimed at optimizing European operations. CEO Oliver Blume explained that the transaction helps establish a sustainable industrial future for the Osnabrück site while fulfilling corporate commitments to regional employees. Representatives from Aurelius Capital, led by Managing Director Tomer Jacob, highlighted that the plant offers precise manufacturing capabilities and an experienced technical workforce suitable for advanced defense production.
This restructuring occurs amid mounting economic pressures faced by traditional European automakers, including declining demand for battery-electric vehicles, high domestic energy prices, and increased competition from overseas manufacturers. Labor union leaders from IG Metall acknowledged that converting civil automotive lines into defense manufacturing provides essential long-term job security for regional workers after months of employment uncertainty.
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The deal remains contingent upon final contractual agreements, approval from relevant supervisory boards, and regulatory clearance from German antitrust authorities. Details regarding the purchase valuation, specific equity split between Aurelius Capital and Lower Saxony, and other financial terms have not been publicly disclosed by the involved parties.
Industry experts point out that redirecting automotive facilities toward military hardware reflects increasing defense budgets across European NATO nations. Monitoring committees will oversee regulatory filings and key transition milestones as Volkswagen prepares to cease vehicle production lines in advance of full operational transfer. Official updates on approvals and site conversions will be issued via regulatory disclosures.