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Schaeffler AG: The Hidden Giant Behind Global Motion
Introduction: A Family Empire Built on Friction—And Its Reduction
Picture a world without bearings. Impossible, because that world wouldn't move. Every wheel that turns, every shaft that spins, every motor that hums—from your car's transmission to the wind turbines dotting the horizon—relies on the quiet efficiency of rolling element bearings. And behind many of those bearings stands a name few consumers recognize but every automotive engineer knows intimately: Schaeffler.
Schaeffler Technologies AG & Co. KG, also known as the Schaeffler Group, is a German manufacturer of rolling element bearings for automotive, aerospace and industrial uses, including the FAG brand. The company operates from its headquarters in Herzogenaurach, the small Bavarian town that improbably became one of the world's great industrial capitals—also home to Adidas and Puma, the Dassler brothers' rival sporting goods empires.
But Schaeffler's story is more than an industrial success tale. In 2001, Schaeffler took over FAG Kugelfischer Georg Schäfer KGaA in Schweinfurt and significantly expanded its range of rolling bearings. Since then, the Schaeffler Group has been the world's second-largest rolling bearing manufacturer. How did a family firm, rising from literal post-war rubble, vault past far larger competitors to seize such commanding market position?
The answer involves a foundational innovation that proved staggeringly consequential, a series of aggressive acquisitions that shocked Germany's conservative business culture, a near-catastrophic gamble on an even larger rival during the 2008 financial crisis, and now—seventy-five years into its history—a bet-the-company transformation as the automotive industry lurches toward electrification.
On a pro-forma basis for 2023, the combined company will have consolidated annual sales of around 25 billion euros, will employ around 120,000 people at over 250 locations and will have more than 100 production facilities worldwide. Those are numbers that place Schaeffler among the world's largest automotive suppliers, yet it remains majority-owned by the founding family—an increasingly rare structure in an age of dispersed ownership and private equity.
This is the story of how the Schaeffler family built an empire on the hidden infrastructure of motion, nearly lost it all, and is now racing to reinvent it for an electric future. It's a case study in the power of proprietary technology, the perils of acquisition-driven growth, the complexities of family capitalism, and the existential challenges facing legacy suppliers in the great automotive transformation.
Part I: Origins—From Upper Silesia to Herzogenaurach
A Family of Entrepreneurs
It was founded in 1946 by brothers Dr. Wilhelm and Dr.-Ing. E. h. Georg Schaeffler. But the story begins earlier, in the borderlands of Central Europe where the Schaeffler family had built businesses across regions that would be redrawn by two world wars.
The brothers came from entrepreneurial stock spanning Lorraine, Saarland, the Rhineland, Upper Silesia and Franconia. Wilhelm, the elder, was born in Lorraine in 1908; Georg followed in 1917. Their careers would intertwine with Germany's darkest chapter before merging into the industrial story that concerns us here.
The Dark Chapter: War, Forced Labor, and Controversy
No account of Schaeffler's origins can avoid the company's wartime activities, which emerged publicly only decades later during the 2008 financial crisis when the family sought government assistance.
In the summer of 1943, Wilhelm Schaeffler founded a limited partnership for the production of armaments and textiles (dropping devices for the air force, fire bombs, needle bearings for tanks, Wehrmacht vests, mattresses and coats).
The controversy runs deeper. In 1939, Certified Public Accountant Wilhelm Schaeffler, an employee of the Dresdner Bank, "acquired" Davistan AG, a Jewish founded textiles company 30 percent below value; the owner, Ernst Frank, had bankrupted in April 1933, because of the boycott and fled Germany. The company was located in Katscher in Oberschlesien. In 1941, Wilhelm Schaeffler joined the NSDAP. In 1942, Wilhelm Schaeffler changed the Jewish-sounding name of the company to Wilhelm Schaeffler AG and his brother, Georg Schaeffler bought 25 percent of the company by the end of 1942.
The company exploited thousands of slave labourers from France, Russia and Poland in its plants in German-occupied Poland, which the company admitted only in 2008, after commissioning historian Gregor Schöllgen to investigate the family archives.
At the center of the drama is Maria-Elisabeth Schaeffler, 67, the grande dame of one of Germany's richest industrial clans. Last year she spearheaded her car-component company's dramatic 12 billion euro ($16 billion) takeover of a larger rival that left most of Germany breathless — but not quite with admiration. Such buyouts had more often been associated with predatory foreigners (e.g., Americans) than with fellow Germans. The timing of these revelations—amid a bailout request—proved particularly damaging.
The historical investigation remains contested. The historian Gregor Schöllgen who investigated the history of the company on behalf of the Schaeffler family claimed in 2009 that there was "no evidence for a connection to Auschwitz" for which he was strongly criticized in 2011 by his colleagues Tim Schanetzky, Cornelia Rauh and Toni Pierenkemper.
This history matters not merely for moral accounting but because it illuminates the origins of the company's technical capabilities. They were very important for Schaeffler's post-war success, based on needle roller bearings for not only the German auto industry but also for the US Armed Forces. Schoellgen confirms german-foreign-policy.com's assessment: Schaeffler's post war "success is based on the machines and materials salvaged from Katscher, employees who followed Schaeffler from Upper Silesia and the know-how of needle roller bearings' industrial production."
