Microstructure engineering links the operational parameters of an industrial process to the properties of the product by modelling the microstructure evolution. This modelling concept has been extended to continuous annealing of steels and aluminum alloys used in automotive applications. The models developed to predict the softening behaviour are formulated using the internal state variable approach. As a first step, a model is presented for an IF steel and AA5754, where softening is not affected by potential precipitation reactions. The principal microstructure phenomena to be considered are recovery, recrystallization and texture. The internal state variables, which have been included in the models, are dislocation density, fraction recrystallized, grain size and fraction of major texture components. A rule of mixtures is assumed to reflect the combined softening contributions from recovery and recrystallization. Material specific parameters were determined during isothermal annealing tests and validated with laboratory simulations of continuous annealing. The similarities and differences in the models adopted for steels and aluminum alloys are evaluated.