Expectations Slump in the German Automotive Industry
In March, German automakers and their suppliers slashed their expectations like never before. The indicator for the entire industry plummeted to minus 43.1 points, down from plus 14.4 points in February. Russia’s attack on Ukraine is increasing the price of oil and gas, which is “raising fears in the industry that sales of new cars could fall,” says Oliver Falck, Director of the ifo Center for Industrial Organization and New Technologies. “At the same time, energy prices are rising in automotive manufacturing, too, and all along the supply chain.”
Car manufacturers also assessed their current situation as worse than in February; this indicator fell to minus 13.5 points, down from plus 28.3 points in the previous month. “The shortage of intermediate products continued to worsen. Ukrainian truck drivers aren’t available for work because they now have to fight to defend their country. This is bringing logistics to a standstill. What’s more, there’s a lack of key components such as cable harnesses,” Falck says. Price expectations rose to an all-time record high of 86.0 points, up from 77.9 points in February.
“Russia is of little importance to German automakers as a sales market,” Falck adds. Order books remained plump, with the demand indicator rising to 37.5 points, up from 17.5 points in February.
“Suppliers will feel the commodity crisis across the board,” Falck says. Their expectations fell to minus 37.9 points, down from minus 6.2 points in February. Order books are thin, and demand fell once again in March, from plus 9.8 points to minus 7.5 points. Suppliers reduced their production expectations from 0.7 points to minus 28.1 points in March. No new jobs are to be created in the next few months.
