Continental AG: Spin-off from AUMOVIO for higher margins by 2027!

Imagine looking through the cockpit of a state-of-the-art vehicle – the future of mobility is taking shape, and Continental AG is right in the middle of this rapid change. As one of the leading suppliers to the automotive industry, the company navigates through an industry that is characterized by technological upheaval and global market shifts. A look at the current trends and growth dynamics shows how Continental is positioning itself in this complex environment and what challenges lurk in the global and regional markets.

The automotive industry is undergoing a historic transformation, driven by electromobility, autonomous driving and sustainability requirements. Globally, industry growth is being fueled by increasing demand for electric vehicles (EVs), which are forecast to reach over 30% market share by 2030. For Continental, this means both opportunity and pressure: The automotive sector, which generated around 19.4 billion euros in sales in 2024 and thus almost half of group sales, is at the center of this change. But the profit margins in this segment, with an operating profit of almost 230 million euros, remain significantly behind the tire business, which achieved an operating margin of almost 13.5% in 2024. This discrepancy is forcing the group to make strategic adjustments, as shown by the planned spin-off of the automotive division, in order to focus on the more profitable core business with tires, as shown by data from Statista emerges.

At a global level, Continental remains strongly internationally positioned, with a foreign share of sales of over 80% in 2024. This underlines the importance of markets such as Asia and North America, where demand for innovative mobility solutions and premium tires continues to grow. However, the group is confronted with intense competition and price sensitivity, particularly in China, the world's largest automobile market. At the same time, emerging markets in Southeast Asia and Latin America offer potential for expansion, especially in the tire segment, where Continental is still one of the top manufacturers behind competitors such as Michelin and Bridgestone. The challenge is to find the balance between cost efficiency and investment in future technologies, while geopolitical uncertainties and supply chain issues influence global strategy.

From a regional perspective, there is a mixed picture in Europe. Germany, where a third of Continental's employees are employed, remains a central location for research and development (R&D), but the group is under cost pressure here. As part of the “Lead - Focus - Perform” strategy, which was presented in December 2023, Continental plans to reduce the R&D quota from currently around 12% of sales (2023) to less than 10% by 2025 and even to 9% by 2028. At the same time, the consolidation of development sites - currently 82 worldwide - and the bundling of units are intended to increase efficiency and reduce annual costs by 400 million euros from 2025, as in a current report Press release of the company is explained. These measures affect around 5,400 positions worldwide, including 1,750 in the R&D department, and are being implemented gradually and in a socially responsible manner, for example by analyzing location consolidation in the Rhine-Main region.

Another trend influencing regional dynamics is the growing importance of sustainability and circular economy in Europe. Consumers and regulators are increasingly demanding environmentally friendly products, driving Continental to invest in sustainable tire materials and energy-efficient technologies. While this could create competitive advantages in the long term, it requires high investments in the short term, which will put a strain on the already strained profitability in the automotive segment. In North America, however, the focus is more on the integration of software solutions for autonomous driving, an area in which Continental plays a key role through its software subsidiary Elektrobit (where 380 positions are affected by the current adjustments).

The trends and market conditions make it clear that Continental is at a turning point. The strategic decisions made in the coming years, particularly to focus on profitable segments and optimize global presence, will be crucial to remain competitive in a changing industry. At the same time, the question remains as to how the group will master the balance between cost reductions and the necessary innovations in order not to lose touch with the top.

If we navigate through the competitive landscape of automotive suppliers, it is striking how fiercely contested every market share in this industry is. Continental AG is asserting itself in this race with a mixture of tradition and innovation, but the competition never sleeps. A close look at market position, main rivals and specific strengths reveals where the company stands and what levers it needs to pull to consolidate its position.

In the tire segment, Continental is one of the global heavyweights, even if it ranks behind Michelin, Bridgestone and Goodyear in 2024. However, with an operating profit margin of almost 13.5% in the tire business, the group shows that it operates extremely profitably in this core area. The automotive sector's share of sales is almost 19.4 billion euros, which accounts for almost half of total sales, but profitability remains significantly weaker here with an operating profit of only 230 million euros. Overall, the Group's operating profit margin reached approximately 5.8% in 2024, indicating a mixed performance. Data from Statista make it clear that the planned spin-off of the automotive sector and the ContiTech division is aimed at no longer compensating losses in less profitable segments with tire profits.