The Post-War Restart
In 1945, with the Soviet army advancing, the company was moved to the Upper Franconian Schwarzenhammer. 300 "Schaeffler people" as well as machines, raw materials and semi-finished goods arrived in 40 railway wagons. After the war, Schwarzenhammer was part of the American occupation zone—a crucial geographic accident that would determine the company's future in the Western bloc rather than behind the Iron Curtain.
Wilhelm was arrested by U.S. forces and served more than four years in Polish prisons after the war. With his brother detained, Georg Schaeffler became the driving force behind the family's industrial rebirth.
In the spring of 1946, the brothers and two partners founded Industrie-GmbH in Herzogenaurach. The company initially was limited to repairing agricultural equipment and producing goods from wood—postwar Germany's occupation authorities strictly controlled industrial production. The firm made wooden items for daily use: ladders, children's scooters, belt buckles, and buttons. It was the humblest of beginnings for what would become an industrial colossus.
Investor Takeaway: Schaeffler's origins carry moral complexity that periodically resurfaces. The company has acknowledged its use of forced labor but disputes some of the most serious allegations. For investors, this history represents reputational risk that can emerge during periods of financial stress—as it did in 2008-2009.
Part II: The Breakthrough—Georg Schaeffler's Needle Roller Cage
An Innovation That Built an Empire
What transformed a maker of wooden scooters into a global industrial leader? A single invention by Georg Schaeffler in 1949 that remains at the company's core seventy-five years later.
In 1949, Dr. Georg Schaeffler developed the INA needle roller cage, in which the rolling elements are guided parallel to the axis. Compared with the existing needle roller bearings of the period, this new type was significantly lighter, more compact, more reliable, and allowed higher speeds. These advantages allowed the INA needle roller bearing to make an industrial breakthrough and, during 1950, the prototype rolling bearing became ready for volume production. The INA needle roller cage was filed for a patent application in September 1950.
The idea: To improve guidance of the needles in the needle roller bearing by using a cage. The first practical tests involving cage-guided needle roller bearings began in February 1950. The results were convincing – the components exhibited extremely low wear and friction.
What made this innovation so consequential? With the invention Dr.-Ing. E.h. Georg Schaeffler eliminated the serious disadvantages associated with the full complement needle roller bearings that had previously been used as standard: The long needle rollers tended to move in a transverse direction during rotation of the bearing (skewing), which would then cause the bearing to jam. Furthermore, a substantial amount of sliding friction was generated between the counter-rotating needle rollers. The development of the new needle cage overcame these disadvantages and permitted considerably higher speeds and less friction.
The speed from concept to market was remarkable. In February 1951, just one year after construction of the first prototype, the first volume production orders were obtained from automotive manufacturers, and use in industrial applications was to follow.
The INA Brand and Philosophy
The company named its bearing brand INA, derived from "Industrie-Nadellager" ("Industrial Needle Roller Bearings"). Georg Schaeffler steered the business for five decades. Detail minded and constantly questioning received wisdom, he was always looking for something new – "Always New Tasks." In German, that's "Immer Neue Aufgaben" – a clever play on "INA" that lives on to this day.
Georg F. W. Schaeffler, Family Shareholder and Chairman of the Supervisory Board, says: "With this invention, my father, Georg Schaeffler, laid the foundation for the rapid growth of our company. The cage-guided needle roller bearing is one of the most important innovations in our company's history as an automotive and industrial supplier." "The development of this very product is, in itself, an impressive example of what sets us apart: We have utilized all synergies in the cage-guided needle roller bearing, which will allow us to serve all relevant target markets with this innovative product and generate real customer benefits – in both the automotive and the industrial sector."
What's remarkable is how this seventy-year-old innovation continues delivering value. What originally started life as an ingenious idea by Dr.-Ing. E.h. Georg Schaeffler, has been continuously developed by Schaeffler engineers over the course of 70 years, both in terms of performance and the variety of available types. Compared to a machined needle roller bearing from the 1950s, the operating life for bearings with the same dimensions has increased fifteenfold, and the static load carrying capacity has tripled.
"This is a publicly-traded company that is still majority-owned by the Schaeffler family, which is rare these days, and we're celebrating the 70th anniversary of Dr. Schaeffler's invention of the cage-guided needle roller bearing, which remains our original claim to fame."
Why Needle Bearings Mattered for Automotive
In particular, needle roller bearings made an invaluable contribution to the development of small, high-performance, and affordable automobiles. As postwar Germany rebuilt its automotive industry—think Volkswagen Beetle, think economic miracle—these compact, high-speed bearings proved essential for transmissions, engines, and drivetrain components.
These needle roller bearings from Herzogenaurach soon became an indispensable component for the vehicle manufacturing, mechanical engineering, and plant construction industries and, by 1953, no new German car was on the road without them.
That's the kind of market penetration that creates enduring competitive advantage. The bearing is a commodity; the engineering relationships and applications expertise are not.
Investor Takeaway: Schaeffler's foundational innovation demonstrates a classic "Intel Inside" business model—invisible to end consumers but essential to manufacturers. The needle roller cage wasn't just a product; it was a platform that opened doors to automotive OEMs and created seventy years of application expertise that competitors struggled to replicate.
Part III: Building the German Mittelstand Champion (1950s–1990s)
Domestic and International Expansion
The success of the INA needle roller bearing funded rapid expansion. In 1951, the Saar Nadellager oHG was founded in Homburg as the first INA branch in Germany. International growth followed quickly.
