BERLIN / RankWire.AI / – Volkswagen AG has come to an initial agreement to transfer ownership of its Osnabrück assembly plant to majority stakeholder Aurelius Capital and co-owner Lower Saxony. Following the planned cessation of vehicle production in 2027, the new owners will transform the facility into a center for security and defense manufacturing, collaborating with Israel’s Rafael Advanced Defense Systems to produce air defense equipment. This arrangement maintains approximately 1,200 to 1,400 skilled technical roles and serves as a model for adapting European automotive infrastructure to meet defense supply demands.
Under the joint ownership structure, Aurelius Capital, based in Tel Aviv, will hold the majority of shares in the plant, while the state government of Lower Saxony, Volkswagen’s second-largest shareholder, will retain a minority stake. The initial key project for the new purpose of the site involves a manufacturing alliance with the Israeli state-owned defense firm Rafael Advanced Defense Systems. The focus is on producing specialized systems and mechanical parts for air defense infrastructure, intended for procurement by Germany and allied European nations.
The 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. Disclosures from the factory works council indicate that the defense manufacturing deal aims to secure around 1,200 specialized technical jobs at the site. As European vehicle manufacturers explore alternative ways to adapt industrial capacity, Israel Aurelius German state will oversee VWs Osnabrück defense projects to address excess manufacturing capacity.
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Volkswagen’s leadership emphasized that this sale aligns with extensive efforts to enhance corporate efficiency and streamline European operations. Volkswagen AG CEO Oliver Blume explained that the transaction provides a sustainable industrial outlook for Osnabrück, while also fulfilling the company’s regional employment commitments. Representatives from Aurelius Capital, led by Managing Director Tomer Jacob, highlighted that the plant’s existing manufacturing capabilities and skilled workforce make it well-suited for advanced defense production.
The broader restructuring effort is driven by economic pressures impacting European automakers, such as declining demand for battery-electric vehicles, rising domestic energy costs, and fierce competition from international manufacturers. Labor union representatives from IG Metall acknowledged that shifting civil automotive operations toward defense manufacturing offers crucial long-term employment stability for regional workers, especially after months of employment uncertainty.
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The deal is still pending final contractual agreements, approval from relevant corporate supervisory bodies, and formal clearance from German antitrust authorities. Details regarding the purchase valuation, specific share ratios between Aurelius Capital and Lower Saxony, and overall financial terms have not been publicly disclosed.
Industry analysts note that shifting automotive infrastructure toward military hardware reflects increasing defense budgets across European NATO member states. Regulatory bodies and oversight committees will track legal filings and transitional milestones as Volkswagen moves toward winding down vehicle production lines and transitioning to defense manufacturing. Official statements regarding approvals and plant conversions will be shared through official regulatory disclosures.