Volkswagen agrees to sell Osnabrück car plant to Aurelius Capital for air defence conversion

Plant sale and defense conversion

Volkswagen agreed on 7 September 2026 to sell its vehicle assembly plant in Osnabrück to Tel Aviv-based investment fund Aurelius Capital and the regional government of Lower Saxony. Under the preliminary memorandum of understanding, Aurelius will take a majority stake while Lower Saxony holds a minority position. The facility will be converted into an industrial competence centre for security and defense solutions, with Volkswagen fully withdrawing from plant operations. Car production at Osnabrück, which currently produces convertibles and the T-Roc model, is scheduled to end in 2027. The agreement aims to secure jobs for the site's workforce, which includes 1,800 to over 2,000 employees, while final contractual details are finalized over the coming months.

With today's agreement, we take an important step towards opening a new industrial future for the site.

Security strategy and production plans

As its primary anchor project, the Osnabrück plant will manufacture air defense systems and components for Israeli state-owned manufacturer Rafael Advanced Defense Systems. Rafael produces military hardware including the Iron Dome air defense system, the Iron Beam laser weapon, and the Trophy active protection system used on German-built Leopard battle tanks. Yoav Tourgeman, the head of Rafael, stated that the long-term goal of the partnership is to manufacture defense equipment for Germany and European allies entirely within Germany. Lower Saxony government officials noted that the conversion establishes new supply chains and directly addresses shifting European security demands.

This production site has a lot of experience in dealing with complex tasks. In addition, the security situation has fundamentally changed: Germany and Europe must strengthen their capabilities and become more independent.

Shareholder veto and deal structure

Negotiations regarding the Osnabrück plant had been under way since spring 2026. Volkswagen initially planned to sell the factory directly to Rafael, but the transaction was blocked by the Qatar Investment Authority, which owns a 17% shareholding in Volkswagen. The Qatari fund opposed direct ties with Rafael due to its role as an Israeli state-owned military contractor, following a September 2025 report by Amnesty International listing Rafael among 15 companies linked to international law violations. To bypass the Qatari veto, Lower Saxony, Volkswagen, and Rafael organized an ownership structure where Aurelius Capital serves as the formal buyer, insulating Volkswagen from direct corporate ties to the Israeli state entity.

Broader restructuring at Volkswagen

The Osnabrück divestment coincides with broad cost-cutting measures across Volkswagen Group. The carmaker has experienced declining vehicle sales caused by United States trade tariffs, competition from Chinese automotive manufacturers, and subdued customer demand for electric vehicles. Volkswagen announced a wide-ranging restructuring plan that outlines reductions between 50,000 and 100,000 jobs globally from its 660,000-person workforce. The corporate reorganization also targets four other vehicle factories in Emden, Zwickau, Hannover, and Neckarsulm for potential closure beginning in 2031. German media characterized the Osnabrück transition as an effort to avoid an outright closure, replacing convertible production with military manufacturing.