Continental Predicts Worst Financial Quarter Since World War 2
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.”
A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.
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