Situation in the German Automotive Industry Further Improved
Business was much better for German car manufacturers and their suppliers in June than the previous month. The indicator for the industry’s business situation rose from plus 37.8 points in May to plus 44.2 points. This is its highest level since August 2018. In contrast, the indicator of expectations increased only slightly, to plus 3.2 points in June from minus 1.6 points in May. “The automotive industry has grown more reserved in the course of its structural transformation,” says Oliver Falck, Director of the ifo Center for Industrial Organization and New Technologies. In the first five months of 2021, Germany produced only 63 percent of the number of passenger cars that it manufactured over the same period in 2018.
According to the ifo survey, demand for cars grew somewhat in June: this indicator climbed from plus 4.5 points in May to plus 14.5 points. Compared to the previous month, the order backlog grew slightly, from plus 21.4 points to plus 38.6 points. Production will grow more slowly than it did in the spring of 2021. This indicator rose from plus 7.5 points to 15.9 points. Export expectations are again slightly optimistic, with the indicator rising from minus 1.0 points in May to plus 11.8 points in June.
Prospects for employees in the industry remain subdued as companies continue to plan job cuts; the indicator rose slightly to minus 23.4 points, after minus 29.5 points in May. “The cutbacks are likely to hit production in particular,” Falck says. “To cope with the structural change, companies will continue to build up personnel in IT, ICT, development, and company organization.” However, in percentage terms, these areas employ far fewer people than production does. At the same time, there is clearly extra work for employees: 68.0 percent of companies reported people working overtime in June. This value has thus returned to its long-term level. In June 2020, that figure was only 29.4 percent.
