Mr. Setzer, the auto industry is in big trouble. Your competitor ZF Friedrichshafen wants to cut 14,000 jobs, and VW is even threatening to close plants. Has Germany been written off as a car location? The situation is challenging. We already said at our Capital Markets Day in December that we expect little tailwind from the automobile market. At that time, we were still expecting global production of cars and light commercial vehicles to remain more or less the same this year. Now we are even seeing a slight decline, especially in Europe. China is also developing weaker than expected. The global market is unlikely to grow much in the next few years. It has therefore been clear to us for a long time that we have to act. We did that and launched our ten-year structural program in 2019. A car summit with Federal Economics Minister Robert Habeck (Greens) is planned for this Monday. The main aim is to improve the weak demand for electric cars, for example through purchase incentives. Is that enough? The type of drive is not directly relevant to us. We spun off our drive technology division three years ago. But of course we notice when general demand is declining, because every vehicle needs tires, hose lines or safety electronics, for example. As a Continental, we must be able to help ourselves. In such an environment, it is important for the industry that we work even more closely together, especially in software development. A level of complexity has arisen and is still increasing that no company can manage alone. This is also one reason why we are making our corporate divisions even more independent – so that they can work more flexibly with partners and make even better use of their growth opportunities. The Frankfurt branch of Continental in the northwestern district of Rödelheim, Maximilian von Lachner, is currently causing a stir with technical problems. Your customer BMW has to recall 1.5 million cars because of faulty brakes. How much compensation do you have to pay? We have set aside provisions in the mid double-digit million euro range and are currently assuming that this will be enough to cover a warranty claim. Based on the systems that have already been replaced and our current knowledge, we expect that only a small proportion of the brake systems delivered will be affected. The important thing is: you can always brake. The braking performance is always well above the legal requirements. There is also a function in the vehicle software that detects possible impairment of the component well before it occurs. At BMW they seem to see it completely differently. Recently there was talk of a high three-digit million sum that the error could cost. Will it result in a legal dispute? With the measures we have taken, vehicles with state-of-the-art brakes can be delivered worldwide without any further precautions. We’ll clarify everything else with BMW. They want to put a long-held idea into practice next year. The Dax group Continental is split up, the electronics, software and sensor technology division, “Automotive”, is separated from tires and other rubber products. The industry crisis and the recall are bad omens. The spin-off, i.e. the separation of our automotive division, is an important step. I am confident that we can implement this as planned by the end of next year. Of course, this assumes that all approvals have been given and that Automotive is eligible for the capital market. We started the process in August because we are convinced that now is the right time. In recent years, we have merged all parts of the division into one unit and focused on future markets such as software and autonomous driving. At the same time, the experiences from the pandemic and the semiconductor crisis have made us more robust. Our measures to improve results are now also taking effect. We are moving forward and are aiming for an adjusted operating return on sales of six to eight percent with Automotive in the medium term. In addition to healthy profitability, automotive obviously also needs a sustainable capital structure and must literally start its independence with a light backpack. At the headquarters in Lower Saxony, many fear that the split will mean the end of the traditional Continental group with its 150-year history. What is left when everything is broken down into individual parts? We have had a journey of around 40 years in which we have become a broad-based technology group through acquisitions and our own growth. Back then our annual report had around 40 pages, today it has over 200 – that shows everything that has happened. We have taken over companies like Temic and Siemens VDO and set up our three divisions with a clear structure. They are all at the forefront in their product segments and markets. In short: We have matured and are now ready for more independence. We are focusing more, also because of the challenges that the entire industry is facing. It’s about ensuring that all parts of the company can act faster and closer to the market, automotive as well as tires and our industrial division Contitech. The rubber products are our historical nucleus; they also benefit from the conversion. Ultimately, we are strengthening our traditional brand. To ensure the divisions’ independence, it is important that we gradually transfer the group’s tasks and functions to the corporate divisions. A lean, focused holding structure should be created by the end of 2025. After separating from the electronics division, can you imagine dividing the rest, i.e. the