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Continental is to restructure its powertrain division to combine its diesel, gasoline and electronics interests into a single business. And it is to investigate where it should locate its high cost and low cost operations.

Executive board member Karl-Thomas Neumann will take charge of the new organisation and the current head of the powertrain division, Dieter Rogge, is to retire after more than 30 years with the group.

Neumann said the division would undergo a thorough restructuring "with the aim of optimising production within a period of around two years and achieving a much better balance between high cost and low cost locations".

He said that the restructuring was intended to bring the organisation, production, quality and reliability of all units up top the levels of the high technology businesses and to ensure that the businesses acquired from Siemens VDO last year "deliver the level of operating margins typically seen at Continental".

The present diesel systems, gasoline systems and electronics business units will be combined into a single Engine Systems business, and Neumann said the organisational structure would become "significantly leaner and more efficient".

He added: "The positive impact of this will become apparent very quickly."