Continental AG, the German automotive supplier, has announced a significant strategic shift as it prepares to spin off its ContiTech division, which specializes in rubber and plastic technologies. The move is part of a broader transformation aimed at positioning Continental as a dedicated tire manufacturer, particularly in light of its already planned separation from its automotive segment.

In a press conference on Tuesday, Continental executives revealed that turning ContiTech into an independent entity is the most viable strategic path forward. CEO Nikolai Setzer emphasized the need for more agile and focused business models in an increasingly volatile and fast-paced global market. “Markets are as volatile and dynamic as ever — in these situations, we need pure-play actors that can act in an agile way,” Setzer stated.

The planned divestment comes as Continental looks to streamline its business and concentrate on its core strength: tire production. With approximately 57,000 employees, the tire division has proven to be the company’s most profitable arm. In the past year alone, it generated €14 billion (approximately $15.3 billion) in revenue and achieved a healthy profit margin of 13.7%, significantly outperforming the company-wide average of 6%.

Despite management’s strategic outlook, the decision has faced strong criticism from labor unions and employee representatives. They argue that the ContiTech and tire businesses are deeply integrated and that severing the connection could disrupt operations. In a strongly worded statement, representatives described the spin-off plan as “socially irresponsible, economically reckless, and technologically nonsensical.”

The separation of ContiTech is expected to proceed only after the formal spin-off of Continental’s automotive unit, which was recently approved by the company’s supervisory board. That separation is scheduled for later this year. This multi-phase restructuring reflects broader shifts across the German auto industry, where leading suppliers like Bosch, ZF, and Continental itself are adapting to a landscape marked by declining car production, escalating costs, and mounting geopolitical tensions.

Among the most pressing challenges is the emerging trade conflict between Europe and the United States, which threatens to complicate export dynamics and squeeze margins further. With these headwinds in mind, Continental’s transformation underscores a growing trend among major automotive suppliers: narrowing their focus to become more specialized and resilient in an unpredictable global economy.

Ultimately, Continental’s shift toward becoming a tire-focused company marks a pivotal moment in its long history — one that could reshape its identity and market position in the years to come.