Expectations Darken in the German Automotive Industry
Business expectations in Germany’s automotive industry darkened in October, finds the latest ifo Institute survey. The figure plummeted to minus 35.3 points in October, down from minus 6.3 points. “Worries about a collapse in demand are now gripping automakers and their suppliers,” says Oliver Falck, Director of the ifo Center for Industrial Organization and New Technologies. For example, manufacturers’ orders (minus 26.2 points) and demand (minus 38.1 points) are both lower than in September. In the industry as a whole, the assessment of the current situation fell – but only from minus 5.1 points to minus 5.7 points.
Manufacturers’ earnings slumped. Assessments for the second half of 2022 fell to minus 59.7 points, down from plus 33.8 points in the first half. However, companies assessed their order backlog positively and intend to produce more in the coming months. “Even though sales prices are higher, evaporating demand and rising material and production costs are causing a deterioration in earnings,” Falck says.
The situation for suppliers has worsened further. They assessed their earnings situation as worse in the second half of 2022 – at minus 31.0 points, compared with minus 26.4 points in the first half of 2022. “Among suppliers, order books and demand continue to decline,” Falck says. In the next few months, they plan to produce less. Suppliers’ business expectations fell to minus 37.0 points, down from minus 30.7 points.