In 1956, the first foreign branch plant was founded in Hagenau, France. In 1957, production started in Llanelli, UK. In 1958, a factory opened in São Paulo, Brazil. After following its automotive customers around the world – Volkswagen in particular –Schaeffler eventually made landfall in the U.S. as a joint venture with Textron in 1964. Schaeffler became the sole proprietor of the business in 1969, ultimately establishing its North American headquarters in Fort Mill, South Carolina.
The pattern was typical of German Mittelstand companies: follow your customers globally, maintain engineering excellence, build long-term relationships, and reinvest profits rather than distribute them.
Eastward After the Wall
In 1991 and 1992 the company expanded Eastward: plants were opened in Skalica, Slovakia, and Ansan, Korea and in 1995 the INA Bearings China Co. Ltd. was founded in Taicang, China.
These moves positioned Schaeffler to benefit from the massive automotive manufacturing expansion in Eastern Europe and Asia during the 1990s and 2000s. The company's strategy of manufacturing close to customers—rather than simply exporting from Germany—would prove prescient as automakers demanded just-in-time delivery and local technical support.
Family Transition
Together with her son Georg F. W. Schaeffler, shareholder Maria-Elisabeth Schaeffler-Thumann is continuing the lifelong work of her husband Dr. Ing. E. h. Georg Schaeffler, who died in 1996.
Georg Schaeffler's death created a pivotal moment. When his father died in 1996, Georg Schaeffler inherited 80% of the ball-bearing business that carries his surname while his mother inherited the rest. Both serve on the supervisory boards of Continental and Schaeffler. While Georg grew up as the heir to an engineering empire, Maria-Elisabeth studied medicine and never expected to embark on a business career.
Today, Maria-Elisabeth Schaeffler-Thumann, then 55 years old, describes her start into full entrepreneurial responsibility like this: "That was no mean feat because INA had been created by Georg Schaeffler and was tailored to him. Some people advised us back then to sell the company but that was never an option for my son and me. I was determined to continue Georg Schaeffler's life work and to take advantage of the development potential that presented itself in view of the dynamic global changes."
The decision to retain the company rather than sell would prove transformative—and very nearly disastrous.
Part IV: The Aggressive Acquisition Era (1998–2008)
JĂĽrgen GeiĂźinger's Strategy
Under the direction of JĂĽrgen GeiĂźinger (November 1998 to October 2013) the company followed an "aggressive acquisition strategy".
It is also a triumph for the Schaeffler family itself, which founded the business in 1946. Frau Schaeffler, who took over the business in 1996 when her husband Georg, a co-founder, died in 1996, has overseen a spectacular, four-fold growth in revenue at the group since 1998 when she hired Jurgen Geissinger as president and chief executive.
GeiĂźinger recognized that the bearing industry was consolidating and that scale increasingly mattered. The company embarked on a series of acquisitions that would radically reshape its competitive position.
LuK Acquisition (1999–2000)
In 1999, INA took over LuK GmbH. LuK, based in BĂĽhl in the Baden region, was a specialist in clutches and transmission systems.
In 1964, the Schaeffler Brothers decided to buy the majority share in Lamellen- und Kupplungsbau August Häussermann and, in 1965, founded LuK Lamellen- und Kupplungsbau GmbH in Bühl, located in Germany's Baden region. The company became the market's technological leader with its very first innovative product, a diaphragm spring clutch manufactured for VW. LuK, a drive train specialist and one of the world's largest clutch manufacturers, became part of the Schaeffler Group in 1999 after years of partnership with another company, and today forms the core of the Transmission Systems business division.
The LuK acquisition expanded Schaeffler from components (bearings) to systems (clutches, transmission components). It was a vertical integration play that increased the company's value-add per vehicle and deepened customer relationships.
FAG Kugelfischer: The Hostile Takeover That Changed Everything
The LuK deal was friendly; the next major acquisition was not.
In 2001 the group bought the Schweinfurt competitor FAG Kugelfischer in a hostile takeover.
However, in the fall of 2001, FAG, by then number four in the world's bearings market, fell victim to a hostile takeover by major competitor INA Holding Schaeffler KG, worldwide number six. After five weeks of arm-wrestling between the two companies, FAG's top management gave up their resistance.
The transaction was remarkable for several reasons. First, it was a hostile bid from a smaller company—INA was number six in the global market, FAG was number four. Second, hostile bids were exceedingly rare in Germany's consensus-oriented corporate culture. Third, FAG itself had a storied history.
In 1883, Friedrich Fischer of Schweinfurt designed a machine to allow steel balls to be ground to an absolutely round state for the first time – and in large volumes. On 29 July 1905, the FAG brand was registered with the patent office in Berlin. The registered trademark FAG is an acronym for "Fischer's Automatische Gussstahlkugelfabrik," or "Fischer's Automatic Steel Ball Factory."
Friedrich Fischer's 1883 invention was to ball bearings what Georg Schaeffler's 1949 cage was to needle bearings—a foundational innovation that created an entire industry. By combining these two technological legacies, Schaeffler created a formidable competitive position.
Maria-Elisabeth Schaeffler, the head of the private, family-owned German engineering group Schaeffler, said in 2001 after her company's successful hostile bid for the much larger, listed company FAG Kugelfischer: "You can't get along in this world by being nice to everyone."
A little more than a year after the formal acquisition by Germany's INA Holding Schaeffler KG of FAG Kugelfischer Georg Schaefer AG, which created the world's second-largest bearing manufacturer behind Sweden's SKF, the amalgamation of the two firms has concluded.
