Situation in the German Automotive Industry Deteriorates Sharply

The current situation in the German automotive industry deteriorated sharply in August. In the ifo survey, the value of the indicator fell to minus 10 points, down from plus 7.5 points in July. Expectations, however, brightened somewhat, from minus 4 points to zero. This is the first time since April that the overall climate was below zero. “The general darkening of mood in the economy is also reflected in the automotive sector,” says Oliver Falck of the ifo Institute, “with suppliers much more pessimistic than manufacturers.”

The climate among manufacturers flipped to minus 1.6 points, down from plus 5.8 points in the previous month. This was mainly due to significantly more pessimistic assessments of the current situation at minus 2.5 points, compared with plus 18 points in the previous month. Expectations, on the other hand, rose from minus 5.8 points to minus 0.7 points. Among suppliers, the business climate dropped as far as minus 11.4 points, down from minus 4.9 points in July. Here, too, companies assessed their current situation as significantly worse than in the previous month. Expectations were unable to offset this pessimism, improving only slightly. At the same time, companies are more reluctant to hire staff. This indicator for the industry’s employment plans plummeted to minus 3.6 points, down from plus 9.5 points.