Volkswagen agrees to sell Osnabrück factory to Aurelius and Lower Saxony for defense production

Ownership transfer and industrial conversion

Volkswagen signed a letter of intent on 7 September 2026 to sell its assembly plant in Osnabrück to Israeli investor Aurelius Capital and the German state of Lower Saxony. Under the agreed framework, Aurelius will take a majority ownership stake, while Lower Saxony, which is Volkswagen's second-largest shareholder, will hold a minority interest. The transaction aims to convert the site into an industrial center for defense and security technologies as passenger vehicle manufacturing ends. The decision follows Volkswagen supervisory board plans to cut 50,000 jobs globally in addition to 50,000 planned reductions in Germany by 2030, driven by competition from Chinese manufacturers and high operating costs. Final execution of the transaction remains subject to committee approvals, definitive contracts, and regulatory reviews over the coming months.

Defense cooperation with Rafael

The anchor project for the site will be an industrial cooperation with Israel's Rafael Advanced Defense Systems to manufacture air defense hardware and components for Germany and European allies. Lower Saxony Minister-President Olaf Lies pointed to shifting European security requirements as a reason for state backing.

Germany and Europe must strengthen their capabilities and become more independent. Lower Saxony wants to help ensure that this creates value and secure employment.

Rafael chief executive Yoav Tourgeman stated that the goal is to manufacture protection technologies entirely within Germany under a long-term partnership. Rafael produces military hardware including the Iron Dome rocket interceptor, the Iron Beam laser weapon, and the Trophy active protection system used on German Leopard battle tanks. An earlier proposal for direct cooperation between Volkswagen and Rafael was opposed by Qatar, which holds a 17% stake in Volkswagen. Transferring ownership allows defense production to proceed at Osnabrück without direct corporate participation from the automaker.

Job security and labor provisions

The Osnabrück facility currently employs approximately 1,800 people. Under the preliminary agreement, roughly 1,400 staff members will retain their positions initially, backed by employment guarantees that run through the end of 2029. Headcount will gradually adjust down to around 1,200 positions through early retirement and partial retirement arrangements, with those roles also protected through late 2029. Collective bargaining agreements in the metal and electrical industry, works agreements, and works council structures will remain in force. Volkswagen will contribute to personnel costs during the transition period through 2029 while providing access to existing infrastructure and technical know-how.

History and automotive phase-out

The agreement concludes more than 125 years of automotive manufacturing history in Osnabrück. The site originated with contract coachbuilder Karmann, which began producing the Beetle Cabriolet in 1949 and built vehicles such as the Karmann Ghia as well as niche models for BMW, Mercedes-Benz, Renault, Jaguar, and Kia. Volkswagen acquired the factory in 2010 following Karmann's 2009 insolvency, supported by then state premier Christian Wulff. Production of Porsche models at the facility concluded in late 2025 after a planned order for an electric sports car was canceled. Volkswagen will phase out assembly of the T-Roc Cabriolet, the last remaining vehicle built at the plant, in late summer 2027.