German carmaker Volkswagen has signed an agreement to convert its factory in Osnabrück, Lower Saxony, from car manufacturing to the production of air defence system components. It is the first time an automobile plant in Germany is being turned into a defence industry site.
Under the deal announced on Monday, 7 September 2026, a controlling stake in the plant will pass to investment group Aurelius Capital together with the government of Lower Saxony — Volkswagen’s second-largest shareholder. The roughly 125-year-old factory will become a manufacturing hub for defence equipment. The anchor project will be cooperation with Israeli company Rafael Advanced Defense Systems, the developer of the Iron Dome system.
The site is not expected to produce interceptor missiles. Instead, it will make supporting components: heavy-duty transport platforms for missiles, launchers and power generators. Rafael plans to manufacture the missiles themselves at a separate specialised facility in Germany. Conversion of several thousand Volkswagen Amarok pickups into military vehicles is also under consideration.
The Osnabrück plant currently builds the T-Roc convertible. Production of that model is due to end in summer 2027, after which the factory faced closure. About 1,800 people work at the site. In the longer term, around 1,200 jobs are expected to be retained. Conversion will begin after car production stops.
Volkswagen CEO Oliver Blume called the deal an important step that opens a new industrial future for the site. Lower Saxony’s authorities also backed the project, citing the plant’s experience with complex manufacturing and the changed security situation. The plan is to create a kind of “defence campus” where several companies can share production lines.
