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Continental and Osram Reduce Supply Expenses After Downturn Issue

Top automotive suppliers Continental and Osram have the plan to have deeper cost cuts after reporting weaker results on Tuesday. This was after a global strike hits the car industry.

Meanwhile, demand in China has plummeted for 15 months. China has the world’s biggest auto market.

Moreover, carmakers are under pressure to invest in better tech, and self-driving technologies are set to restructure the industry.

BMW, Daimler, and Volkswagen have all proclaimed they have cost-cutting plans.

The automakers’ announcement is because of the industry’s recession that could tip Germany. It is the one which issues third-quarter gross domestic product data on November 14.

There is a chance it could slip into recession for the first time since 2013.

On Tuesday, Japan’s Nissan reported a 70% drop in its quarterly profit.

The maker of headlights and other elements stated, “Osram does not expect global automobile production to recover in the short term.”

He has also unveiled plans to cut 220 million euros ($242 million) in costs between 2017 and 2021.

In addition, a cut of 800 jobs in Germany was started by trade union IG Metall.

Continental and Osram’s Operating Profit

Osram plunged to a full-year loss and indicated it would not pay a dividend.

The automotive firm added that medium-term targets would be achieved two years later than they expected.

Meanwhile, Continental’s third-quarter operating profit also fell by 20%.

The decline has led the brakes and tire maker to look at downsizings as it predicted a slowdown in automotive management over the next five years.

In a news report, Chief Financial Officer Wolfgang Schaefer stated, “We are in talks with works council representatives,” adding the firm would seek out to strike job reduction agreements with staff by the end of this year.

Schaefer added, “We have said that this program has been started, and that this is not yet the end, and that we may have to consider further measures.”

On the other side, German chipmaker Infineon Technologies used in electric drivetrains and wind turbines. These devices have beat their own profit guidance in the fourth quarter.

The German chipmaker is also a specialist in semiconductors.

But it has remained vigilant about the car sector.



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