Agency Report –
Sentiment in the German automotive industry has sunk significantly, a leading economic institute reported ahead of a major summit at the Chancellery in Berlin on Thursday.
The Munich-based ifo Institute said its business climate index for the carmaking sector dropped by 5.7 points to -21.5, a significant fall after consecutive months of rises.
“The first signs of disappointment with the new German government are shining through here,” said ifo industry expert Anita Wölfl.
“Companies had hoped that the government would make Germany more competitive as a business location through significant structural reforms. So far, they have not seen these hopes confirmed.”
Germany’s crucial automotive sector is grappling with declining sales, competition from China, the transition to e-mobility, and EU regulations aimed at reducing carbon emissions.
Aiming to lay out a way forward for the crisis-hit sector, Chancellor Friedrich Merz is due to hold talks in Berlin with representatives of manufacturers, suppliers, trade unions and state officials.
The ifo report could provide food for thought for those gathering in Berlin.
Despite volatility in global trade in recent months, companies’ export expectations rose to 16.7 points in the ifo index – the highest value since April 2023.
The current decline is therefore “not due to the uncertain situation in foreign trade,” emphasized Wölfl. Rather, it reflects “the continuing overall economic weakness in Germany.”
The business expectations index deteriorated by 8.3 points to -23.1, while the assessment of the current situation fell by three points to -19.9.
