Volkswagen to turn German car plant into defence equipment factory for Israel’s Rafael

Frankfurt, September 7 — Volkswagen announced on Monday that one of its German facilities will be repurposed to manufacture defense equipment for Israel's Rafael. The car manufacturer, grappling with declining demand, revealed plans to sell the Osnabrück plant, along with the German state of Lower Saxony, to Aurelius Capital, a Tel Aviv-based investment firm.

An initial air defense project involving Rafael Advanced Defence Systems is slated to commence at the site. Volkswagen CEO Oliver Blume emphasized that the agreement marks a significant step towards establishing a new industrial future for the location, while reiterating the company's commitment to Osnabrück. The firm had previously decided in 2024 to cease vehicle production at the site, slated for completion by 2027.

The arrangement guarantees a minimum of 1,200 jobs will be retained at the factory, as confirmed by the works council. The future of an additional four German Volkswagen factories remains uncertain. The multinational automaker, which includes brands from Audi to Porsche and Seat, is facing intense competition from Chinese automakers while navigating a challenging transition to electric vehicles.

Management and unions recently agreed to eliminate an additional 50,000 jobs across the group, bringing the total number of positions to be eliminated in the coming years to 100,000.