In addition to the tire giants mentioned, the main competitors also include suppliers such as Bosch and ZF Friedrichshafen, who are fighting for market share in the automotive sector. Bosch particularly dominates in electronics and software solutions for electromobility, while ZF scores with transmission and drive technologies. In the tire segment, Michelin and Bridgestone set standards for innovation and global presence, with Michelin often standing out for its sustainable materials and Bridgestone for its aggressive pricing policy. Goodyear, in turn, focuses heavily on the North American market, where Continental is also fighting for shares. This competition forces the company to use its resources in a targeted manner so as not to fall behind.

A key advantage of Continental is its premium positioning in the tire segment, especially for medium and high-priced vehicles. Products such as the PremiumContact 6, which combines efficiency with sportiness and comfort, or the SportContact 6, optimized for handling, steering precision and safety at high speeds, meet the specific requirements of manufacturers. In addition, the ContiSilent technology, which uses a special foam layer to reduce vibrations and noise, addresses the need for comfort in electric vehicles, where rolling noise is more noticeable due to the lack of engine noise. These technological differentiations are presented in one Press release of the company and underline the ability to master technical conflicting objectives such as rolling resistance versus energy consumption.

Another plus point is the strong international positioning, with a foreign share of over 80% of sales in 2024. This enables Continental to benefit from growth markets such as Asia and North America, while a third of the workforce in Germany ensures a high level of engineering expertise. However, expansion outside the tire business remains a challenge as it ties up resources and reduces profitability in other segments. The strategic decision to concentrate on the core business could reduce competitive pressure in the long term by outsourcing unprofitable areas.

In a direct comparison with its competitors, it is noticeable that Continental can score points in terms of the breadth of its portfolio, but still has some catching up to do in the depth of individual future fields such as software for autonomous driving or battery technology. The ability to quickly scale innovations while optimizing the cost structure will be crucial to making up ground against Bosch or ZF. At the same time, the focus on premium tires remains a solid foundation not only to survive in the competition with Michelin and Bridgestone, but also to specifically expand market share.

Let's delve into the world of numbers at Continental AG, where every key figure tells a story about the company's financial health and strategic priorities. The analysis of sales, profits, EBITDA, margins and balance sheet ratios provides a clear insight into the company's performance and the challenges it has to overcome in a dynamic market environment. Let's look at the current data and trends to accurately assess the financial situation.

In 2024, Continental achieved sales of around 41 billion euros, of which the automotive sector contributed almost half with 19.4 billion euros. The tire business, the more profitable core of the group, contributed the rest and showed robust development. The operating profit of the entire group amounted to around 2.4 billion euros, with the automotive sector falling well short of expectations at just 230 million euros. In contrast, the tire segment boasted an operating profit margin of almost 13.5%, while the group's overall margin was around 5.8%. This discrepancy underlines the need for strategic adjustments such as the planned spin-off of the automotive division.

EBITDA, a key indicator of operational performance, was an estimated 5.2 billion euros in 2024, which corresponds to a margin of around 12.7%. This shows that, despite the weaknesses in the automotive segment, Continental has a solid cash flow basis that enables investments in future fields such as electromobility and autonomous technologies. Nevertheless, the challenge remains to reduce the high research and development costs - currently around 12% of sales - as envisaged by the “Lead - Focus - Perform” strategy with a target of less than 10% by 2025 and 9% by 2028. However, the absolute level of expenses could continue to rise due to sales growth.

A look at historical data shows the development of financial performance. In 2017, the group reported a result of 2.98 billion euros, an increase of 6.5% compared to the previous year (2.80 billion euros), as in Annual report 2017 documented. Earnings per share also rose by 6.5% to 14.92 euros, and the dividend was increased to 4.50 euros per share, which corresponded to a distribution of 900 million euros or 30.2% of consolidated earnings. The dividend yield was 2.2%, slightly below the previous year (2.3%). These figures illustrate long-term stability in shareholder policy, even if the current margins in the automotive sector are putting pressure on overall profitability.

The balance sheet ratios provide further insights into the financial structure. At the end of 2017, the market capitalization was 45 billion euros, an increase from 36.7 billion euros the previous year, with the free float remaining unchanged at 54%. The average market capitalization based on free float was 24.3 billion euros, which reflects the attractiveness for investors. Current estimates for 2024 show that the equity ratio is around 35-40%, indicating a solid but not overly conservative financial structure. Leverage, as measured by the net debt/EBITDA ratio, is expected to be around 2.0 to 2.5, which is moderate compared to the industry but limits scope for strategic investments if margins do not increase.

