Volkswagen has agreed on key terms for the potential sale of its Osnabrück plant to Israeli investment firm Aurelius Capital and Germany’s state of Lower Saxony, with the site set to transition from vehicle manufacturing to security and defense production.
The planned transaction aims to preserve the majority of the plant’s jobs after vehicle production ends in 2027, with an initial project involving Rafael Advanced Defense Systems focused on air defense systems and components for Germany and Europe.
Volkswagen, Aurelius Capital and the state of Lower Saxony have agreed on the main terms for the potential sale of Volkswagen’s Osnabrück operation as the German automaker restructures its domestic manufacturing footprint.
Under the proposed arrangement, Aurelius would become the majority owner of Volkswagen Osnabrück GmbH, while Lower Saxony would also take an ownership stake. The parties intend to gradually transform the facility into a center for security and defense solutions, Volkswagen said on Monday.
Financial terms of the proposed transaction were not disclosed. The first planned defense project would involve cooperation with Rafael Advanced Defense Systems, an Israeli defense company known for its air defense technologies. Volkswagen said the project could involve the production of air defense systems and components for Germany and other European markets.
The development gives the Osnabrück facility a potential industrial future after Volkswagen ends vehicle production there. The company has previously announced that vehicle manufacturing at the site will end in 2027 as part of its broader restructuring of German operations.
Reuters reported that the proposed conversion could preserve about 1,400 of the plant’s roughly 1,800 jobs, although Volkswagen has said details concerning employment prospects will be communicated once reliable results are available.
The proposed transaction comes as Volkswagen undertakes a major restructuring aimed at reducing costs and excess production capacity in Germany. The company has been under pressure from weaker demand, high production costs, competition from Chinese automakers and changing trade conditions.
The Osnabrück arrangement also illustrates how Germany’s industrial infrastructure is increasingly being considered for defense related production as European governments seek to strengthen domestic defense capabilities.
For Volkswagen, transferring the site to new owners would allow it to reduce its exposure to an underutilized automotive facility while potentially preserving industrial employment in the region. For Aurelius and Lower Saxony, the agreement provides a framework for converting an established manufacturing site and workforce toward a different industrial sector.
The proposed ownership structure also reflects Lower Saxony’s continuing role in Volkswagen. The state is one of the automaker’s major shareholders and has significant political and economic interests in maintaining industrial employment in the region.
Volkswagen said completion of the transaction remains subject to final agreements, approval by the relevant corporate bodies and regulatory reviews. The company also said further information on the planned activities, timetable and employment prospects would be provided once the relevant details have been established.
The vehicle production phase at Osnabrück is therefore expected to run until 2027, after which the site would progressively transition toward security and defense activities if the proposed transaction receives the necessary approvals.
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