The Brand Portfolio Logic
The acquisitions created a powerful brand architecture: Schaeffler – one of the world's largest manufacturers of bearings and auto parts. Owns well known brands LuK (auto parts), FAG (bearings) and INA (rolling and sliding bearings, linear motion, engine components).
Each brand served different applications and customer sets while sharing manufacturing scale, procurement leverage, and R&D investment. The combined entity now had: - INA: Needle roller bearings, the original Schaeffler specialty - FAG: Ball and roller bearings, the broader bearing portfolio - LuK: Clutches and transmission systems
Wilhelm Schaeffler – was fully acquired in 1999, followed by the acquisition of competitor FAG Kugelfischer in 2001. Sales and headcount tripled in the space of one decade. Operationally executed by a trusted management team, the shareholders transformed the medium-sized company with its origins in the mechanical sector into a technology group with global operations. There were many observers who didn't expect such success to be achievable.
But the family's appetite for transformative acquisitions was not yet sated. The next deal would prove far more consequential—and nearly fatal.
Part V: INFLECTION POINT #1—The Continental Takeover: David vs. Goliath
The Audacious Bid
In order to become the world leader in the automotive components industry, on 15 July 2008, Schaeffler launched a bid to acquire publicly-held Continental AG, the world's six-largest automotive components supplier.
The relatively small family-owned Schaeffler Group reaches out to acquire the three times larger Continental AG, a publicly traded stock corporation.
Schaeffler's bid was a bold move, considering the fact that it was nearly three times smaller than Continental.
To understand the audacity: Schaeffler had 2007 sales of approximately €9 billion. Schaeffler had 2007 sales of 8.9 billion euros. Continental, including VDO, is expected to have sales of more than 26 billion euros this year. The company makes tires and a wide range of automotive components.
Continental itself had just completed a transformative acquisition. For its part Continental incurred around EUR10 billion during an earlier takeover of the VDO automotive components unit of Siemens VDO.
The newspaper says Schaeffler has approached Continental about a takeover. A combination of the two companies would create a German automotive supplier with annual sales of more than 35 billion euros. Germany's Schaefffler is much smaller than Continental, which last year acquired Siemens VDO.
The Hostile Response
The agreement was put in place in 2008 when Schaeffler completed its hostile and extremely unwelcome (from the perspective of Continental's then management team) takeover bid.
The takeover unfolded as a corporate drama that captivated Germany. Schaeffler Group takes over Continental AG: This chapter details the initial stages of the takeover, focusing on the clandestine acquisition of a significant stake in Continental AG by the Schaeffler Group. It narrates the meeting between the two companies, highlighting Continental AG's strong rejection of the unsolicited bid and Schaeffler's swift defense of its actions. The resulting investigation by Germany's financial watchdog introduces the legal and regulatory context of the takeover, emphasizing the complexity and potential controversies surrounding the acquisition. The chapter highlights the stark contrast in corporate structures and approaches between the family-owned Schaeffler Group and the publicly traded Continental AG.
This summer Frau Schaeffler, who is 66, proved again she was not in the business of being "nice" when she launched another unsolicited bid for a far bigger listed company, the German automotive parts manufacturer Continental, and this time used controversial "creeping" tactics to boot. Hostile bids are rare in any market, but in Germany's conservative business culture they are almost unpardonable.
Angela Merkel's Mediation
The deal became significant enough to require government involvement. The agreement was brokered with the help of German chancellor Angela Merkel, who acted as a kind of corporate mediator, and who helped put in a place an agreement which would placate Continental's staff and shareholders, while also allowing a structure that would eventually lead to a full merger.
Schaeffler agreed to restrict the shareholding it controlled to 49.9%, with the other shares being acquired being parked at German banks. The agreement also laid out the terms of the two companies' co-operation, taking into account Schaeffler's position as Continental's biggest shareholder.
The Financial Catastrophe
And then Lehman Brothers collapsed.
The takeover deal, made during the worst period of the financial crisis shortly after the collapse of Lehman Brothers, saddled the Schaeffler Group with a debt of €12 billion.
On August 21, 2008 Continental accepted Schaeffler's offer to become a majority shareholder of their company. Both companies signed an investment agreement, including the criteria that Schaeffler is not allowed to hold more than 49.9% of the total shares until 2012. Because of the lucrative offer to the former shareholders of Continental, they have tendered a total of 82.41% to Schaeffler that led to a total holding of approximately 90%. Therefore Schaeffler had to hand over 40% of those shares to banks.
Schaeffler's debt grew to EUR12 billion (USD15.6 billion) after the company was faced with more shareholders willing to sell it stock than it initially expected when it made its offer for the company. At one point its indirect and direct holding was 90%, but these excess shares have now been partially sold off.
Near-Death Experience
During the height of the financial crisis it looked as through the combined debt burden of both companies could lead to the potential for the banks taking control of both firms.
"The debts were overwhelming and almost led to one of the biggest bankruptcies in German history. Then and now one person emerged as a key player in Schaeffler's refinancing: Klaus Rosenfeld."
The audacious bid smacked of hubris to many Germans and angered labor unions, who warned that the Schaeffler Group was biting off more than it could chew. Indeed, it soon came under immense pressure as the global financial crisis slammed headlong into the German car industry and orders dried up almost overnight. By the end of 2008, the once proud matriarch was seen in tears on German television, leading employees in a demonstration to prod the government to bail out her hapless clan and save thousands of jobs.