The financial challenges are also reflected in the planned cost-cutting measures, which are expected to save 400 million euros annually from 2025. These steps, which affect around 5,400 jobs worldwide, aim to streamline administrative and business structures and increase profitability. At the same time, the focus on the tire business remains crucial, as this is where the highest margins are achieved. The question is whether the sales development in growth markets such as Asia is sufficient to compensate for the weaknesses in the automotive sector while the planned spin-off is still being implemented.

Let's travel back through the stock market history of Continental AG, where the share price curves have as many ups and downs as the roads for which their products are developed. The historical performance of the share price, volatility and comparison with relevant indices provide valuable information about how the company has adapted to market conditions over time and what risks exist for investors. Let's take a close look at the data to decipher the performance in the markets.

Continental's share price development shows an eventful journey over decades. From 1983 onwards, a recovery began after years of decline, supported by acquisitions such as Uniroyal, General Tire and Semperit as well as an active approach to foreign investors. However, by 1999 there was a setback, triggered by a crisis in the automotive industry. An impressive rally began in 2003, reaching the 200 euro mark in 2015 and finally a record of 257 euros per share in 2018. But volatility increased from 2016 onwards as high investor expectations did not always match company performance. The spring of 2020 brought a stock market crash due to the corona pandemic, and news of billions in write-offs continued to weigh on the price, even if speculation about a corporate restructuring caused brief jumps. Like a historical review Continental's website documented, an investor who bought 100 shares in 1994 would have earned around 25,000 euros at the end of 2017, while the value at the end of 2020 was still around 15,000 euros.

The volatility of Continental shares reflects the uncertainties of the industry. Stronger price fluctuations have been observed since 2016, due to external shocks such as the 2009 financial crisis, the 2020 corona pandemic and internal challenges such as low profitability in the automotive sector. Annualized volatility of around 25-30% over the past few years (based on historical data and estimates) shows that the stock is subject to greater fluctuations than the broader market. This makes them attractive for risk-taking investors, but also entails considerable uncertainty, especially in times of economic instability or negative company news.

Compared to relevant indices, the picture is mixed. Compared to the DAX, the leading German index, Continental was able to keep up with or exceed it in phases of upswing, for example between 2003 and 2015, when the share returned to the top 30 stocks in Germany after seven years. However, in times of crisis like 2020, the performance fell significantly behind the index. A comparison with the boerse.de Megatrend shares, which increased in value from 10,000 to 3,727,156.17 points from 1999 to the end of 2023, shows that Continental was unable to keep up with the strongest growth stocks. The Nasdaq 100, which rose from 10,000 to 40,680.20 points over the same period, highlights this gap even more clearly, according to data from boerse.de clarify. This is primarily because Continental operates in a cyclical industry, while technology indices benefit from structural growth.

The market capitalization at the end of 2017 was €45 billion, underlining its attractiveness for institutional investors, but increased volatility and recent price declines suggest cautious confidence. Current estimates for 2024 show a price of around 70-80 euros per share (as of mid-2024), which is well below the highs of 2018. The beta number, which measures sensitivity to market movements, is around 1.2, which means that the stock reacts more strongly to market changes than the DAX - an indication of increased risk.

The historical development and the comparison to indices make it clear that Continental is able to shine in growth phases, but remains vulnerable to external and internal crises. The question of whether strategic measures such as the spin-off of the automotive division or cost reductions can regain investor confidence depends heavily on implementation and market conditions in the coming years.

Let's imagine turning the wheel towards the economic conditions that surround Continental AG and zooming in on the key drivers such as interest rate developments, raw material prices, demand and the role of management. These factors not only shape the group's operational landscape, but also influence strategic decisions in an industry in transition. Let us take a close look at the current developments and their impact on the company.

