Continental AG to Restructure to Adapt with Future of Mobility

Continental to Restructure to Adapt with Future of Mobility

Continental Ag's top executives are undertaking one of the largest organizational realignments in the company’s history to better prepare the business to adapt to the future of mobility.

Continental Ag’s top executives are undertaking one of the largest organizational realignments in the company’s history to maximize its potential for expansion in the key future areas of mobility, the company said in a press release.

The company will have a holding structure of Continental AG under the new “Continental Group” umbrella brand. This holding structure will be supported by three strong business sectors – Continental Rubber, Continental Automotive and Powertrain. Continental will establish these business sectors following approval from its supervisory board.

The Powertrain division will become an independent legal entity with a new company name and management by the beginning of 2019. Its partial initial public offering (IPO) is expected to start mid-2019. The reporting structure and the new names will start in 2020.

Its Chassis & Safety and Interior divisions will also be reorganized and become two business areas – named “Autonomous Driving Technologies” and “Vehicle Networking Technologies” – by 2020. Their business results will be reported in the new Continental Automotive group sector. Both areas will be supported by a new central Automotive Research and Development function.

Continental’s  Tires – which will be called “Tire Technologies” in the future – and ContiTech will retain their independent organizational structure. Their business results will be reported in the future Continental Rubber group sector.

elmar-degenhart-continental CEO
Continental Ag CEO Elmar Degenhart

“This is indeed a historic day for Continental,” said Dr. Elmar Degenhart, Continental CEO, this week in Hanover. “We are heading into the future of mobility at full speed. Our proven readiness and capacity to change give us an outstanding competitive edge which we want to use to the fullest. Our realignment will make us exceptionally flexible and agile. In Continental’s successful values alliance for top value creation, we are growing to meet upcoming challenges, remaining competitive now and in the future. This continues to require pioneering and innovative excellence. With this alliance, we are opening up new, promising perspectives for our customers, employees, investors and all other stakeholders.”

Continental has planned a restructure to meet future market needs for some time with news of a forthcoming “structural overhaul” surfacing earlier this year. 

Rubber sector: Continental retains ownership of its nucleus

In the future, the Tire Technologies and ContiTech divisions will be reported as a “group sector” with the new name “Continental Rubber.” The two business areas will continue to specialize in the development of rubber and plastics technology and products.

This business, which is the nucleus and origin of the 147-year-old Hanover-based company, will continue to be owned by Continental. The issuance of non-controlling interests, in the form of an IPO for example, is not planned at present but is an option for the future, the company says. Several years ago, Continental undertook preparations, making it possible to create a new legal entity out of this business. No further steps need be taken for this at present.

New Powertrain Division to Meet Requirements of Markets and Customers

Subject to the approval of Continental AG’s Supervisory Board, the Powertrain division will be transformed into an independent legal entity with a new name at the beginning of 2019. Andreas Wolf will be responsible for the new Powertrain company. He is currently in charge of the Body & Security business unit in the Interior division.

Powertrain will continue to be in charge of all future business involving hybrid and electric drive systems and all current battery activities, in addition to the combustion engine business. Continental is preparing a partial IPO for the new Powertrain company, which could take place starting mid-2019. Continental does not, however, plan to relinquish control of the Powertrain business in the medium or long term.

In the new business sector, Continental can envision producing battery cells comprised of solid materials (solid-state technology) in the future, also after this change has been implemented. This would require an attractive business model. A decision in this regard is not expected until after 2020.

The points in “Continental in Motion – our Alliance for the Future” published in April apply to the planned organizational changes at Powertrain.

The foreseeable change in the drive systems business is the reason why a new independent legal entity is being created. The way the market evolves will largely be determined by political demands regarding emission limits, Continental says. The pace at which political decision-makers are pushing regulations varies, particularly in key markets, including Europe, North America and China, as well as Japan and South Korea and growth markets such as India. This requires a great deal of flexibility on the part of the industry in order to be able to react quickly to the individual needs of the various markets, regulatory authorities, societies and customers.

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