Situation in the German Automotive Industry at a Three-Year High, but Expectations Are Falling
Business was much better for German car manufacturers and their suppliers in May than the previous month. The indicator for the industry’s business situation rose from plus 23.7 points in April to plus 36.6 points. This is its highest level since September 2018. “At the moment, business is still very good,” says Klaus Wohlrabe, Head of Surveys at ifo, “but dark clouds are beginning to gather, probably because of the chip shortage.” And automotive managers’ optimism of the past few months has evaporated for now: the corresponding indicator dropped from plus 23.2 in April to minus 1.4 points – its lowest level since May 2020.
“Demand growth wasn’t as strong as it has been recently,” Wohlrabe adds. That indicator fell from plus 40.2 points in April to plus 4.7 points in May. Growth in order books slowed accordingly, sliding from 42.1 points to 20.9 points. In response, the industry plans to slow down production; this indicator dropped from plus 42.0 points to 9.7 points. Export expectations plummeted as well, down to plus 0.2 points from 28.6 points in April.
Things are still looking bad for employees in the industry, as employment plans continue to provide for job losses. The indicator slipped slightly to minus 30.2 points, after minus 29.4 points in April.
