Volkswagen plant to make Rafael defence equipment

Volkswagen said Monday that its Osnabrueck car plant in northwest Germany would be converted to make defence equipment for Israeli group Rafael after vehicle production ends there next year.

The German carmaker said it would sell the site to Tel Aviv-based Aurelius Capital and the German state of Lower Saxony, a major Volkswagen shareholder. Volkswagen said an initial air defence project was planned for Rafael Advanced Defence Systems.

Volkswagen CEO Oliver Blume said the agreement was an important step towards a new industrial future for the site. Volkswagen had already decided in 2024 to end vehicle production at Osnabrueck by 2027.

Volkswagen's works council said the deal would preserve at least 1,200 jobs at the factory.

The company is dealing with weak demand, Chinese competition and a difficult shift to electric vehicles. Volkswagen says the long-term future of four other German factories is uncertain.

Management and unions last week reached a deal to cut 50,000 more jobs across the group, bringing planned job losses in the coming years to 100,000. The 10-brand group includes Audi, Porsche and Seat.