Business climate in Germany’s car industry worsens slightly

The business climate in Germany’s auto industry worsened slightly in October as the corresponding ifo barometer for the industry declined from 9.8 to 8.5 points month-on-month, the ifo Institute announced this week.

Manufacturers’ business continued to be “very good” and the indicator for the current business situation rose to 46.2 points, up from 29.9 in September, the ifo Institute noted. At the same time, the indicator for exports declined, but was still at a solid level.

“Sales markets abroad are still doing splendidly,” said Oliver Falck, director of the ifo Center for Industrial Organization and New Technologies. “However, all manufacturers were still complaining about supply shortages.”

When presenting business results last week, Germany’s largest carmaker Volkswagen noted that the “global semiconductor bottlenecks particularly impacted on the business performance of the Volkswagen Group in the third quarter.”

Volkswagen’s sales revenues were down 4.1 percent year-on-year, decreasing to 56.9 billion euros (around 66 billion U.S. dollars) from July to September. Operating results before special items declined by 12.1 percent to 2.8 billion euros.

The situation of the German automotive suppliers remained “much less favorable” as the indicator was still below zero and improved only slightly to minus 9.8 points, ifo noted. “Suppliers are complaining about a lack of orders and demand is declining.”

“The figures reflect many suppliers’ concerns that they won’t be able to keep up with the structural change in the automotive industry,” said Falck.

The Center Automotive Research (CAR) expects this year to be even more difficult for German carmakers in their domestic market than 2020, predicting that the 2.9 million new cars registered last year would not be matched, according to a recent study. (1 euro = 1.16 U.S. dollars)

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