Let's start with interest rate developments, which are of central importance for a capital-intensive company like Continental. The building interest rates for ten-year loans are currently 3.6% (as of November 5th, 2025), and over 80% of experts expect stable conditions in the short term, supported by a robust internal market situation in the EU and an inflation rate close to the ECB's 2% target. In the medium term, however, 60% of experts predict an increase to around 4% by 2026, due to geopolitical tensions, new tariffs and high national debt, according to an analysis Interhyp shows. For Continental, this means potentially higher financing costs, especially for investments in research and development or location consolidations. With an estimated net debt/EBITDA ratio of 2.0 to 2.5, the scope for additional debt remains limited if interest rates rise.

Another critical factor is raw material prices, which directly affect production costs in the tire segment and other areas. Natural rubber, a key component of tires, has shown price fluctuations of 10-15% per year in recent years, influenced by weather conditions in producing countries such as Thailand and geopolitical uncertainties. Steel and synthetic materials required in the automotive sector are also subject to global supply and demand tensions. Current estimates suggest a moderate increase in raw material costs of 3-5% for 2025, which could further put pressure on the already tight margins in the automotive sector (currently under 2%). An efficient cost structure and possible price increases in the premium tire segment will be crucial to cushioning this burden.

The development of demand presents a mixed picture. In the tire segment, demand for premium products remains stable, especially in growth markets such as Asia, where the foreign share of sales was over 80% in 2024. The increasing adoption of electric vehicles is also driving demand for specialized tires with low rolling resistance and low rolling noise, an area in which Continental is well positioned with technologies such as ContiSilent. In the automotive sector, however, demand is stagnating due to the uncertainties surrounding the transition to electromobility and lower profitability, which underlines the planned spin-off of this segment. Forecasts indicate moderate sales growth of 2-3% in the tire segment for 2025, while the automotive sector remains under pressure.

The leadership strength of management is crucial to overcoming these challenges. Under the “Lead - Focus - Perform” strategy, which was presented in December 2023, the group management has set clear priorities: reduction of the R&D quota from 12% (2023) to under 10% by 2025 and 9% by 2028 as well as annual cost savings of 400 million euros from 2025 through streamlining structures and job cuts (around 5,400 worldwide). These measures, which are intended to be implemented in a socially responsible manner, show a pragmatic approach to increasing profitability. At the same time, management is faced with the challenge of smoothly organizing the spin-off of the automotive division and the ContiTech division in order to focus on the lucrative tire business. Communication to date indicates a clear goal orientation, but the speed of implementation and the market's reaction to these restructurings remain crucial touchstones.

The combination of rising interest rates, volatile raw material costs and inconsistent demand presents Continental with complex tasks. How management balances these external and internal factors will largely determine whether the group can maintain its competitiveness in a changing industry.

Let's embark on a geopolitical map where trade conflicts, sanctions and political stability significantly influence Continental AG's route. In a globalized economy in which the group generates over 80% of its sales outside Germany, these external factors are not just side notes, but rather central risks and opportunities. Let's take a hard look at the current tensions and their potential impact on the company.

Trade conflicts between major economic blocs such as the EU and the USA represent a growing threat. Following the re-election of Donald Trump in November 2024, the threat of new tariffs has once again strained transatlantic relations. Already in 2018, US tariffs on steel and aluminum led to significant cost increases for European companies, and current debates in the European Parliament in February 2025 show that the EU is relying on counter-tariffs as a deterrent. Maroš Šefčovič of the European Commission criticized such measures as harmful to businesses and consumers, as stated on the website of the European Parliament documented. For Continental, this could mean higher costs for raw materials such as steel needed in its automotive division, as well as difficulties exporting to the US market, which accounts for a significant portion of sales. Estimates suggest that a 10% tariff on automotive products could further depress margins in this already weak segment (currently below 2%).

Sanctions and trade restrictions increase uncertainty. Historical conflicts, such as US tariffs on Spanish olives in 2018 or disputes over hormone-treated beef, show how quickly political decisions can disrupt supply chains. Sanctions against countries such as Russia, where Continental was active until the Ukraine conflict in 2022, are currently an issue. The withdrawal from this market has already caused lost sales of an estimated 200-300 million euros annually, and further geopolitical tensions could jeopardize access to raw materials such as natural rubber or rare earths for electromobility components. The group's dependence on global supply chains makes it particularly vulnerable to such external shocks, particularly in emerging markets, which are crucial for expansion in the tire segment.

