Volkswagen plant to be converted for Israeli defence group

Frankfurt, Germany - Volkswagen, the German auto giant, announced on Monday that one of its plants will be converted to manufacture defence equipment after car production ceases there. This is part of a significant overhaul at Europe's top carmaker, which is implementing the most extensive job cuts in the global auto industry as it confronts competition from China, US tariffs, and low electric car sales.

The announcement also highlights the growing partnership between Germany's struggling auto industry and the defense sector, which is expanding as nations bolster their militaries to counter rising global threats. Volkswagen's Osnabrück plant in northwest Germany is set to be sold to Israeli investors Aurelius Capital and the German state of Lower Saxony, with an initial air defense project planned for the Israeli firm Rafael Advanced Defence Systems.

Volkswagen CEO Oliver Blume stated, "With today's agreement, we are taking an important step towards opening up a new industrial future for the site." The company is committed to preserving at least 1,200 out of 1,800 jobs at the factory, despite the factory's decision to cease vehicle production by 2027. Rafael, the Israeli defense firm, plans to focus on manufacturing air defense systems for Germany and Europe.

The Osnabrück site, established 125 years ago, currently produces the Volkswagen T-Roc Cabriolet, as well as the Porsche Cayman and Boxster. However, the future of four other German factories of the VW group remains uncertain as the company seeks to cut costs. The deal helps VW avoid dealing directly with Rafael, a defense firm that produces the Iron Dome air defense system, which Qatar, Volkswagen's third-largest shareholder, does not recognize.