Continental plans to reduce its automotive spending by $428 million (400 million euros) annually by 2025 to improve its finances, the company said Monday.
To save money, the auto supplier said it would lay off employees and reduce its automotive business from six to five units. Continental said the automotive layoffs would “be in the mid four-digit range,” but German business publication Manager Magazin first reported Sunday that it could be around 5,500 workers. The automotive supplier has not confirmed those numbers.
The company also plans to dissolve its Smart Mobility business area, which it will fold into its other automotive units. Continental’s automotive business areas now include architecture and networking, autonomous mobility, safety and motion, software and central technologies, and user experience.
“Our goal is to create a sustainably profitable sector that can invest in its future from its own resources. With the adjustments to our structure, we bring technology solutions to those business areas where we see synergies. This will allow us to respond even better to market requirements,” Philipp von Hirschheydt, an executive board member and head of automotive at Continental, said in a news release.
In August, Manager Magazin reported that Continental may sell ContiTech’s automotive business within two years as part of a corporate restructuring. The company, however, plans to keep its profitable tire business amid the transition to electric vehicles.
ContiTech manufactures industrial and automotive rubber, plastic, metal and fabric components. Its automotive product line includes drive belts, pulleys, belt tensioners and hoses. The company operates core branches in Asia, Europe and North and South America and reported sales of about $7.2 billion in 2022.
Continental plans to provide a comprehensive strategy update for its automotive business on Dec. 4.