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German auto giant Volkswagen said Monday that one of its plants would be converted to make defense equipment for Israeli group Rafael after car production ends there next year.
The struggling carmaker said it would sell the Osnabrueck plant to Tel Aviv-based Aurelius Capital and the German state of Lower Saxony, a major Volkswagen shareholder.
An initial air defense project is planned for Rafael Advanced Defense Systems at the site.
“With today’s agreement, we are taking an important step towards opening up a new industrial future for the site,” Volkswagen CEO Oliver Blume said.
“Volkswagen stands by its responsibility for Osnabrueck,” he added.
Volkswagen, which is struggling with weak demand, had already decided in 2024 to end vehicle production at the site in northwestern Germany by 2027.
The deal will guarantee that at least 1,200 jobs are preserved at the factory, Volkswagen’s works council said.
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The long-term future of four other German factories remains uncertain.
The 10-brand auto giant, whose brands range from Audi to Porsche and Seat, is battling fierce Chinese competition amid a difficult shift to electric vehicles.
Management and unions last week reached a deal to cut 50,000 more jobs across the group, bringing the total number of positions set to be lost in the coming years to 100,000.
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