Political stability – or lack thereof – also plays a central role. In Europe, the situation remains relatively stable despite internal tensions, which benefits Continental as a third of its workforce works in Germany and the region remains a core market. But in Asia, especially in China, where the group has a strong presence, political uncertainties and trade disputes pose risks. The possibility of new tariffs or regulatory hurdles could put a strain on the cost structure, while in North America the unpredictable trade policy of the new US government reduces planning certainty. Bernd Lange, chairman of the European Parliament's International Trade Committee, stressed the need for countermeasures, suggesting an escalation in tensions. For Continental, this could mean that strategic decisions such as relocations or supply chain adjustments have to be implemented more quickly in order to react to sudden changes.

The impact of these geopolitical dynamics on the group's finances should not be underestimated. An increase in trade costs of just 5% could further reduce the already low operating margin in the automotive sector, while the tire sector could be burdened by higher export tariffs in key markets such as the USA. At the same time, political initiatives in the EU, such as funding programs for electromobility, offer opportunities for growth if Continental strengthens its position in this area. Balancing risk management and leveraging funding opportunities will be critical to navigating this uncertain environment.

Let's take a deeper look into the operational foundations of Continental AG by taking a close look at the production and order situation. Order backlog, delivery bottlenecks and production capacities are key indicators of the Group's ability to survive in a challenging market environment. With a precise focus on current data and trends, we analyze how these factors influence short and medium-term development.

The order backlog in the automotive industry is currently showing a downward trend, which also affects Continental. According to a press release from the Federal Statistical Office dated August 19, 2024, the order backlog in the manufacturing sector fell by 0.2% in June 2024 compared to the previous month and by 6.2% compared to the previous year. The automotive industry in particular recorded a decline of 0.7%, the 17th consecutive month of negative development. The order backlog range is 7.2 months, which indicates a solid but not abundant order situation. For Continental, this means that the pressure in the automotive sector, which generated around 19.4 billion euros in sales in 2024, continues. In the tire segment, the situation could be more stable as demand for premium products continues in growth markets such as Asia (over 80% foreign share of sales). Nevertheless, the declining trend remains a warning signal for short-term sales development, especially for capital goods, where the range is 9.7 months, as shown on Destatis documented.

Delivery bottlenecks represent an additional challenge that affects Continental's operational efficiency. Global supply chain issues, compounded by geopolitical tensions and sanctions, have limited the availability of raw materials such as natural rubber and steel in recent years. Estimates suggest that delivery delays have increased production costs in the automotive sector by 3-5%, further weighing on already low margins (less than 2%). Bottlenecks in semiconductors, which are essential for electronic components in vehicles, are particularly critical. This shortage has led to production losses in the industry, and Continental is not exempt from this. The group's dependence on international suppliers, particularly from Asia, makes it vulnerable to such disruptions, while the consolidation of development sites (out of 82 worldwide) as part of the “Lead - Focus - Perform” strategy could limit flexibility in the short term.

Continental's production capacities are also in focus as they are crucial for dealing with fluctuations in demand. The group operates numerous plants worldwide, with a focus on Europe, Asia and North America, to ensure proximity to important markets. Current estimates show that utilization in the tire segment is around 85-90%, indicating solid but not overloaded capacity. In the automotive sector, however, utilization is lower, at an estimated 70-75%, due to stagnating demand and the uncertainties in the transition to electromobility. The planned spin-off of this segment as well as the cost-cutting measures (400 million euros annually from 2025) could lead to unprofitable production facilities being closed or restructured. At the same time, the company plans to make better use of the existing infrastructure by bundling development units, which could increase efficiency in the long term.

The combination of a declining order backlog and ongoing delivery bottlenecks is putting Continental under pressure, especially in the automotive sector, where the operating margin is already weak. In the tire segment, stable demand in emerging markets offers a certain buffer zone, but the ability to flexibly adjust production capacities will be crucial in responding to sudden surges in demand or further supply disruptions. The strategic measures to consolidate locations and reduce costs could have a positive effect here, provided they are implemented quickly and effectively.

Let's explore the innovation front of Continental AG, where technological advances set the course for the future. In an industry characterized by rapid change, patents and research and development (R&D) spending play a key role in securing competitive advantages. With a keen eye on current developments and strategic priorities, we analyze how the group is strengthening its position through innovation.

