Parts supplier Continental says the extended lockdown protocols that closed countless automotive factories and dealerships will result in the worst quarter witnessed since the Second World War. It also isn’t overly optimistic about Q3, as supply chain issues will continue making normal business operations difficult while the global recession begins to take hold.
“The second quarter is just behind us. It will be the historically weakest quarter for the auto industry since 1945,” Continental Chief Executive Elmar Degenhart said, according to a transcript of a speech due to be delivered at the company’s annual shareholder meeting on July 14 that was intercepted by Reuters.
Continental plans to cut investment spending by a fifth and has extended credit limits with banks by €3 billion ($3.38 billion USD), according to the document. These and other cost-cutting measures are intended to help the company save roughly €500 million annually by 2023, helping it endure what it seems to think will be an incredibly lean period for the automotive industry.
It doesn’t seem to think Q3 will be quite as bad as Q2, however. Unfortunately, we’ll have to wait until next week to hear all of what Continental has to say on the issue. The above changes are only part of its overall strategy, with staffing reductions seeming highly probable. CEO Elmar Degenhart told German employees not to get overly comfortable and that government help was meaningless in an internal video posted in June.
“We have given up hope that the stimulus packages are effective and good enough to give a short-term boost to car markets. We cannot expect any help from politicians,” he was quoted as saying by WirtschaftsWoche. “At the moment we cannot give any job guarantees. The probability that we will have to talk about layoffs is very, very high.”
[Image: arcticphotoworks/Shutterstock]
Continental is a global business, though headquartered in Germany. Which politicians from which countries are the ones Continental can’t expect any help from?
I suspect the CEO is talking primarily about the German government. In the US, neither the Republicans nor the Democrats historically have demonstrated any reluctance to borrow trillions of dollars to goose the economy.
Don’t worry, the Germans know how to make it rain with the best of them. Google Weimar Hyperinflation for some history.
All the central banks are running the taps wide open. Not sure what Degenhart is whining about. Must not have gotten as big a slice of the free cheese as some other fellow rat.
What is surprising here? If you are German company and as company you remember WW2, than every quarter should be worse than ww2. Because they used to slave labor for good profits. Now you have to pay up
I did Nazi this coming.
I hope they don’t go under .
In the past I’ve used their tires to good effect and they make damn near all the rubber bits on VW’s and Mercedes…
-Nate
I pay extra for Continental.
I have Continental TKC 80’s on my bike. They work well on pavement and offroad but don’t last. I’m going to put a Shinko 705 on the back soon. Might as well spend 1/2 as much for 6-7,000 km of life.
Continental makes some nice, sticky tires that make a noticeable difference in handling, and the price isn’t much more than ordinary tires. They do wear out a bit faster, though. But the tradeoff is completely worth it – shorter braking, better handling, nicer cornering. Good tires are the most important and least costly upgrade.
Where is the very true
‘It’s more fun to drive a slow car fast than a fast car slow’
comment?
My experience with Continental automotive tires has been horrible, but it was some kind of OEM-super-discount-original-equipment-tires deal and was several years back.
@Lou_BC–I use to put Continentals on my motorcycles years ago because of their grip. Never had their car or truck tires.