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.

More by Matt Posky

Comments
Join the conversation
2 of 11 comments
  • 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.

  • Jpolicke In a communist dictatorship, there isn't much export activity that the government isn't aware of. That being the case, if the PRC wanted to, they could cut the flow of fentanyl down to a trickle. Since that isn't happening, I therefore assume Xi Jinping doesn't want it cut. China needs to feel the consequences for knowingly poisoning other countries' citizens.
  • El scotto Oh, ye nattering nabobs of negativism! Think of countries like restaurants. Our neighbors to the north and south are almost as good and the service is fantastic. They're awfully close to being as good as the US. Oh the Europeans are interesting and quaint but you really only go there a few times a year. Gents, the US is simply the hottest restaurant in town. Have to stand in line to get in? Of course. Can you hand out bribes to get in quicker? Of course. Suppliers and employees? Only the best on a constant basis.Did I mention there is a dress code? We strictly enforce it. Don't like it? Suck it.
  • 1995 SC At least you can still get one. There isn't much for Ford folks to be happy about nowadays, but the existence of the Mustang and the fact that the lessons from back in the 90s when Ford tried to kill it and replace it with the then flavor of the day seem to have been learned (the only lessons they seem to remember) are a win not only for Ford folks but for car people in general. One day my Super Coupe will pop its headgaskets (I know it will...I read it on the Internet). I hope I will still be physically up to dropping the supercharged Terminator Cobra motor into it. in all seriousness, The Mustang is a.win for car guys.
  • Lorenzo Heh. The major powers, military or economic, set up these regulators for the smaller countries - the big guys do what they want, and always have. Are the Chinese that unaware?
  • Lorenzo The original 4-Runner, by its very name, promised something different in the future. What happened?
Next