Volkswagen finds defence future for German plant amid major overhaul

Business Recorder reported that Volkswagen reached a preliminary agreement on Monday to hand its Osnabrueck plant in Germany to a new owner group, which would turn the site toward defence manufacturing. The deal is the first of its kind for the carmaker as it works to rescue factories that are finding it difficult to match cheaper Chinese competitors. Under the early terms, Aurelius Capital and Volkswagen's home state, Lower Saxony, would take over the facility, a move labour officials said could keep around 1,400 of its 1,800 jobs.

The plan follows a sweeping overhaul that Volkswagen unveiled only days earlier, aimed at cutting jobs, simplifying its structure and restoring margins in a stagnant European market with excess capacity. Volkswagen has warned that as many as four German plants could close or be repurposed if no alternative use is found. Aurelius and Lower Saxony formalised their intent with a signed document on Monday, and vehicle output at the plant is set to end in 2027.

Volkswagen said the first anchor project would be a partnership with Israel's Rafael Advanced Defense Systems, possibly making air defence systems and components for Germany and Europe. A person familiar with the matter also said Amarok pick-up trucks could be converted into military vehicles, while Poland's WB Group could handle similar work on MAN vehicles.