Hanover, Germany  - Karl-Thomas Neumann, chief executive of Continental, appeared to lose a power struggle early Friday at the major German supplier to the world car industry.

The company, which announced that a board meeting had debated replacing him, has been shaken by a 12-month feud between its management and its new owners.

As labour leaders raged at the effort to remove him, Neumann did not say at the end of a late-night supervisory board meeting that he was leaving, but he thanked his staff for all their hard work.

The announcement said the board would consider the chief executive appointment at its next meeting on August 12. Sources said a Schaeffler executive, Elmar Degenhart, was front-runner for the post.

Neumann called himself the victim of an "odd and very upsetting development," adding, "This makes it very, very hard to cooperate long-term with our main shareholder."

One year ago, Maria-Elisabeth Schaeffler bought Continental at a price she later admitted was far too high, and has since struggled to win management control. Schaeffler's own company skirted bankruptcy in the crisis.

Most of Hanover-based Continental's electronic and rubber products other than tyres are barely visible in cars, and the brand is little known outside Germany, but the group is an industrial giant. The war for control has fascinated Germans.

Shares in Continental slumped 5 per cent Friday to 25.76 euros on the Frankfurt exchange, mainly because of another decision to dilute the equity by offering up to 1.5 billion euros (2.1 billion dollars) in new shares.

The Schaeffler company owns 49.9 per cent of Continental directly and its proxy banks hold 40 per cent.

They were thwarted at the board meeting in efforts to dump Neumann by labour leaders who have board seats, so the actual decision to remove Neumann was adjourned to the next meeting. A dismissal of a chief requires two-thirds support in a German board.

The Schaeffler company in Herzogenaurach, Germany declined comment Friday, saying the board members were sworn to silence.

"We don't want to comment on any of the rumours," said Schaeffler spokesman Detlef Sieverdingbeck.(dpa)