Volkswagen plans to convert struggling German plant for air-defense production

Volkswagen’s struggling Osnabrück factory is being lined up for a new role in air defense after the automaker announced a possible sale to Lower Saxony and Aurelius Capital. The plan seeks to preserve “a large part of the jobs in the long term” at the site.

Under the agreement, Aurelius would become the majority shareholder of Volkswagen Osnabrück alongside the state of Lower Saxony. The two buyers plan an initial cooperation project with Israel’s Rafael Advanced Defense Systems, potentially producing air-defense systems and components for Germany and Europe.

Volkswagen said the cooperation could open the way to further partnerships and projects under the new company. The automaker had already announced in 2024 that it intended to end vehicle production at Osnabrück in summer 2027.

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a large part of the jobs in the long term

The proposed conversion follows a major agreement between Volkswagen shareholders and employee representatives on extensive savings across the group, particularly at the VW brand, as the company confronts pressure on Europe’s auto industry.

The company’s works council welcomed the plan as a future prospect for nearly 1,400 employees, roughly three-quarters of the plant’s current 1,800 workers. Further reductions are expected through retirements and early-retirement schemes. The council said the new center would have about 1,200 positions, with employment guaranteed through the end of 2029. Aurelius is described as an investment firm headquartered in Tel Aviv with interests in defense, cybersecurity, artificial intelligence and critical infrastructure.

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offers future prospects to nearly 1,400 employees