Resolution and Restructuring
The Schaeffler Group has completed its planned takeover of Continental AG, paying 75 euros per share to the depositary banks of those who tendered their shares to Schaeffler. As a result of all the recent share trading, Schaeffler Group holds 49.90 per cent of the voting stock of Continental AG and is therefore the company's largest shareholder. At the peak of the complicated transaction Schaeffler Group held up to 90 per cent of Conti stock, although Schaeffler has now transferred the additional shares tendered to financial institutions.
The original shareholder's agreement was instigated after the initial resistance of Continental's then management team to what was a hostile takeover of Europe's second largest automotive components conglomerate by a much smaller company. The then CEO of Continental Karl-Thomas Neumann resisted the takeover, and despite the establishment of the shareholder's agreement, which was supposed to manage the ownership transition and pave the way for a full merger, Neumann was ousted in a boardroom coup in 2009.
Investor Takeaway: The Continental takeover illustrates both the power and peril of acquisitive growth funded by debt. Had the financial crisis struck three months earlier, Schaeffler might not have closed the deal at all; had it struck three months later, the family might have had time to adjust. Instead, they were caught with maximum leverage at the worst possible moment. The survival story that follows demonstrates both financial engineering skill and the structural advantages of family ownership in distress situations.
Part VI: INFLECTION POINT #2—Deleveraging and the IPO (2009–2015)
The Long Road to Recovery
Schaeffler tried to conduct a "reverse takeover", but markets have collapsed, and remained a family business with more than 90 percent of shares of Continental and more debt ($ 10 billion), taken for this large-scale transactions. Not to be torn creditors, Schaeffler was forced to begin debt restructuring, an important element of which was the proceeds of the gradual sale of shares in Continental.
Schaeffler AG, manufacturer of bearings and auto parts from Germany, this week said it sold 10.4 percent of Continental AG shares for $ 1.6 billion to reduce debt after a failed capture tire manufacturer.
The deleveraging process was methodical: improve operating performance, generate cash flow, and gradually sell Continental shares to reduce debt. But both firms have subsequently enjoyed robust financial results and their liquidity has improved, with Continental's net indebtedness declining to a far more manageable EUR5.3 billion by the end of 2012. Schaeffler for its part has also reduced its debt level to EUR6.8 billion in the same period, so both firms are on a more stable financial footing.
Klaus Rosenfeld Takes the Helm
The architect of the financial restructuring was Klaus Rosenfeld, who would ultimately ascend to the CEO role.
In March 2009, Klaus Rosenfeld joined the Schaeffler Group as Chief Financial Officer. In this capacity he restructured the Group's corporate and capital structure by a number of complex transactions.
Rosenfeld's background was ideally suited to the challenge. After graduating, he returned to Dresdner Bank in 1993 and worked in the Structured Financing Department of the Investment Banking Division. From 1997 onwards, he was Assistant to the CEO Bernhard Walter and his successor Prof. Dr. Bernd Fahrholz. In 2001, he became Chief Representative and Deputy Head of Finance and Controlling. In 2002, Klaus Rosenfeld was appointed Member of the Board of Managing Directors of Dresdner Bank AG, with responsibility for Finance & Controlling, Compliance, and Corporate Investments. In March 2009, Klaus Rosenfeld joined the Schaeffler Group as Chief Financial Officer. In this capacity he restructured the Group's corporate and capital structure by a number of complex transactions. In 2009 he was appointed Member of the Supervisory Board of Continental AG. In October 2013, Klaus Rosenfeld assumed the position of CEO on a temporary basis in addition to his role as CFO.
In October 2013, he took over the position of CEO in addition to his role as CFO, initially on an interim basis. In June 2014, he was appointed permanent CEO of Schaeffler AG, whose IPO took place under his leadership in October 2015.
The 2015 IPO
Schaeffler AG has successfully completed its initial public offering (IPO). The bell at the Frankfurt Stock Exchange rang on October 9, 2015. The first trade rate was set at 13.50 euros per share.
Schaeffler AG successfully completed its IPO today. In total, 75 million non-voting common shares were placed with institutional investors. 66 million of these shares result from a capital increase of Schaeffler AG and the remaining 9 million shares from Schaeffler Verwaltungs GmbH. The placement price for the shares offered in connection with the IPO was set at EUR 12.50 per share. Gross proceeds amount to approximately EUR 938 million. The order book was several times oversubscribed.
„We are very pleased that we could successfully complete our IPO in a challenging market environment. The strong demand from investors shows that Schaeffler is perceived as an attractive investment", said Klaus Rosenfeld, CEO of Schaeffler AG. „With the IPO we have paved the way to continue the profitable growth path of Schaeffler AG." The proceeds from the transaction will be used to reduce financial indebtedness of Schaeffler AG and thus to sustainably improve its financial strength.
Family Control Preserved
The IPO structure was notable: the shares traded on the stock exchange were non-voting common shares. "Despite the IPO, Schaeffler plans to remain a family company. "The Schaeffler Group will remain a family business in the future. As shareholders we will take responsibility to further successfully develop our company in the interest of our customers, our suppliers, and our many employees," said Maria-Elisabeth Schaeffler-Thumann, shareholder and deputy chairperson of the supervisory board.
This dual-class structure allowed the family to access public capital markets while retaining complete control—a structure increasingly popular among technology founders but unusual for traditional industrial companies.
Investor Takeaway: The seven-year journey from near-bankruptcy to successful IPO demonstrates both Schaeffler's underlying business quality and management's financial engineering capability. The IPO itself was the capstone of a restructuring process that reduced debt, streamlined the corporate structure, and positioned the company for the next phase of growth. The preservation of family control through non-voting shares reflects a strategic choice: access capital markets while maintaining long-term orientation.
