Continental Sees Tough Climate in Auto Unit’s Spinoff Year
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Continental AG said its automotive unit will struggle to increase sales this year as the German supplier pushes ahead with plans to spin off the ailing division despite the car industry downturn.
Sales will be burdened by the “challenging market environment,” Continental said ahead of a call with investors and analysts. The company expects cost cuts will help offset higher wages and buoy the unit’s profitability in 2025. Auto division sales for 2024 will be at the “very lower end” of guidance.
The tire and component maker has so far stuck to plans to carve out its auto unit by the end of 2025. The division, which makes products including brakes and automated driving systems and accounts for roughly half of group revenue, is struggling with waning demand, as carmakers suffer from weak sales.
A successful separation would be the company’s biggest-ever restructuring and leave Continental with its tire and industrial components divisions.
The company expects its tire business to face a “stronger and persistent headwind from raw material cost” in the first half of the year, noting that “tariffs and political changes” will create ongoing uncertainty. The tire unit’s profit will be weighed down by wage costs, while higher spending will be focused on the US and Asia.
President Donald Trump has threatened to impose 25% across-the-board tariffs on goods from Canada and Mexico as soon as Feb. 1. Continental has more than 20 production sites in Mexico.
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