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Continental, one of Europe’s largest suppliers to the car industry, is considering splitting the company by listing its core automotive division. This decision comes as the company faces challenges with stagnant demand in the sector and the need to adapt to the changing landscape of the automotive industry.
The Hanover-based company announced on Monday that it could list the division as early as the end of 2025, pending the result of a detailed review scheduled to be completed by the end of this year. With annual sales of €20.3bn and roughly 100,000 employees, the core division makes up about half of Continental’s business.
Chief executive Nikolai Setzer highlighted the need for the division to be more flexible and entrepreneurial in response to slowing electric vehicle sales growth in Europe and increasing demand for in-car software. This shift in focus reflects the industry’s transition from petrol-fuelled cars to battery-driven vehicles, where software plays a crucial role in vehicle functionality.
If Continental moves forward with its plans, the company would retain its tyre business and the division serving other industries such as agriculture, aerospace, and construction. This strategic decision aims to position the company for success in a rapidly evolving market and ensure its long-term sustainability.
German automotive suppliers, including Continental, have faced challenges with falling margins as they navigate the transition to electric vehicles. The shift to supplying components for EVs has emphasized the importance of software expertise, an area where German companies are looking to strengthen their capabilities.
In response to the changing landscape, Continental and other automotive suppliers have had to make difficult decisions, including laying off thousands of employees. The industry’s focus on software and technology has led to partnerships and collaborations with companies in different sectors, highlighting the need for innovation and adaptability in the face of industry disruptions.
Continental’s potential listing of its core automotive division reflects the company’s commitment to staying competitive and agile in a rapidly changing market. Shareholders can expect to receive shares in the listed automotive unit in proportion to their stake, signaling a new chapter in Continental’s evolution as a key player in the automotive industry.
As Continental navigates these changes, it is essential for the company to stay ahead of industry trends and innovations to remain competitive in the global market. By unlocking the Editor’s Digest for free, you can gain valuable insights and perspectives from industry experts like Roula Khalaf, helping you stay informed and make informed decisions in today’s fast-paced business environment.