Technological advances form the backbone of Continental's strategy, particularly in the areas of electromobility and autonomous driving. An outstanding example is the award of the CLEPA Innovation Prize 2024 in the “Digital” category for “Smart Cockpit High Performance Computer (HPC) virtualization”. This cloud-based solution revolutionizes vehicle development by enabling software development before the availability of physical hardware. Virtual ECUs allow the simulation and testing of future applications, allowing hardware and software to be developed in parallel. This significantly reduces development time and helps identify potential problems early, as in a Press release of the company is highlighted. Jean-François Tarabbia, head of the Architecture and Network Solutions business unit, emphasized the importance of this recognition for the group's innovative strength. Such technologies position Continental as a pioneer in the digital transformation of the automotive industry.

The group also relies on sustainable innovations in the tire segment. A framework agreement with Pyrum Innovations AG for the long-term purchase of recovered carbon black (rCB) underlines the commitment to circular economy. The contract, which covers a term of ten years and purchase quantities for at least two Pyrum plants, stipulates that Continental will also deliver used tires to Pyrum and make an advance payment for future deliveries. All newly produced forklift tires at the Korbach plant already contain Pyrums rCB, and both companies are working on further development for series production of passenger car tires. Pyrum also plans to build a new factory in Perl-Besch by the end of 2025 to double recycling capacity from 20,000 to 40,000 tons of used tires, according to its website Pyrum documented. This partnership strengthens Continental's sustainability strategy and could reduce long-term costs through the reuse of materials.

Patents are another cornerstone of innovative strength. Continental holds an extensive portfolio of patents, particularly in the areas of tire technology, sensors and software solutions for autonomous driving. It is estimated that the group registers hundreds of new patents every year, underlining its position as a technology leader. Technologies such as ContiSilent, which reduces rolling noise in electric vehicles, or PremiumContact 6, which combines efficiency and sportiness, are protected by patents and ensure competitive advantages. In the automotive sector, patents for software and electronic solutions protect the group from imitators, even if the planned spin-off of this segment could affect the long-term use of these patents. The ability to protect and monetize intellectual property remains a critical factor in market position.

Continental's R&D spending is a key lever in enabling these technological advances, but is under cost pressure. For 2023, the R&D quota amounted to around 12% of sales, which, with sales of around 41 billion euros, means expenditure of almost 4.9 billion euros. As part of the “Lead – Focus – Perform” strategy, the group plans to reduce this ratio to less than 10% by 2025 and to 9% by 2028, which would mean expenditure of around 3.7 billion euros in 2028 if sales remained the same. Despite the planned reduction, absolute expenses could increase due to sales growth. The consolidation of 82 development locations worldwide and the reduction of 1,750 jobs in this area are intended to increase efficiency without endangering innovative strength. Nevertheless, the balance between cost reduction and necessary investments in future fields such as electromobility and digital solutions remains a challenge.

The technological advances and commitment to sustainable solutions show that Continental is on the right track to assert itself in a changing industry. The strategic focus on digital innovations and circular economy could not only secure competitive advantages in the long term, but also meet regulatory requirements and open up new markets.

Let's focus on the coming years and take a far-sighted look at the development of Continental AG. For the period of 3 to 5 years, i.e. until 2027-2029, promising but also challenging prospects are emerging. By analyzing growth drivers and possible scenarios, we outline how the group could position itself in a dynamic market environment. Let’s dive straight into the key aspects that will shape the future.

The outlook for Continental over the next 3 to 5 years depends heavily on the successful implementation of the strategic realignment. The planned spin-off of the automotive division, which generated around 19.4 billion euros in sales in 2024, is intended to focus on the more profitable tire business, where the operating margin is almost 13.5%. The automotive division is positioned as an independent unit under the AUMOVIO brand, a technology company for software-defined and autonomous vehicles. With sales of 19.6 billion euros in the 2024 fiscal year and approximately 93,000 employees in over 50 countries, AUMOVIO demonstrates a strong market presence, especially in growth markets such as China, as stated on its website Continental explained. The four business areas – Autonomous Mobility, Architecture and Network Solutions, Safety and Motion and User Experience – offer a broad portfolio that ranges from sensor solutions to display technologies. If the spin-off is completed by 2027, this could increase the remaining group's overall margin to 8-10%, as automotive losses no longer need to be offset by tire profits.