Part VII: INFLECTION POINT #3—The EV Transformation & Vitesco Merger (2023–2024)
The Strategic Imperative
The automotive industry's shift toward electrification poses an existential challenge for traditional suppliers. Internal combustion engines require complex mechanical systems—precisely the components in which Schaeffler excels. Electric vehicles require far fewer moving parts but entirely new technologies: power electronics, electric motors, battery management systems.
Schaeffler's response was transformative: acquire Vitesco Technologies, a specialist in e-mobility propulsion systems spun off from Continental AG—ironically, the same Continental that Schaeffler nearly merged with fifteen years earlier.
The companies agreed to merge to create a more competitive supplier in the electric vehicle segment, while also simplifying the Schaeffler family's empire, which included stakes in both Vitesco and Continental AG.
The Merger Execution
The Schaeffler Group and Vitesco have completed their merger on 1st of October 2024 to become a Leading Motion Technology company.
Klaus Rosenfeld, CEO of Schaeffler AG, said: "With the completion of the merger with Vitesco today, Schaeffler is entering a new chapter in its corporate history. Despite the challenging environment, the complex transaction was successfully completed according to plan in less than a year. This proves that the two companies are not just a technological but also a cultural match. We look forward to our continued cooperation. Together, we will create a leading Motion Technology Company." Georg F. W. Schaeffler, family shareholder and Chairman of the Supervisory Board of Schaeffler AG: "Schaeffler and Vitesco are stronger together."
In accordance with the exchange ratio specified in the merger agreement, existing Vitesco shareholders receive 11.4 newly issued Schaeffler common shares with full voting rights for each Vitesco share. As part of the conversion of Schaeffler's share classes, Schaeffler's previously listed non-voting common shares are also converted into common shares with full voting rights at a ratio of 1:1. Going forward, all Schaeffler shareholders will hold common shares with full voting rights. Listing and trading in the new Schaeffler share with full voting rights will commence on the Frankfurt Stock Exchange on October 2, 2024.
The share conversion is significant: As the third and final step, the shareholders of Schaeffler agreed to convert Schaeffler's preference shares into common shares with full voting rights at a ratio of 1:1, further improving their liquidity and attractiveness. On October 1, 2024, the merger was successfully registered in the relevant commercial register and the new voting common shares of Schaeffler were admitted to trading by the Frankfurt Stock Exchange/Deutsche Boerse so that trading of all "New Schaeffler" shares started on October 2, 2024.
The New Structure
Along with group-level earnings, Schaeffler AG will present earnings for the four divisions – E-Mobility, Powertrain & Chassis, Vehicle Lifetime Solutions, and Bearings & Industrial Solutions – and Others starting January 1, 2025.
The company assumes that the merger will lead to sales and cost synergies with an impact on earnings totaling €600 million per year.
On a pro-forma basis for 2023, the combined company will have consolidated annual sales of around 25 billion euros, will employ around 120,000 people at over 250 locations and will have more than 100 production facilities worldwide.
Part VIII: Current Business Performance
2024 Financial Results
Revenue for the reporting period was 18.2 billion euros (prior year: 16.3 billion euros). Constant-currency revenue growth amounted to 12.9 percent and is attributable to the revenue contributed by the subsidiaries of Vitesco Technologies Group AG ("Vitesco"), which has ceased to exist as a result of the merger; these subsidiaries have been fully consolidated in the consolidated financial statements since October 1, 2024, and contributed 1,949 million euros in revenue that was recognized in the Others division.
Schaeffler AG generated 811 million euros in earnings before financial result, income taxes (EBIT) and special items during the reporting period (prior year: 1,187 million euros). This represents an EBIT margin before special items of 4.5 percent (prior year: 7.3 percent).
The margin compression is notable and reflects both integration costs and industry-wide pressures. Free cash flow before cash in- and outflows for M&A activities for the year was 363 million euros (prior year: 421 million euros). The Schaeffler Group's net financial debt amounted to 4,834 million euros as at December 31, 2024 (December 31, 2023: 3,189 million euros). The ratio of net financial debt to shareholders' equity (gearing ratio) as at that date was 121.8 percent (December 31, 2023: 81.5 percent).
The Schaeffler Group's total assets amounted to 21,370 million euros as at December 31, 2024 (December 31, 2023: 15,016 million euros). The number of employees as at the same date was 115,055.
2025 Performance
The Schaeffler Group's revenue for the first six months of the year was 11,845 million euros; compared to the prior year level based on pro-forma amounts and at constant currency, revenue decreased slightly by 2.6 percent (pro-forma prior year: 12,421 million euros).
"Despite the challenging environment and the demands of the integration of Vitesco and the further transformation of the Schaeffler Group, we are maintaining our outlook. We are confident that our diversified positioning makes us well-equipped to respond appropriately and flexibly to the challenges ahead," Klaus Rosenfeld said.
The Restructuring Challenge
The Vitesco merger brought not just synergies but also restructuring requirements.
The structural measures envisage a gross loss of about 4,700 jobs, some 2,800 of which will be in Germany. Production relocations will reduce the net loss to about 3,700 jobs, which corresponds to about 3.1 percent of the total post-merger headcount.
After relocating a number of positions, the overall net job cuts will shrink to 3,700, about 3.1% of the company's workforce. The measures will be taken between 2025-2027 and are expected to save €290m by the end of 2029.
