Continental AG will cut thousands of jobs worldwide as the German parts supplier moves to reduce costs and bolster the competitiveness of its automotive unit.
The reductions are part of a plan to trim annual costs by €400 million ($428 million), the maker of auto-parts and tires said Monday. While the exact number of job cuts isn’t yet decided, it’s expected to be in the “mid four-digit range,” according to the statement.
ManagerMagazin reported earlier that the company plans to eliminate 5,500 jobs — 1,000 of them in Germany. Continental said it will dissolve its smart-mobility unit and plans to give a more comprehensive update at its capital markets day next month.
Shares rose as much as 1.8% in Frankfurt. Continental is up roughly 15% this year.
Continental is fighting to stem a slide in profitability at its automotive unit, which has started to fall behind peers as the industry transitions to electric vehicles. The company is weighing options including divesting its autonomous mobility business or inviting in partners to join it, people familiar with the talks have said. The unit makes sensors for driver assistance functions and requires hundreds of millions of euros in further investments.
Read more: Continental Said to Mull Auto Divestments to Shore Up Profit
For the planned job cuts, Continental is looking across all functions and processes, from sales to research and from development to production, according to the statement. Management is also entering discussions with employee representatives about the measures.
The company began a long-term restructuring program in 2020 that included eliminating or transferring 30,000 jobs by the end of the decade. The job cuts announced Monday are separate from that plan and are aimed at addressing cost and competitiveness issues at the automotive unit, which has a target of 2% to 3% adjusted EBIT margin this year and 6% to 8% in the midterm.
The unit achieved a 1% adjusted EBIT margin in the first nine months of this year.
(Updates with share price in fourth paragraph.)