One of the key growth drivers is the tire segment, which is benefiting from increasing demand for premium products and specialized tires for electric vehicles. Forecasts indicate annual sales growth of 3-5% until 2029, driven by markets in Asia and North America, where the foreign share of sales is already over 80%. Another driver is sustainability, for example through partnerships such as with Pyrum Innovations to use recovered carbon black, which could reduce costs and meet regulatory requirements. In the automotive sector (via AUMOVIO), autonomous technologies and display solutions are growth areas, especially in the user experience area, where the value per vehicle is expected to increase through larger displays. Estimates show that the autonomous mobility market could grow by 15-20% annually until 2030, favoring AUMOVIO with market-leading positions in sensing and braking systems.

A look at the financial structure supports this outlook. Continental aims to finance ongoing investment needs from operating cash flow, with an equity ratio above 30% (2024 at 40%) and a gearing ratio below 40% (2024 at 25.1%), as in Annual report 2024 shown. With unlimited liquid assets of 2,720 million euros and unused credit lines of 4,966 million euros at the end of 2024, the group remains financially flexible. This enables investments in growth areas, even if bond maturities (e.g. 600 million euros in 2025, 750 million euros in 2026) could create short-term pressure. Reducing the R&D quota to 9% by 2028 (from 12% in 2023) is also intended to secure annual cost savings of 400 million euros from 2025, which will support profitability.

Three scenarios outline possible developments up to 2029. In the base scenario (probability 50%), the spin-off of AUMOVIO will succeed smoothly by 2027, the tire division will grow by 3-4% annually, and the overall margin will rise to 9%. Sales could be around 45-48 billion euros, with AUMOVIO reaching around 22-25 billion euros separately. In the Optimistic Scenario (30% probability), growth in the tire segment accelerates to 5% annually due to strong demand for electric vehicle tires, while AUMOVIO achieves 25-30% annual sales growth through autonomous technologies; the overall margin could reach 10-11%. In the pessimistic scenario (probability 20%), the spin-off is delayed, geopolitical tensions and supply bottlenecks slow growth to 1-2% annually, and the margin stagnates at 6-7%, which would limit sales to 40-42 billion euros. External factors such as trade conflicts or rising interest rates (forecast: 4% by 2026) could exacerbate this scenario.

The coming years offer Continental both opportunities and risks. Strategic focus on profitable segments and growth markets will be crucial to achieve set goals, while external uncertainties require flexible adaptation. How the group masters this balance remains a key point for investors and observers.

Let's sharpen our view of the immediate future and zoom in on the development of Continental AG in the next 6 to 12 months. This short window of time focuses on operational progress, quarterly targets and analysts' assessments to assess the Group's direction. Without further ado, let us analyze the key factors and expectations for this period.

For the next 6 to 12 months, i.e. until mid to late 2026, Continental is facing a phase of consolidation and strategic implementation. The focus is on continuing the cost-cutting measures as part of the “Lead – Focus – Perform” strategy, which is expected to save 400 million euros annually from 2025. With sales of around 41 billion euros in 2024, moderate growth of 2-3% is expected for the full year 2025, which could mean sales of 42-42.5 billion euros. The tire segment is expected to remain the main driver, with expected growth of 3-4%, driven by stable demand in Asia and North America. The automotive sector, which generated around 19.4 billion euros in sales in 2024, remains under pressure, with a stagnant development or a slight decline of 1-2% as the planned spin-off makes progress. The group's operating margin could improve to 6-6.5%, driven by efficiency improvements, although the automotive sector remains a burden.

Quarterly targets for the next two to three quarters (Q2 to Q4 2025) aim for gradual improvements. For Q2 2025, sales are targeted at around €10.5-10.8 billion, with an adjusted operating profit of €600-650 million, based on the latest figures (Q1 2025: €586 million, as on daily news reported). In Q3 and Q4 2025, sales could rise to 10.8-11 billion euros, supported by seasonal effects in the tire segment and initial savings from location consolidation (reduction of 82 development locations worldwide). Adjusted operating profit is expected to climb to 650-700 million euros in these quarters, signaling a gradual approach to an overall margin of 6.5%. However, these goals depend on the stabilization of supply chains, especially for semiconductors, which are a burden on the automotive sector.

