Continental Predicts Worst Financial Quarter Since World War 2

Matt Posky
by Matt Posky

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]

Matt Posky
Matt Posky

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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  • ToolGuy ToolGuy on Jul 09, 2020

    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.

  • Jeff S Jeff S on Jul 10, 2020

    @Lou_BC--I use to put Continentals on my motorcycles years ago because of their grip. Never had their car or truck tires.

  • EBFlex More proof of how much EVs suck. If you have to do this, that means you are trying to substitute what people want...and that's ICE.
  • Akear The only CEO who can save Boeing, GM, and Ford is Alan Mulally. Mulally is largely credited with saving both Boeing and Ford. The other alternative is to follow a failed Jack Welch business model. We have all witnessed what Jack Welch did to GE, and what happened to Boeing when it was taken over by GE-trained businessmen. Below is an interesting article on how Jack Welch indirectly ruined Boeing.https://www.thedailybeast.com/how-boeing-was-set-on-the-path-to-disaster-by-the-cult-of-jack-welch
  • ChristianWimmer The interior might be well-made, but the design is just hideous in my opinion. It’s to busy and there’s no simplistic harmony visible in it. In fact I feel that the nicest Lexus interior ever could be found in the original LS400 - because it was rather minimalistic, had pleasing lines and didn’t try to hard. It looked just right. All Lexus interiors which came after it just had bizarre styling cues and “tried to hard” if you know what I mean.
  • THX1136 As a couple of folks have mentioned wasn't this an issue with the DeLorean? I seem to recall that it was claimed you could do a 'minor' buff of the surface and it would be good as new. Guess I don't see why it's a big deal if it can be so easily rectified. Won't be any different than getting out and waxing the car every so often - part of ownership, eh.
  • ToolGuy This kind of thing might be interesting in a racing simulator.
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