The pattern of the world auto parts market is rewritten, and Continental is struggling to survive


The pattern of the world auto parts market is rewritten, and Continental is struggling to survive

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With the announcement of ZF's 2021 financial report, it has become a foregone conclusion that the pattern of the world auto parts market in 2022 will be rewritten. According to the latest ranking of global auto parts suppliers, Continental slipped from second place to fourth place, the top three were Bosch, Denso and ZF.

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As the former Continental Group is one of the world market leaders and the world champion of market segments, why did Continental Group "fall" to this point?

First look at the changes in Continental's share price to see the first clues. As early as January 9, 2018, the day after the 2017 financial report was released, Continental's share price rose to the highest level in Continental's history. However, the good times did not last long. After about nine months, Continental's share price was cut in half, plummeting by 50%, becoming the lowest point in five years. The Continental Group has taken a more confusing measure, that is, lowering its performance target.

In the end, after three cuts, the EBIT margin remained at 9%, and the sales target was lowered to 44.5 billion euros. In addition, the mainland also exerted pressure on executives. This directly led to the forced resignation of José A. Avila, President of the Powertrain Division, and the internal cohesion of Continental was greatly affected.

In fact, in the final analysis, there are many reasons for the decline of Continental's position, but one of the key problems is that Continental's lack of foresight in the market structure has led to a slow transformation.

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After the share price of Continental was cut in half, in addition to the reduction in sales performance of cabin pump, Continental also divested the powertrain business with the lowest EBIT margin. But it was already too late at this time. Honeywell Group announced as early as a year ago that it would divest its turbocharged system,cabin pump,cabin tilt cylinder with lower barriers to entry. Compared with these market-forward companies, Continental Group’s response was indeed half slow. shoot.

In addition, according to Continental's many measures, it can be seen that the most fatal point of Continental is that it is extremely easy to be interfered by the capital market. It is true that as a listed company, it must be responsible for its shareholders. After the stock price and profits fall, it must take relevant measures to explain to its shareholders. However, Continental always makes a decision to focus on short-term interests in cabin pump and ignore long-term interests, which makes Continental The development of the group began to become confusing.

Although Continental has a certain sensitivity to the transformation of automobile intelligence and hopes to "embracing change", the return in the field of intelligent vehicles will take time and be destined to be long. At present, Continental has attempted to enter the field of smart cars through a number of acquisitions, and its business has covered many fields of cabin tilt pump,software and hardware such as ADAS and smart cockpits. But it will take many years for autonomous driving to achieve large-scale revenue, and Continental cannot stop investing in these emerging businesses. The decline in global production, the impact of the new crown epidemic and the huge investment in emerging industries have all brought serious damage to Continental's development in recent years.

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Finally, going back to the data of the 2021 financial report mentioned at the beginning, Continental finally reversed its losses after two years. Continental's financial report shows that in 2021, it will achieve sales of 33.76 billion euros, with total sales of 33.8 billion euros, a year-on-year increase of 6%. The 2021 financial report is undoubtedly a placebo for the long-term sluggish Continental Group, but compared with its competitors, the current situation of Continental Group is still grim.

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Situ Che, CEO of Continental, said the last fiscal year was another very difficult year for Continental. Looking ahead, Continental expects consolidated sales of between 38 billion and 40 billion euros in the coming fiscal year. As for whether this goal can be achieved in the 2022 fiscal year, it does not seem optimistic at present. The rise in raw materials and the shortage of semiconductor supply in the automotive industry are all continuing to affect Continental. Finally, I still hope that the Continental Group, which has gone through a hundred years, will be able to radiate new vitality.