Situation in the German Automotive Industry Improves
Business was better for German car manufacturers and their suppliers in July than the previous month. The ifo indicator for the industry’s business situation rose from plus 44.9 points in June to plus 56.8 points. This is its highest level since July 2018. Expectations rose slightly from 3.6 points in June to 6.3 points. “Demand in Asia and the US continues to be very strong, and pre-crisis levels are within reach. In Europe, however, we’ve still got quite a way to go,” says Oliver Falck, Director of the ifo Center for Industrial Organization and New Technologies.
In July, 83.4 percent of companies said they were affected by a short supply of intermediate products, up from 64.7 percent in April. “Automakers and their suppliers are affected by the shortage in preproduction, which is causing production stoppages. Semiconductor bottlenecks in particular are likely to continue for a while,” Falck says. That’s why suppliers are deliberately stocking up, he explains, adding that stocks of finished passenger cars, however, were low.
For the first time since December 2018, automakers are looking to expand their workforce. The indicator rose from minus 19.3 points in June to plus 5.2 points.
Demand for cars was slightly up in July, with the indicator jumping from plus 16.8 points in June to plus 27.5 points. Compared to the previous month, the order backlog grew slightly, from plus 42.1 points to plus 53.7 points.
Capacity utilization remains at pre-crisis levels. In July, the companies surveyed reported capacity utilization of 84.7 percent. This had reached an all-time low of 44.1 percent in April 2020.
