Volkswagen is undergoing a major restructuring as it responds to strong competition from Chinese brands, continued investment needs in EVs and software, and US tariffs. The latest move will see one of the world’s oldest auto manufacturing sites sold to an investment firm specializing in defense production.
Volkswagen to Sell Historic Osnabrück Plant
Volkswagen confirmed this week that its plant in Osnabrück, Germany, will be sold to Aurelius Capital, an Israeli investment firm that specializes in defense production. The site has been involved in automobile construction for 125 years.
Under the terms of the deal, whose financial details have not been published, Aurelius will become the majority owner. Lower Saxony, the German state where Osnabrück is located, will also retain a stake.
Lower Saxony is also one of Volkswagen’s biggest shareholders, with a roughly 20 percent holding. The sale is expected to preserve roughly 1,400 of the plant’s current 1,800 staff.
From Convertibles to Defense Systems
The Osnabrück plant’s automotive history dates to 1901, when Wilhelm Karmann took over the site from its original carriage-building owner and began producing car bodies.
Volkswagen became involved in 1949 after forming a partnership with Karmann to build Beetle cabrios at the site, alongside Karmann’s Ghia. Volkswagen eventually acquired the entire site after Karmann went under in 2009.
The plant has traditionally focused on small-series production and special vehicles. It mainly built Volkswagen convertibles, including the former VW T-Roc Cabrio, while also handling overflow production for other brands within the group, including Porsche, which built 718 Boxsters there.
Dwindling demand for open-top cars prompted Volkswagen to seek a buyer for the site several years ago. The automaker had already been phasing out production there since 2024 and said the last cars will be built at the plant in mid-2027.
What the New Owners Plan for Osnabrück
Under its new ownership, the Osnabrück plant is set to become a competence center for security and defense solutions.
One of its initial customers will be Israel’s state-owned Rafael Advanced Defense Systems, which is responsible for the country’s Iron Dome and David’s Sling missile systems, among others.
The Osnabrück facility will build components for these systems, potentially including vehicle launchers.
More German Plants Could Be Affected
Volkswagen said last week that its European production capacity currently exceeds demand by more than 500,000 vehicles annually. The company warned that four additional German sites could be affected as part of its restructuring.
The sites include plants in Emden, Zwickau and Hanover that mostly build Volkswagens, as well as a plant in Neckarsulm responsible for Audis. An Audi plant in Brussels, Belgium, was already closed in 2025 after its final production run of the Q8 E-Tron.
The four German plants currently have production allocations between 2031 and 2034, but Volkswagen said alternative uses for the sites are being assessed.
The restructuring also includes targeted job cuts of 50,000 by 2030, in addition to the roughly 50,000 positions already targeted in Germany since December 2024. Volkswagen may also ditch SEAT, the mainstream Spanish brand from which Cupra was spun out and which it has since overtaken in sales.
Volkswagen Faces Broader Industry Pressures
The scale of Volkswagen’s restructuring reflects pressures that extend beyond competition from Chinese automakers and US tariffs. Rising energy costs, high labor costs, regulation and other structural problems are undermining Germany’s industrial competitiveness, while similar pressures are being felt across Europe.
Volkswagen’s transformation reflects that broader reckoning as the automaker restructures its operations and prepares for a very different automotive industry.