The move comes after the integration with Vitesco and the slow down in the electric vehicle market. The slowdown in the EV market means previously anticipated stronger growth levels, particularly from European OEMS, have so far failed to materialize, and there is greater price and cost pressure that is driving the need for greater localization of R&D services.
Schaeffler AG Chief Executive Officer Klaus Rosenfeld: "By taking the measures announced today we will tackle three issues. Firstly, we will get our bearings and industrial business back on track. Secondly, we will realize cost synergies from the merger with Vitesco Technologies. And thirdly, we will continue the transformation of our Powertrain & Chassis and E-Mobility divisions. Given the current business environment, this program is necessary to safeguard the Schaeffler Group's competitiveness over the long term."
Part IX: Competitive Analysis and Industry Position
The Global Bearings Market
The bearings industry is a highly competitive sector, with only a few key players dominating the market. Among them, SKF and Schaeffler LTD stand out as the leading contributors, accounting for over 36% of the industry's revenue share. In particular, SKF boasts an impressive 25% share of the market, making it the largest contributor.
The global bearing market is a highly competitive & consolidated and dynamic industry, with numerous players operating across different segments and regions. Leading companies in the global bearings market include SKF, Schaeffler Group, NTN Corporation, NSK Ltd, THE TIMKEN COMPANY, and JTEKT Corporation. These companies dominate the market due to their large-scale production capabilities, strong R&D focus, global presence, and established relationships with OEMs and end-users.
In 2025, SKF Group (20% share) is positioned to maintain its global leadership, driven by rising demand for renewable energy and electric vehicles. Its investments in predictive maintenance and digitally integrated bearing systems are gaining traction across Europe, North America, and Asia. Offshore wind and smart factory projects further enhance its technical edge. Schaeffler Group (~18%) continues to lead in Europe with expanding aerospace and industrial automation verticals. Its wind turbine-specific innovations and automation solutions are translating into steady contract wins. Strong ties with German OEMs and a robust R&D pipeline support global competitiveness.
The Automotive Supplier Industry Transformation
The broader context is an industry in upheaval. While supplier revenues have been slowly recovering since the pandemic, profitability has structurally declined. Global EBIT margins were 5.3% in 2021 and 2023, two percentage points lower than in 2016/17, marking a 25% loss in absolute terms. This downward trend is anticipated to persist into 2024, with industry-level EBIT margin estimates projected at 4.7%. The decline was driven by the COVID-era production downturn and inflation-driven increases in personnel and material costs.
Chinese suppliers recorded the healthiest EBIT margins in 2024 at 5.7%, while European (3.6%) and South Korean (3.4%) suppliers are suffering the most. By product segment, tire suppliers remained the leading OES group in 2024 with a 7.4% EBIT margin. Suppliers of electronics and infotainment components, however, experienced declining margins, despite having the highest revenue CAGRs.
Porter's Five Forces Analysis
1. Threat of New Entrants: LOW-MEDIUM
High capital requirements for precision manufacturing create substantial barriers. Decades of R&D investment and patents establish competitive moats. However, Chinese competitors are emerging with government backing, and the shift to EV components potentially opens new entry points.
2. Supplier Power: MODERATE
Steel and specialty materials are key inputs. Large bearing manufacturers have scale to negotiate favorable terms, but raw material price volatility (particularly specialty steels) can impact margins. The industry's consolidation has improved supplier management.
3. Buyer Power: HIGH
Automotive OEMs are concentrated and powerful buyers. The shift to EV platforms increases their leverage as they seek to reduce supplier counts and integrate more components in-house. Industrial customers are more fragmented but still sophisticated purchasers.
4. Threat of Substitutes: LOW
Rolling element bearings have no viable substitute for most applications. Magnetic bearings serve niche applications but cannot replace mechanical bearings at scale. The fundamental physics of reducing friction through rolling elements remains unchallenged.
5. Industry Rivalry: HIGH
Six major global players (SKF, Schaeffler, NTN, NSK, Timken, JTEKT) compete intensively. Chinese manufacturers are gaining capability. Automotive industry consolidation increases pricing pressure. The transition to EVs creates uncertainty about which suppliers will maintain position.
Hamilton Helmer's 7 Powers Framework
Scale Economies: Schaeffler benefits from significant scale economies in manufacturing and R&D. However, scale advantages are partially offset by the need for regional production to serve automotive customers.
Network Effects: Limited direct network effects, though installed base creates some switching costs through spare parts and service relationships.
Counter-Positioning: The Vitesco merger represents a potential counter-positioning move—incumbent bearing suppliers may struggle to replicate Schaeffler's combined mechanical and electronic capabilities.
Switching Costs: Moderate to high. Bearings are designed into specific applications; changing suppliers requires re-engineering and re-qualification. Automotive OEMs value proven reliability.
Branding: Strong in B2B context. INA, FAG, and LuK are recognized brands among engineers. However, brand matters less than performance specifications and relationship history.
Cornered Resource: Deep engineering talent concentrated in Herzogenaurach and surrounding regions. Decades of application engineering knowledge.
Process Power: Precision manufacturing processes refined over 75 years. Quality control and consistency are competitive differentiators.
Part X: The Bull and Bear Cases
The Bull Case
1. Market Position and Moat: Schaeffler holds the #2 position globally in rolling bearings, a market with significant barriers to entry and proven durability through economic cycles. The combination of INA, FAG, and LuK brands creates a comprehensive portfolio unmatched by competitors except SKF.
