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Who will be next as the parts giants scramble to revolutionise themselves by splitting up?

[Abstract]:
At present, the global automobile industry is facing a new round of reform centering on electrification, intelligentization and sharing. The hard ware research and development focusing on automobile products in the past has begun to shift to software and mobile travel services.
  At present, the global automobile industry is facing a new round of reform centering on electrification, intelligentization and sharing. The hardware research and development focusing on automobile products in the past has begun to shift to software and mobile travel services. Faced with industry changes, it is increasingly difficult for component suppliers to maintain their competitive advantages in the past by relying on the traditional business model, especially the high-growth target in financial statements. Therefore, in the past two years, many large parts suppliers have changed their strategies, aiming to reshape their competitiveness by breaking up, merger and acquisition, investment and other behaviors, and participate in the next stage of competition in the automobile market.
  The split, while giving full flexibility and independence to the traditional business, enables companies to deeply focus on new industrial trends such as new energy vehicles, intelligent vehicles and mobile travel, and gain new profit growth from them, which is highly praised among the parts giants. In the past few years, a number of technology suppliers, including Johnson controls, foggia, Delphi, otto liffe and honeywell, have joined in the market, and carried out a "self-revolution" by rearranging their ranks. A strong man breaks his wrist? Business restructuring of continental group
  News of the restructuring of continental's business is not strictly new. Earlier this year, foreign media reported that continental was in preliminary talks to restructure some of its higher-margin businesses, such as its tire business, or to merge some of its operations with competitors to better transform itself into electric and autonomous driving. In an interview with the media, the head of the mainland group also said that changes may be made in the future. So for a long time after that, there was speculation that continental would spin off its tire business until the official announcement.
  According to continental's announcement on July 19, the adjustment is based on a new "continental" the main brand, integrating the original five business units - chassis and security division, powertrain division, body electronics, tire division, condi teck division, formed three new business sectors - powertrain, continental automotive rubber and continental group. The reporting structure and the new name will be in use from 2020.
  Parts business split, mainland group reorganized
  To be specific, in early 2019, the original powertrain business of continental group will become an independent legal entity with the new company name and new management. By then, the new powertrain company will be in charge of Andreas Wolf, senior executive of body and security business unit of the body electronics business division of continental group. In addition to its internal combustion engine business, the new company will be responsible for future businesses such as hybrid power, electric drive systems and batteries, including the recently announced 48-volt battery joint venture. Continental is expected to launch a partial IPO of the new powertrain company in mid-2019. Meanwhile, continental said it does not intend to relinquish control of powertrain business in the medium to long term.
  On the chassis and security division and body electronics will be completed early in 2020 before the restructuring, integration into two new business areas, the new name of automatic driving technology and vehicle respectively made technology, these two areas in the future will be provided by the car in the middle of the newly established r&d department support, business performance will be classified as a brand new continental automotive group.
  While the current tyre division and conde's division will retain their independent organizational structure, the operating performance will be relegated to the future continental rubber group, with continental retaining ownership of its core. Continental said that while it had prepared for a spinoff of its rubber business and the creation of a new legal entity a few years ago, there were no plans for an uncontrollable equity offering, such as an IPO, but that might be an option in the future.
  Parts business split, mainland group reorganized
  so to speak, continental, the adjustment well fit the current intelligent electrification, change trend of auto industry, at the same time makes the operation of the company in the future, better able to balance the demand for the development of niche - the main business of the powertrain are electrification transformation, continental, auto focus on intelligent vehicles, continental, rubber, represents the traditional business.
  In particular, the business related to new energy vehicles and smart cars has been reported to have become one of the important drivers of the mainland group's strong growth. Earlier this year, continental revealed in its 2017 fiscal year earnings report that the company's innovative technologies in the areas of auxiliary and automated driving, interconnection and electrification had achieved strong growth in 2017, again exceeding the average level. That's why continental expects its new car business (excluding powertrain) to grow from 19 billion euros in 2017 to about 30 billion euros in 2023, based on the new structure.
  In addition, the independent operation of its business also helps mainland group give full play to the advantages of "ship small and good turn", respond to new technologies and new trends in a timely manner, respond flexibly, and respond quickly to the personalized needs of various markets, regulatory authorities, society and customers. At the same time, we can optimize the allocation of resources, avoid the competition of internal resources, improve the efficiency of product research and development, and shorten the time of new product launch.
  At present, the global automobile market is stepping into a critical moment of transformation and upgrading. At the same time, consumers' consumption concepts are becoming increasingly personalized. In order to gain more dominant and competitive advantages in the ever-changing market, vehicle manufacturers and component companies must speed up product development and respond to market demands. Especially with the new power of building cars, many of them have a shorter product research and development cycle than traditional car companies. How to keep up with their research and development pace is also a problem for component suppliers to consider. For now, breaking up big parts groups to make the core business "light" is a proven approach.
  Give up to get? When the parts giant split up
  As one of the world's leading suppliers of automotive technology, continental's actions represent, for the most part, a foretaste of the future of the auto market. In continental's view, the global car industry will undergo its biggest and most profound transformation in 130 years over the next decade and beyond. Looking back over the past two years, as mainland group faces new trends, there are many parts giants that have decided to tear up their business.
  Parts business split, mainland group reorganized
  On June 15, honeywell announced a formal spin-off of its transport systems business, which will use "Garrett" as the new company's brand and Advancing Motion as its tagline. On the business side, Garrett will commit to innovations in turbocharger applications and vehicle software to drive the automotive industry, with the brand officially launched after the third quarter of this year's spin-off.
  The split is no accident. Honeywell is understood to have had the intention to split its transportation systems business and its home and ADI global distribution business into two separate companies as early as October 2017. At honeywell is facing the risk of depreciation, honeywell to split traffic systems business, with its leading turbocharging technology, help car manufacturers to develop electric power system, and with advanced software solutions to build the safe and reliable car of the Internet, thus in the deepening intelligent electrification, change, seek new development opportunities for transportation business and profit growth point.
  As Darius Adamczyk, President and CEO of honeywell, put it, "" independent investment decisions have helped spin off the business into a rapidly growing end-market. The streamlined portfolio will provide multiple platforms for the company to grow organically and boost profits. It will also give honeywell more leverage to continue to implement an effective capital allocation strategy, including a strong and prudent merger plan. Core businesses such as aviation and special materials are expected to be given more attention as a result of the spin-off and to achieve better performance in the future. The turbo division comes after honeywell sold its automotive sensors, consumer products and brake pads in the past few years, a strong indication of its commitment to transformation.