FRANKFURT, Aug. 8 -- Continental, a leading German auto parts supplier, reported a slight sales decline for its automotive business during the first half of this year. This announcement comes just two days after the company revealed it is considering spinning off its automotive division.

Sales of its vehicle products went down by 3.7 percent to 9.77 billion euros (10.66 billion U.S. dollars) in the first six months this year, according to the company's first half-year 2024 results released on Wednesday. Since the end of June last year, over 3,400 jobs have been axed at the company.

Continental blamed the decline in vehicle production in Europe for the sales drop. Production of passenger cars and light commercial vehicles plunged by 4 percent in Europe in the first half of the year.

On Monday, the company disclosed that it was preparing for a spin-off of its automotive business.

"A spin-off of automotive has the potential to create competitive opportunities, enhance agility and increase transparency. As a strong, independent entity, automotive would be able to harness its full potential for creating value," said Wolfgang Reitzle, chairman of the supervisory board of Continental.

Justifying the company's decision, Continental CEO Nikolai Setzer said there had been large market evolutions in the automotive sector in recent months. He said that, in the future, the markets will "sharply" fluctuate due to regional market developments and "software driven technology," which he believes will require "greater flexibility and entrepreneurial freedom."

Continental is not alone among auto suppliers in Germany that were caught off guard.

After the German federal government abruptly withdrew incentives for electric vehicles (EVs) in mid-December 2023, EV sales in Germany have dwindled. Registrations of new EVs slumped by 36.8 percent in July compared to the year prior, according to statistics from the Federal Motor Transport Authority.

Similarly, the share of newly registered battery electric passenger cars in Germany decreased to 12.5 percent in the first six months of 2024 from 15.8 percent in the same period last year.

Automakers including Volkswagen and Mercedes-Benz have either scaled back their investment plans for EVs or walked back on ambitious targets as the EV market in the country continues to cool.

Weakened demand for EVs is taking a toll on other leading auto suppliers as well. ZF, a leading German automotive supplier, has announced plans to cut between 11,000 to 14,000 jobs in Germany by 2028.

Another German auto supplier, Bosch Group, was forced to push back the timeline for achieving its 7 percent target profit margin by one to two years, the company said in April when it published its annual results for 2023.

2023 was "tougher than expected ... the years ahead will demand a lot from all of us," the company admitted.

Switching to modules and components for electric vehicles requires substantial investments. According to industry expert Frank Goeller, these costs have led many auto suppliers to experience "significant losses in revenue and profits due to reduced demand." Given the strained situation, he expects even further consolidations and acquisitions in the automotive sector. (1 euro = 1.09 U.S. dollar)

  - Xinhua