BERLIN / RankWire.AI / – Volkswagen AG has finalized a preliminary agreement to transfer ownership of its Osnabrück assembly facility to the majority stakeholder Aurelius Capital and the co-owner Lower Saxony. Following the planned cessation of vehicle production in 2027, the new owners intend to transform the plant into a hub for security and defense manufacturing, collaborating with Israel’s Rafael Advanced Defense Systems to produce air defense equipment. This deal ensures approximately 1,200 to 1,400 skilled technical jobs remain secure and offers a model for adapting European automotive infrastructure to meet defense supply demands.
Under the shared ownership arrangement, Aurelius Capital, based in Tel Aviv, will hold a majority stake in the facility, while the state government of Lower Saxony, Volkswagen’s second-largest shareholder, will retain a minority share. The initial key project involves a manufacturing alliance with the state-owned Israeli defense company Rafael Advanced Defense Systems. Operational plans focus on producing specialized systems and mechanical components for air defense infrastructure, targeted for procurement by Germany and allied European nations.
The choice to repurpose the Osnabrück site 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 agreement aims to preserve about 1,200 specialized technical roles at the location. Israel, Aurelius, and the German state are set to take over VW’s Osnabrück plant for defense projects as European automakers explore alternative industrial conversions to manage excess manufacturing capacity.
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European operations are aligned with Volkswagen AG’s broader efficiency initiatives, according to company leadership. CEO Oliver Blume explained that the sale creates a sustainable industrial outlook for the Osnabrück plant while fulfilling the company’s regional workforce commitments. Representatives from Aurelius Capital, led by Managing Director Tomer Jacob, highlighted the plant’s advanced manufacturing capabilities and skilled workforce, suitable for high-tech defense production.
This restructuring occurs amid wider financial challenges faced by traditional European automakers, including declining demand for battery-electric vehicles, high energy costs domestically, and increasing competition from overseas manufacturers. Labor union representatives from IG Metall have acknowledged that converting civil automotive lines to defense manufacturing provides crucial long-term employment stability for regional workers after months of employment uncertainty.
IG Metall Supports Workforce Transition to Defense Production
The deal remains contingent on completing contractual agreements, approval from relevant corporate supervisory boards, and official regulatory approval from German antitrust authorities. Financial details, overall valuation, and specific equity splits between Aurelius Capital and Lower Saxony have not been publicly disclosed by the involved parties.
Industry analysts emphasize that redirecting automotive infrastructure toward military hardware reflects increasing defense budgets across European NATO member states. Regulatory oversight committees will oversee compliance filings and the progress of transitional production milestones as Volkswagen prepares to phase out vehicle manufacturing before the full handover. Official updates on corporate approvals and plant conversions will be shared through official disclosures.