HANOVER, Germany—Continental A.G. has confirmed multiple media reports that the firm is considering a change to its organizational structure to better position itself for macro changes within the automotive industry.
According to both Bloomberg and Reuters, the firm is considering scenarios in which it would overhaul the current structure of its company to better equip itself for the transition to electric and self-driving vehicles.
One scenario could include listing shares of some of its units. The firm currently is split into two groups—Automotive and Rubber. The Rubber Group consists of its tire division and ContiTech A.G. non-tire rubber parts division. The Automotive Group comprises its non-rubber business—the Chassis & Safety Division, Interior Division and Powertrain Division—which produce products such as powertrains for hybrid electric vehicles, intelligent transportation systems, vehicle dynamics and advanced driver assistance systems, among others.
"We confirm media reports that we are in the early stages of analyzing how our organization can become even more flexible in response to the fast changing environment in the automotive industry," Continental said. "In this process we are being supported by external advisers. As of today, it is wide open if and which changes could result from these early evaluations. To date, there are no plans which could be submitted for approval."
Paul Eichenberg, managing director of Novi, Mich.-based Paul Eichenberg Strategic Consulting and former vice president and corporate development of strategy for Magna Powertrain Inc., recently told Crain's Detroit Business—a sister publication of Rubber & Plastics News—that 75 of the top 100 global auto suppliers are being disrupted by electrification.
Eichenberg added that the industry will see more companies splitting apart much like Sweden's Autoliv Inc. and New Jersey's Honeywell disclosed to do so in recent months. He cited Continental A.G., which operates its North American business in Auburn Hills, Mich.. and France's Valeo S.A., which has its North American headquarters in Troy, Mich., as the next major suppliers to follow suit and split into separate entities.
"There's a great many of Tier 1 suppliers that are being caught flat-footed by electrification," he said. "Some don't understand how big of a situation this is and how different their strategies must be."
Dustin Walsh, Crain's Detroit Business, contributed to this report.