2. Vitesco Transformation: The acquisition positions Schaeffler as a "motion technology company" rather than purely a mechanical components supplier. Vitesco brings power electronics, electric motors, and battery management systems—exactly the capabilities needed for EV platforms.
3. Diversification Benefits: Four divisions (E-Mobility, Powertrain & Chassis, Vehicle Lifetime Solutions, Bearings & Industrial Solutions) reduce dependency on any single end market. The Vehicle Lifetime Solutions aftermarket business provides stable, higher-margin revenue.
4. Family Ownership Advantages: Long-term orientation, strategic patience through industry cycles, and alignment between ownership and management. The family has demonstrated willingness to invest through downturns and make bold strategic moves.
5. Industrial Portfolio: Approximately 35% of revenue comes from non-automotive industrial applications—wind energy, aerospace, rail, industrial automation—providing diversification from automotive cycle volatility.
The Bear Case
1. EV Transition Risk: Electric vehicles require fewer mechanical components than ICE vehicles. While Schaeffler is investing heavily in e-mobility, the long-term content per vehicle may decline even as the company successfully transitions its product portfolio.
2. Margin Pressure: EBIT margins have declined from above 7% to 4.5%, and restructuring charges suggest further pressure. The integration of Vitesco adds complexity during an already challenging period.
3. German Cost Base: Significant manufacturing and R&D in Germany exposes Schaeffler to high labor costs and energy costs. The announced layoffs indicate ongoing structural cost challenges in the company's home market.
4. Chinese Competition: Chinese bearing manufacturers are gaining capability and increasingly competing in global markets. Government support and lower cost structures create long-term competitive threats.
5. OEM Consolidation and In-Sourcing: Major automotive customers are consolidating supplier bases and increasingly developing e-mobility components in-house. Schaeffler's largest customers could become competitors in key product categories.
6. Debt and Integration Risk: Net financial debt of €4.8 billion and a gearing ratio above 120% create financial risk, particularly if the EV market transition proves slower or more costly than anticipated.
Part XI: Key Performance Indicators for Investors
For tracking Schaeffler's ongoing performance, three metrics deserve particular attention:
1. EBIT Margin Before Special Items
The critical profitability metric. Management targets sustainable margins in the mid-single digits; any sustained decline below 4% would signal competitive or structural problems. Watch for margin progression as Vitesco integration matures and restructuring takes effect.
Current level (2024): 4.5% Prior year: 7.3% Target trend: Stabilization and gradual improvement toward 6%+
2. E-Mobility Division Revenue Growth
The bellwether for transformation success. E-mobility revenue growth demonstrates whether Schaeffler is successfully capturing content in electric vehicles to offset declining ICE component sales.
Why it matters: A company successfully navigating the EV transition will show sustained double-digit growth in e-mobility even as powertrain revenue declines.
3. Free Cash Flow Conversion
Schaeffler's ability to generate cash while investing in transformation determines strategic flexibility. Free cash flow before M&A activities relative to EBITDA reveals whether the business generates sufficient returns to fund both dividends and reinvestment.
Current level (2024): €363 million FCF before M&A Watch for: Improvement as restructuring costs roll off and Vitesco synergies materialize
Part XII: What Lies Ahead—Motion in a Changing World
Seventy-five years ago, in the rubble of postwar Bavaria, Georg Schaeffler developed a better way to guide needle rollers in a bearing cage. That single innovation—brilliant in its simplicity—created a company now spanning 120,000 employees across 100+ production facilities.
The Schaeffler story illustrates enduring themes in business history: the power of foundational innovation, the double-edged sword of acquisition-driven growth, the unique advantages and occasional excess of family capitalism, and the constant requirement to reinvent as technologies evolve.
"Klaus Rosenfeld stands for continuity and progress in equal measure. Over the past ten years, he has successfully guided the Schaeffler Group through challenging times, positioned it for the future under the Roadmap 2025 and successfully initiated the strategic implementation of the transformation into a leading motion technology company with the planned integration of Vitesco Technologies."
The Vitesco merger represents Schaeffler's largest strategic bet since the near-fatal Continental acquisition. Unlike that deal, this one was executed from strength rather than opportunism, with clear strategic logic: combine mechanical motion expertise with electronic power management to serve the mobility industry of the future.
Whether Schaeffler successfully completes this transformation—maintaining its position as a critical partner to global automotive OEMs while developing entirely new capabilities—will determine whether this family enterprise thrives for another generation or joins the ranks of once-great industrial names reduced by technological disruption.
The bearing industry's underlying physics haven't changed: friction must be managed, loads must be borne, motion must be enabled. What's changed is everything around those physics—the powertrain that creates motion, the electronics that control it, the software that optimizes it.
In a sense, Schaeffler faces the challenge Georg Schaeffler confronted in 1949: make motion better, more efficient, more reliable. The tools are different; the imperative is the same. The hidden giant behind global motion must remain hidden no longer—it must prove it can pioneer the next generation of motion technology just as it pioneered the last.
For investors evaluating Schaeffler, the core question reduces to this: Can a company built on the precision engineering of mechanical components successfully transform into one that masters the integration of mechanical and electronic systems? The answer will determine whether the Schaeffler name endures as a leader in motion technology or becomes a cautionary tale of transformation attempted too late.
History suggests never betting against German precision engineering. But history also reminds us that technological transitions spare no one—not even the hidden giants.
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