German car parts supplier Continental to cut thousands of jobs

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Continental has announced thousands of job cuts as an “initial” step towards improving competitiveness, as one of the world’s largest suppliers to the car industry battles to remain competitive in the electric vehicle era.

The German group on Monday said measures designed to save €400mn annually would affect a “mid four-digit range . . . across all parts and all levels” of the 100,000 people employed by its automotive division, which makes up roughly half of the company’s total workforce.

Philipp von Hirschheydt, the company’s new head of automotive, referred to the cuts of “administrative” roles in sales, research and development as well as production as “initial measures”, opening the door for potential further cuts.

Continental in 2019 warned that 30,000 of roles would disappear within the next 10 years, as the company needed to invest in the expensive transition to electric vehicles — nearly 10,000 people have since left the company. An additional 10,000 jobs are still under review as part of that particular cost-cutting program.

The company has, alongside other suppliers, been hit by the chip shortage that depressed car production, and soaring inflation, which has raised costs that have proven difficult to pass on to their customers, the carmakers.

Margins at Continental’s automotive unit have fallen behind several rivals, sparking the company to consider selling investment-hungry divisions such as its autonomous driving arm.

Its rival Schaeffler last month announced a bid for EV specialist Vitesco, which was spun out of Continental two years ago, arguing that the arrival of Chinese brands in Europe would spur the need for car parts suppliers on the continent.

Continental last week slightly raised its expectations for the global sales growth of cars this year, which its chief financial officer, Katja Garcia Vila, said was mainly “coming from China”.

The European automotive industry is facing growing competition from Chinese rivals that have come to specialize in EVs, ahead of a ban on sales of new cars fueled by diesel and petrol by the EU in 2035.

The 152-year-old Continental, which last year made just under €40bn in global sales, said it would provide a further update on the latest round of lay-offs at its capital markets day on December 4.