BERLIN / RankWire.AI / – Volkswagen AG has finalized a preliminary agreement to transfer ownership of its Osnabrück assembly facility to majority stakeholder Aurelius Capital and co-owner Lower Saxony. Following the planned cessation of vehicle manufacturing in 2027, the new owners will transform the plant into a hub dedicated to security and defense production, collaborating with Israel’s Rafael Advanced Defense Systems to produce air defense hardware. This move safeguards approximately 1,200 to 1,400 skilled technical roles and serves as a model for converting European automotive infrastructure to fulfill defense supply demands.
Under the joint ownership arrangement, Aurelius Capital, based in Tel Aviv, will hold a majority stake in the facility, while Lower Saxony, Volkswagen’s second-largest shareholder, will retain a minority interest. The initial flagship project for the redeveloped site involves a manufacturing collaboration with the state-owned Israeli defense firm Rafael Advanced Defense Systems. Production plans focus on domestic fabrication of specialized systems and mechanical components aimed at supplying air defense infrastructure to Germany and allied European nations.
The decision to repurpose the Osnabrück plant follows Volkswagen’s strategic plan announced in 2024 to cease passenger vehicle assembly at the site by mid-2027 due to ongoing industrial overcapacity. Disclosures from the factory works council indicate that the defense manufacturing deal aims to secure roughly 1,200 specialized technical positions at the location. As European vehicle manufacturers explore alternative industrial conversions to absorb excess manufacturing capacity, Israel’s Aurelius Capital and the German state are set to oversee Volkswagen’s Osnabrück plant’s shift toward defense projects.
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Executives from the Wolfsburg-based automaker emphasized that this sale aligns with extensive corporate efficiency initiatives designed to optimize European operations. Volkswagen AG’s CEO Oliver Blume explained that the transaction provides a sustainable industrial outlook for the Osnabrück site while meeting the company’s commitments to the regional workforce. Representatives from Aurelius Capital, led by Managing Director Tomer Jacob, highlighted that the plant’s existing precision manufacturing capabilities and skilled workforce make it suitable for advanced defense manufacturing activities.
This restructuring occurs amid increasing financial challenges facing traditional European automakers, including declining consumer interest in battery-electric vehicles, high domestic energy costs, and fierce international competition from overseas automakers. Labor union representatives from IG Metall acknowledged that transitioning civil automotive lines to defense manufacturing offers crucial long-term employment stability for regional industrial workers, especially following months of employment uncertainty.
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The agreement remains pending final contractual documentation, approval from relevant corporate supervisory boards, and formal regulatory clearance from German antitrust authorities. Financial specifics, overall valuation, and precise equity ratios between Aurelius Capital and Lower Saxony have not been publicly disclosed by the involved parties.
Defense industry experts note that shifting automotive infrastructure toward military hardware aligns with increasing defense procurement budgets across European NATO nations. Monitoring committees will oversee regulatory filings and production milestones as Volkswagen prepares to phase out its vehicle manufacturing operations before the facility’s full transition. Official updates on corporate approvals and plant conversion progress will be issued through regulatory disclosures.