Continental to spin off automotive unit by end of 2025 

Continental will spin off its automotive group business by the end of 2025 as it focuses on its profitable tire and ContiTech industrial businesses.

Preparations for the move are expected to be complete by the end of September, Continental said.

Until then, Continental will focus on transferring some groupwide functions to the business unit “to create a lean, focused holding structure,” the company said in a Dec. 9 statement.

The new structure “will let us respond more flexibly to customer and market developments,” CEO Nikolai Setzer said.

The aim is to increase competitive opportunities, agility and transparency, supervisory board chairman Wolfgang Reitzle said in August, when Continental announced it was examining the split.

The automotive unit employs about 100,000 people globally and had sales of $21.1 billion in 2023. It is expected to be floated on the stock market as a pure spinoff.

Primary products include brakes, comfort features, sensors and displays. The business unit has a large software department and expertise in the field of autonomous driving.

The automotive division, which has been a drag on Continental’s profits for years, has had positive news this year ahead of the planned spin-off. In the third quarter, Continental’s adjusted operating profit rose by 36 percent to $913.7 million. The adjusted operating profit margin climbed to 8.9 percent from 6.3 percent, with both automotive and tire divisions contributing to the increase.

Even though sales were down in the automotive unit by 4.7 percent to $5 billion in the quarter, largely because of declining markets, the adjusted operating profit margin rose to 4.2 percent from 2.8 percent, an improvement that Continental credited to cost-cutting measures and negotiating prices with automakers.

Continental expects further improvement in the fourth quarter and in 2025 as global auto markets recover, it said in November.

Continental and other megasuppliers have sought to adapt to shifts in the auto industry, including electrification and software-defined vehicles. They have cut costs, hired more software engineers, boosted merger and acquisition activity, and divested or spun off combustion engine units.

Continental spun off its powertrain unit as Vitesco Technologies in 2021, and shares began trading that year on the Frankfurt stock exchange. Vitesco merged with Schaeffler this year.

Realignment in the supplier industry has also meant job cuts. In 2024 alone, European suppliers announced they would reduce their head count by 50,000 in the next several years.

Of that total, Continental will trim 7,150 global jobs, with about 3,000 in Europe, in an effort to save nearly $420 million in personnel costs annually. CFO Olaf Schick said about 4,500 of those cuts had been made by the end of September.

Continental ranks No. 8 on the Automotive News Europe list of the top 100 global suppliers, with automotive sales of $28.7 billion in 2023. It is the No. 4 tire maker in the world, according to Rubber News' 2024 Global Tire Report, with tire sales of $12.5 billion in 2023. And it's No. 4 in Rubber News' North American Rubber Ranking for non-tire rubber product-related sales of $3 billion.

Automobilwoche contributed to this report.