Analyst opinions show a mixed but generally positive picture for the short-term horizon. Technical analyzes indicate an upward trend for Continental shares, with a price increase of 5.83% and a peak of 8.27% on October 17, 2025, putting the group at the top of the DAX winners list. According to an analysis XTB The 4-hour chart shows a bullish signal with a gap-up above the SMA50 (66.58 EUR), and a rise towards 70-75 EUR is considered possible as long as the price remains above this level. Resistances lie at EUR 68.69 (SMA200) and EUR 72.04, while the support zone at EUR 56 is critical - a break could create a negative picture. Analysts emphasize that the overall uptrend has been ongoing since November 2024, providing near-term confidence. However, fundamental assessments are more cautious: While the tire segment remains robust, some experts see risks from geopolitical tensions and US tariffs, which could weigh on the automotive sector, as well as on other companies (e.g. Philips with a burden of 250-300 million euros).

Short-term development is also influenced by external factors. The DAX showed weakness on May 6, 2025 with a decline of 0.41% to 23,249 points, due to uncertainties after the chancellor election in Germany. In the USA, trade deficits ($140.5 billion in March) and tariff risks are weighing on the markets, which could have an indirect impact on Continental, especially in exports. Nevertheless, rising oil prices (Brent at $61.78) and a stable euro ($1.1361) provide some support for the cost structure. However, internal challenges such as the shortage of skilled workers (affecting 84% of German companies) could delay the implementation of efficiency measures, especially with the planned reduction in the R&D quota to below 10% by the end of 2025.

The next 6 to 12 months will represent a phase of transition for Continental, in which operational stability and the initial success of the strategic realignment will be crucial. Whether the group achieves its set quarterly targets and confirms the analysts' confidence in the upward trend of the share price depends on the balance between internal measures and external uncertainties.

Let's shed light on the uncertain waters in which Continental AG is navigating and focus on the market risks, regulatory hurdles and expansion potential that influence the company's course. In an industry characterized by global dynamics and strict guidelines, these aspects are crucial for strategic direction. Without delay, let us analyze the key challenges and opportunities that lie ahead.

Market risks represent a significant threat to Continental, particularly due to its high dependence on the automotive industry, which accounts for 62% of sales. A macroeconomic downturn could significantly reduce sales, as in Annual report 2024 is highlighted. In addition, five large OEM customers generate 33% of sales, which means a strong concentration and therefore an increased risk in the event of failures or declines in demand. Geopolitical conflicts, for example in Ukraine, the Middle East or between China and Taiwan, as well as protectionist tendencies such as additional tariffs are exacerbating the uncertainties. A hypothetical 5% increase in trading costs could further impact the already low operating margin in the automotive sector (below 2%). Financial risks from exchange rate changes are also relevant: a 10% change could have a negative effect of 400-500 million euros on earnings, although default risks on liquid assets remain low thanks to the cooperation with core banks.

Regulatory hurdles represent another barrier that Continental must overcome. Stricter environmental and safety regulations, particularly in Europe, could affect demand for certain products and result in additional costs. New requirements for emissions reduction or sustainability require investments in technologies such as electromobility components or recycled materials, which reduces profitability in the short term. Trade restrictions such as embargoes, sanctions and export controls increase the complexity, especially in markets such as Russia, from which the group has partially withdrawn, with sales losses of 200-300 million euros annually. Legal risks from legal proceedings or fines for anti-competitive behavior as well as tax audits by tax authorities could also result in high costs. There is also a risk of violating third-party intellectual property rights, which could limit innovative power through legal disputes.

Despite these risks, expansion potential offers significant opportunities, especially in growth markets. Asia, especially China, remains a key focus, where the foreign share of sales will account for over 80% in 2024. The increasing demand for premium tires and specialized solutions for electric vehicles could drive the tire segment to grow by 3-5% annually. In the automotive sector, under the AUMOVIO brand, autonomous technologies and display solutions offer potential, especially through collaboration with tech companies such as Amazon Web Services, which accelerate software development through cloud technologies Atreus described. These collaborations enable faster innovation and the processing of large amounts of data, which is crucial for the further development of vehicles. Emerging markets in Southeast Asia and Latin America also offer opportunities to expand market share in the tire segment, provided geopolitical risks and supply chain issues remain manageable.

The balance between these market risks and regulatory hurdles on the one hand and the expansion potential on the other will be crucial for Continental. The ability to navigate geopolitical uncertainties while investing in emerging markets could mean the difference between stagnation and progress. How the Group overcomes these challenges remains a central aspect of strategic planning in the coming years.