The business situation in the automotive industry is deteriorating significantly

Dhe mood in the executive floors of the German auto industry deteriorated noticeably in August: for the first time since April, the barometer for the business climate fell below zero, like the one in Munich Ifo Institute announced on Friday about his survey. The main reason for this is that the business situation was rated significantly more negatively: This value dropped to minus ten points after it had been plus 7.5 points in July. Expectations brightened a bit. Here the barometer climbed from minus four to zero points. “The general slowdown in the economy is also reflected in the automotive industry,” said Ifo expert Oliver Falck. “The suppliers are in a much worse mood than the manufacturers.”

The business climate index for car manufacturers turned to minus 1.6, after plus 5.8 in the previous month. “This was mainly due to a much more pessimistic assessment of their current situation,” it said. The expectations for the coming months, on the other hand, were rated more positively. The business climate for suppliers plummeted to minus 11.4 points after it had already been minus 4.9 points in July. Here, too, companies assessed their current situation as significantly worse than in the previous month, while the outlook brightened only slightly. At the same time, companies are more reluctant to hire new staff: the corresponding indicator for the industry’s employment plans fell from plus 9.5 to minus 3.6 points.

The automotive industry has adjusted its expectations for the current year due to the increased material shortages caused by the war in Ukraine and the rapid increase in costs. While the situation in China has improved after the corona lockdowns, expectations for the USA and Europe are dampened by high inflation and rising interest rates, the Association of the Automotive Industry (VDA) explained. For the USA, for example, the VDA has corrected its forecast significantly and, after a slight decline of one percent that had previously been forecast, now expects sales to fall by seven percent to 13.8 million vehicles.

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