Siemens VDO is rethinking its business after losing E261 million this year in a bid to challenge rival Robert Bosch in high-tech components.
The German supplier blamed the loss on a poor return on its investment in technology-driven products.
Siemens says it will not repeat risky investments like the one it made in second-generation common-rail diesel injectors. Siemens VDO CEO Franz Wressnig said automakers don't pay high enough prices to reward investment.
The supplier is considering which operations to retain.
'If it is not profitable, if it is not selling in our core area, we are selling it,' Wressnig said.
Siemens VDO said restructuring plans will affect 5,000 employees, but some will be transferred to other operations rather than laid off. Part of the loss in the fiscal year ending September 30 is a charge for absorbing VDO into Siemens in May.
In September, Siemens VDO sold four wiring harness plants to AFL and put most of the rest of its wiring businesses into a joint venture with Yazaki.
The only wiring businesses that Siemens VDO retains are those in a joint venture with Volkswagen.
Siemens VDO wants a partner for cockpit modules.
Siemens VDO is looking for a turnaround in the financial year ending September 30, 2002. It expects sales to exceed E7 billion, compared with E5.7 billion in the year just ended.