Vehicle suppliers looking to future with new business divisions

6 August 2018

Two vehicle suppliers are moving forward with new business strategies in efforts to unlock further financial potential.

Hanover-based Continental and Fiat Chrysler (FCA) owned Magneti Marelli are set to confirm new structures that will see them gain various degrees of independence, with certain parts of Continental’s business being spun out, while FCA looks to set Magneti Marelli as a stand-alone business.

The German company is planning to spin-out its powertrain division, whose products include parts for combustion engines, early in 2019. Once this is done, it will sell a part of the unit to investors. The company has been planning the move since January this year.

The decision is part of the creation of a holding structure of Continental AG under the new ′Continental Group’ umbrella brand. This holding structure will be supported by three strong business sectors; Continental Rubber, Continental Automotive and Powertrain. The reporting structure and the new names are to be used starting in 2020. This change needs to be approved by Continental AG’s Supervisory Board, as well as for the transformation of the Powertrain division into an independent legal entity with a new company name and management by the beginning of 2019. Its partial initial public offering (IPO) is expected to start mid-2019.

′This is indeed a historic day for Continental. We are heading into the future of mobility at full speed. Our proven readiness and capacity to change give us an outstanding competitive edge which we want to use to the fullest. Our realignment will make us exceptionally flexible and agile. In Continental’s successful values alliance for top value creation, we are growing to meet upcoming challenges, remaining competitive now and in the future. This continues to require pioneering and innovative excellence. With this alliance, we are opening up new, promising perspectives for our customers, employees, investors and all other stakeholders,’ said Elmar Degenhart, Continental CEO.

Meanwhile, FCA has begun its plans to spin out its parts company Magneti Marelli, which will be registered in the Netherlands and listed on the Milan stock exchange, according to the news agency Reuters.

The idea is part of a plan by FCA CEO Sergio Marchionne to ′purify’ the Italian-American carmaker’s portfolio and to unlock value at Magneti Marelli.

The company said it was planning to start the process by the end of 2018 back in March. The spun-out parts division could be worth as much as €5 million and will allow FCA to focus on vehicle development at a time when car companies are being pushed to research new powertrains and methods of transportation for an electric and autonomous future.