MUNICH — Continental bears little resemblance today to the company it was when it started 150 years ago this month. In truth, it is looking increasingly unfamiliar to the company it was even 20 years ago.
But if Continental management succeeds in its mission to create a new way forward, the German megasupplier will look remarkably different just 10 years from now.
Speaking with Automotive News here last month, Continental CEO Nikolai Setzer summed up the vision of what the old company is to become: as "strong in our hardware business and our heritage on one hand, but on the other, to become even more digital, more software-driven, more software-inclined."
"That's how we see the company in 10 years," Setzer said.
The parts and advanced vehicle systems producer no longer views itself as simply a maker of tires and other traditional automotive parts. The company is sharpening its focus on areas it sees as having high growth potential, particularly in software and self-driving vehicle technology.
As vehicles become greener and more high-tech, Continental's goal is to be an industry leader for high-performance in-vehicle computers, for the software that makes electronics components perform and for assisted- and automated-driving technology.
Setzer was named CEO of Continental in 2020, amid concerns from investors that the company was not being quick enough to keep up with the rapidly evolving industry. He's intent on changing that narrative.
"You have to be extremely fast in order to make your point, in order to develop your technologies," he said. "You have to change technologies swiftly because you find out, lessons learned, that certain technologies don't apply anymore or there are new technologies coming up."
But the makeover Continental is pursuing consists of a lot of moving parts.
Continental was founded Oct. 8, 1871, in the era before automobiles, as a rubber manufacturer. Today it is the world's sixth-largest automotive supplier on Automotive News' top global suppliers ranking, with 2020 sales to automakers of $29.68 billion. It employs 198,000 people in 58 countries.
A little more than 10 percent of those employees are particularly mission-critical to the transformation Continental has in mind. They are the pool of 20,000 software and IT specialists, tasked with building out Continental's capabilities in information technology. High-performance computers and software are becoming core components—as compressors and fuel filters once were—while vehicles become more connected and advanced driver-assist systems become more commonplace. Continental wants to be at the center of those developments.
Horst Schneider, head of European automotive research at Bank of America, believes Continental's software capabilities are now among its greatest strengths. Its network of software engineers makes it an extremely valuable problem-solver for auto makers, particularly German auto makers that are looking to build their own operating systems but having trouble finding enough qualified people to work on them, he said.
There simply aren't enough engineers available for what auto makers want to do.
"Where I think Conti has the biggest chance to succeed is software integration," Schneider said. "I think all the German car makers are trying to get enough software engineers on board. There's just a lack of people with good programming skills. They're just not finding people in Germany."
Since Continental has the staff, it is likely that automakers will turn to it for support, he said.
"The carmakers want to do it themselves, but at some moment they need to recognize that they can only achieve that with the help of suppliers, and Continental has got one of the [largest] software engineer" bodies in the industry, he said.
Like one of its main competitors, Robert Bosch, Continental is betting heavily on in-vehicle computers that can control electronic and software functions inside the car.
In 2020, Continental began supplying the computing systems to Volkswagen for its ID3 and ID4 electric vehicles. The supplier said that just a "handful" of those computers can manage vehicle functions in the cockpit, chassis systems and for driver-assist capabilities. Until now, managing those operations has taken dozens, or even hundreds, of individual electronic control units.