Continental, a name synonymous with tires and automotive components, has been a cornerstone of German industry for decades.
Known for its innovation and global reach, the company has weathered market fluctuations and technological shifts. But now, Continental is facing one of its toughest challenges yet.
Financial difficulties have forced it to make a dramatic decision that could reshape its future, according to Boosted.
The company announced plans to spin off its Automotive division, which has struggled with mounting losses in recent years.
This division, responsible for producing electronics, brakes, and interiors for cars, has been a financial drag despite its technological capabilities. Continental aims to complete the separation by the end of 2025.
12,000 Jobs to be Cut
To stabilize its operations, the company is implementing a cost-cutting program. Leaders plan to reduce annual expenses by €400 million, starting in 2024.
Unfortunately, this will come at a human cost. Over 12,000 jobs are set to be cut, affecting both administrative and research roles.
The spin-off will take the form of a stock market listing. Shareholders will receive new shares in the standalone Automotive division, which they can either hold or sell.
This approach ensures that Continental’s core operations, particularly its tire business, remain financially insulated. However, the spin-off itself won’t bring an immediate cash influx to the company.
Continental’s tire segment, a major profit driver, remains unaffected. This part of the business continues to thrive, providing some stability during uncertain times.
The move highlights broader challenges within Germany’s automotive industry. Economic pressures have pushed other firms, such as gearbox manufacturer ZF, into similarly precarious positions.
For Continental, this restructuring represents not just a reaction to current struggles but an attempt to secure a sustainable future.
