The business climate index for the German auto industry fell by almost 4 points in November, to -32, 1 point. This is the lowest level since the first quarter of 2022, the Munich Institute for Economic Research Ifo reported.
The index in October was -28.6 points. It was at a comparable level in early 2022, as well as in 2020, when the coronavirus pandemic began and lockdowns began to be introduced in the country. “The industry was caught in the grip of three factors – large-scale transformation, huge competition and a weak economy“, commented the results of the study, expert Anita Wölfl.
Economists also registered a decrease in the index for the assessment of the economic situation, which indicates pessimistic sentiments among managers regarding the situation in the economy and its near prospects. Indicators of readiness to hire new employees are also low. At the same time, surveys recorded an improvement in export expectations, which experts attributed to the fact that, despite the victory of Donald Trump, a supporter of protectionist measures, German carmakers are still waiting for his final form of future trade policy.
Wölfl attributed the pessimistic sentiment in the industry to the fact that for the previous three years, automakers had been saddled with residual demand after the pandemic. This demand is now satisfied and new orders are “not sufficient to ensure full capacity”.
The German automotive industry, considered for many years a pillar of the German economy, has recently experienced a crisis. Volkswagen, in particular, plans to restructure its business to increase competitiveness, which could lead to the closure of some of its factories in Germany. Among the factors for this crisis are increased production costs in the country, including due to increased electricity prices, and the import of cheaper cars from China.