tires and the Contitech rubber division? We are maturing step by step. We are now fully focusing on preparing the automotive spin-off and on more independence for tires and Contitech. The Contitech division is concentrating even more closely on its industrial customers. We therefore want to make your business with rubber products for car manufacturers, Original Equipment Solutions, or OESL for short, independent as soon as possible. This is a business area with 18,000 employees in 15 countries. We are making good progress and plan to introduce OESL to potential buyers and partners in the fourth quarter. By the end of the year, we on the board will also decide on the Automotive spin-off. With our new structure, we are creating all the options to position ourselves even more flexibly depending on the development of our customers and markets and to make the best possible use of our opportunities. The Schaeffler family is a major shareholder in Conti and, with their company Schaeffler AG, is now taking over the former drive division, now Vitesco Technologies . Will the automotive division also end up there at some point? You have to ask Schaeffler. In any case, the electronic drive technology from Vitesco Technologies obviously complements Schaeffler’s great strengths in mechanics very well. Our automotive division produces solutions for autonomous driving, software or braking systems. In my opinion, the overlap is much smaller. The unions don’t speak well to you. Conti has also cut many jobs and closed locations. A further 7,150 jobs will now be lost in the automotive division. Some people question the point of the whole spin-off. In the automotive division, we will reduce our administrative costs by 400 million euros by the end of next year. We will achieve more than 150 million euros of this this year. We are also adapting personnel in research and development. We also concentrate our development on fewer locations and thus increase the efficiency and effectiveness of our development performance. As for the spin-off: This was discussed in detail by the supervisory board and is supported by the committee, including the employees. You have been leading the group for almost four years and previously worked in the tire division for a long time. It is now led by Christian Kötz, who would also be considered as CEO of the new, slimmed down group. Do you want to stay at the top? Anyone who knows me knows: my heart beats for Continental. It is a great challenge, but also a unique task, to lead our company through this development and thereby strengthen all of our units, Automotive, Tires and Contitech. My board colleague Philipp von Hirschheydt will be responsible for the fate of the automotive division even after its spin-off. My contract runs until 2029, so now we’re taking these important steps. We’ll see everything else. The Corona crisis fell during your term of office, a hard turning point. Now the entire auto industry feels that global political tensions are growing, especially between America and China. How do you reduce the risks for Conti? As with other companies, our answer is to serve the markets locally, i.e. “locally for local”. Take China: We have a strong presence there and already produce 90 percent of our products for the local market. The same applies to America and of course to Europe, our home market. What we have to constantly work on is our supply chains. The semiconductor crisis two years ago showed us that alternative sources of supply are needed. Our supplier network is large. We monitor it continuously and have already helped suppliers when necessary to keep the system running smoothly.More on the topicChip supply has just come back into focus due to Intel’s decision to move the factory in Magdeburg. This is another setback for Europe in a key technology. Here you have to differentiate between which industries which chips are needed. The plant in Magdeburg is intended to produce particularly modern semiconductors, small technology nodes in the 1.5 nanometer range. These are needed, for example, for processors in the area of artificial intelligence or for highly complex applications such as autonomous driving. Certainly an important technology, but the automotive industry needs the high volumes in the segment above 90 nanometers. The supply situation will remain tense. Because demand is growing faster than supply. So we need even more investment to strengthen local supply chains, especially in the larger, more mature semiconductor nodes. Any support is welcome.Hausgewächs in HanoverNikolai Setzer is a manager to whom the description “Hausgewächs” applies like few others. He has spent his entire professional life at Continental AG. He worked most of the time in the tire division, and since the end of 2020 he has been CEO of the DAX group with headquarters in Hanover. Conti has a complex structure and has been struggling with the upheavals in the car industry and its own difficulties for years. In order to concentrate more, the management split off the drive division three years ago, which produces control electronics for engines and now operates as “Vitesco”. Now CEO Setzer is planning the next step. The “Automotive” electronics division is to be separated, which will bring Conti back to its origins: tires and other rubber products. The 53-year-old industrial engineer used to play volleyball professionally and still enjoys sports. He was born in Groß-Gerau in southern Hesse.
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