Continental plans to cut 7,100 jobs in the automotive sector.

Around 7,150 jobs worldwide are to be cut by tire manufacturer and supplier Continental as part of cost-saving measures. According to the economic news service of the German Press Agency (dpa-AFX), the reduction of jobs by more than three percent of the total number of employees is due to the currently globally weak automotive supply sector. According to the information, the cuts will mainly affect employees in administration, but also those in the research and development (R&D) area of the Automotive business unit. The Dax-listed company, headquartered in Hannover, announced this decision today, February 14, 2024.

Of the more than 200,000 jobs in the group, around 5,400 will be cut in the administrative area, and another 1,750 in the research and development network. Additionally, Philipp von Hirschheydt, a board member responsible for the automotive sector for almost a year, also plans to consolidate locations in the Rhine-Main area. "Conti plans to cut jobs gradually and as socially acceptably as possible," it says.

Increase profitability

According to the report, the company had already announced deep cost-saving measures due to the "long-troubled automotive supply sector." In fact, the company, which has divided its activities into three business units: Tires, Automotive, and Contitech for industrial applications, provided insights into its future plans at its Capital Market Day for investors in December 2023. It was said that the company's goal was to "permanently" increase profitability and competitiveness in the Automotive business unit by significantly reducing costs and focusing on "high-growth and value-creating business areas." It was also mentioned that the costs for research and development, which were assumed to be 12 percent of sales in 2023, would be reduced to less than 10 percent "in the medium term."

Administration needs to slim down

In administration, the goal is to reduce annual costs by 400 million euros through job cuts by 2025. Previous plans for this goal were based on a "mid four-digit range" (in employees). More precise figures on the reduction in the R&D area had not yet been disclosed by the company. According to the report, investors and analysts have long criticized the company's low revenues in the automotive supply sector and the correspondingly high research expenses. The new target in the R&D area is now that its expenses should only account for nine percent of the Automotive sector's revenue by 2028, down from around 12 percent currently. Von Hirschheydt commented:

"With the streamlining of our research and development network, we are leveraging synergies and relieving our cost burden."