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Continental is considering splitting the company by listing its core automotive division, as one of Europe’s largest suppliers to the car industry continues to struggle with stagnant demand in the sector.
The Hanover-based company on Monday said it could list the division as early as the end of 2025 pending the result of a “detailed review” scheduled to be completed at the end of this year. The unit has annual sales of €20.3bn and roughly 100,000 employees, making up about half of Continental’s business.
Chief executive Nikolai Setzer said that slowing electric vehicle sales growth in Europe combined with increasing demand for in-car software meant the company’s core division — which makes brakes, sensors and in-car comfort systems — needed to be more flexible and “entrepreneurial”. “Against this backdrop, we are aiming to split up Continental,” he added.
If the company moves ahead with its plans, Continental would retain its tyre business as well as the division that serves other industries, such as agriculture, aerospace and construction.
Continental and other German automotive suppliers have struggled with falling margins as the industry scrambles to transition from petrol-fuelled cars to battery-driven vehicles. The shift to supplying components for EVs has meant that the focus has moved to software rather than engines — a technology known to be an area of German expertise.
In November, the company warned it would have to lay off thousands more employees in addition to the more than 10,000 people that have already left the company since 2019. Its rival ZF Friedrichshafen last month announced that it would cut 14,000 jobs in Germany over the next four years.
As a sign of the changing times, Continental in June signed an agreement with Germany’s largest defence contractor, Rheinmetall, which has agreed to take on hundreds of laid-off car engineers to fill its rapidly growing number of vacancies.
Continental’s share price, which has slumped almost a third in the past year, was down just over 1 per cent following news of the potential listing.
One of Continental’s main rivals, Schaeffler, last year announced a €3.8bn takeover of Vitesco — an EV-focused division that Continental spun out in 2021. Maria-Elisabeth Schaeffler and her son Georg, who chairs Schaeffler’s supervisory board, also own 46 per cent of Continental.
Continental said that, were a spin-off to be approved by its directors, its shareholders could expect to receive shares in the listed automotive unit in proportion to their stake.