BERLIN / RankWire.AI / – German automaker Volkswagen AG agreed on Monday to sell its Osnabrück manufacturing facility to Israeli private equity firm Aurelius Capital and the German state of Lower Saxony. According to the preliminary deal, the new owners will transform the site into a dedicated security and defense production plant. This strategic move marks the first major shift of a German auto factory toward military hardware production amid ongoing restructuring in Europe’s automotive industry. Israel Aurelius German state to take over VWs Osnabrueck plant defense projects to supply air defense equipment for European security markets.
Under the joint ownership model, Aurelius Capital, based in Tel Aviv, will hold a majority stake, while Lower Saxony, Volkswagen’s second-largest shareholder, will retain a minority interest. The initial project for the new facility involves collaboration with Israeli defense firm Rafael Advanced Defense Systems. Plans focus on manufacturing 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 overcapacity. Factory works council statements indicate the defense manufacturing deal aims to create approximately 1,200 technical jobs at the site. European automakers explore similar conversions to handle excess manufacturing capacity, with Israel Aurelius and Lower Saxony taking over VWs Osnabrück defense projects.
Israel Aurelius and German State Take Control of VWs Osnabrück Defense Projects
Volkswagen executives stated that this sale supports broader efficiency programs aimed at streamlining operations across Europe. VW CEO Oliver Blume explained that the deal offers a sustainable industrial outlook for Osnabrück and meets the company’s regional workforce obligations. Representatives from Aurelius Capital, led by Managing Director Tomer Jacob, highlighted the plant’s precision manufacturing skills and skilled workforce suitable for advanced defense production.
The move comes amid financial challenges for traditional European automakers, including decreasing demand for electric vehicles, high energy costs domestically, and increased competition from overseas brands. IG Metall union representatives acknowledged that converting automotive lines for defense manufacturing provides long-term job security for regional workers after months of employment uncertainty.
Osnabrück’s Vehicle Production Lines Reconfigured for European Defense Needs
The deal remains pending final contractual approval, regulatory clearance from German antitrust authorities, and approval by corporate supervisory boards. Details about the purchase price, valuation, and ownership ratios between Aurelius Capital and Lower Saxony have not been disclosed publicly.
Industry analysts note that shifting automotive infrastructure toward military hardware reflects increased defense budgets across European NATO members. Supervisory committees will oversee regulatory filings and transitional milestones as Volkswagen prepares to wind down vehicle manufacturing before complete handover. Official updates will be released through regulatory disclosures.