€11.4 billion merger of Continental and Siemens VDO

Normally we wouldn’t report this, but when two of the auto world’s biggest parts suppliers decide to merge in a deal that’s reported to top €11.4 billion, you can bet it’ll have a major effect on most of the carmakers. So, why should you care? First of all, together, these two companies supply parts to almost every major carmaker including VW, GM, Ford, DaimlerChrysler, Toyota, BMW, Renault and Porsche, and, secondly, with the pooling of resources of these two giants we’re likely to see more advanced technologies coming to cars sooner and at a lower cost, too.

Continental has agreed to purchase VDO, Siemens' automotive electronics unit but the deal is yet to receive regulatory approval. If all goes to plan, the deal should be finalized by the fourth quarter with full integration of the two suppliers expected by 2009.

Combined revenues of the two firms topped €25 billion last year, and together they employ over 140,000 staff. Continental is mostly known for its tire range but it also produces braking and vehicle stability systems as well as a number of other car parts. Siemens, meanwhile, is a specialist in the supply of information and in car electronics, navigation, control and fuel systems.