In last year’s letter, I promised you that our profitable growth would continue. Today, I am pleased to say that the sales figure of over €50 billion we foresee for 2020 is within our grasp.
We achieved sales of €44 billion last year, up more than 8 percent on 2016, which shows we are growing faster than the markets in which we operate. And we are doing so profitably. Furthermore, at 20.6 percent, our return on capital employed has exceeded the 20 percent target. As you can see, Continental is continuing along its successful course – at full steam.
This year, we have set our sights firmly on maintaining our high profitability, even as our sales grow to about €47 billion. We are preparing our organization for upcoming challenges in our industries. To do so, we are becoming more flexible, which is why we are currently undertaking extensive analyses. It remains to be seen whether the findings will bring about changes and, if so, what those changes will be.
Our three Automotive divisions – Chassis & Safety (safety and assistance systems and automated driving), Interior (connectivity, comfort and convenience electronics), and Powertrain (drive technologies) – are already making the most of the opportunities presented by industrial transformation. Incoming orders in these divisions stood at €30 billion in 2015. Since then, orders have risen to almost €40 billion – a double-digit percentage increase. Our customers’ ever increasing confidence in our innovative capabilities is what will keep us viable in the future.
Our digital solutions, which include electronics in vehicles as well as sensors, actuators and software programs, are the primary drivers of our growth. These solutions make up more than two-thirds of the value of incoming orders in the Automotive Group. When it comes to vehicle digitalization, we are one of the largest suppliers worldwide.
Customers and end users accept technologies that are reliable and affordable. Take for example advanced driver assistance systems, our fastest-growing product area. In just a few years, we have increased our sales in this field from nearly zero to €1.6 billion solely with the accompanying sensor technology and software.
In addition, we also provide systems for dialogue between people and vehicles, and for connected mobility. To date, we have equipped more than 30 million vehicles worldwide with our connectivity technologies. Thanks to our recent acquisition of Argus Cyber Security, we will be protecting the data of these rolling computers at the highest level in the future.
All of these activities are fueling our growth: In the Automotive Group, we expect to achieve a sales share of roughly 10 percent in 2020. And that’s not all.
Another driver of our growth is clean-air technology, which includes hybrid and electric drive systems, more efficient combustion engines, and systems for cleaner emissions. We expect that 110 million vehicles will be manufactured in 2025 worldwide. About one in ten of those vehicles will be all electric and one in four will be a hybrid. And by that time, one in five will feature drive solutions from your Continental.
We are catching the attention of new customers, including city and municipal authorities. After all, they need vehicles and transport concepts that are intelligent and connected in order to prevent traffic jams and eliminate the need to search for parking spaces. The result is better air. When it comes to traffic jams, intelligent route recommendations, updated almost in real time, are a help, keeping everyone from using the same road to get around the congestion.
Automated, electrified and connected. The vehicles of the future may well be all of that, but they will still run on our tires. In this business field, we likewise outperformed the market as a whole in 2017. With our return on sales continuing to be top notch, your Continental is making its way further toward the front of the pack of tire manufacturers.
The portion of our total sales with industrial customers and end users is to be increased gradually from 28 percent toward 40 percent. Most of that increase will be coming from our tire-replacement business and from the ContiTech division, where surface materials and innovative systems for transporting materials are major growth drivers.
By investing in us, you are putting your money on top technologies from Continental. You are making roads safer. You are protecting millions of people from accidents each day. You are lowering emissions. You are making driving more relaxed, more comfortable and more convenient.
To top it off, you are banking on profitable growth.
On behalf of our global team, I would like to thank you for your investment.
It is your trust, and that of our customers, that drives us!
Dr. Elmar Degenhart
Chairman of the Executive Board