Business climate in the German auto industry collapses in September

In some industries, spirits have recently been rising. Not so with car manufacturers. Chinese competitors are putting more and more pressure on German manufacturers. The industry is changing its mind on import tariffs.

The mood in the German automotive industry deteriorated significantly in September. The barometer for the business climate fell to minus 35.0 points, from minus 22.0 points in August, as the Ifo Institute announced in its survey. Companies assessed their business situation as worse than ever this year. The prospects for the coming months had already fallen drastically in August and now remain at a low level. “The automotive industry is still in crisis,” said Ifo industry expert Anita Wölfl.

This mood of crisis can be seen in many other indicators: export expectations in the automotive industry fell after they had previously risen. The same applied to employment expectations. In September, companies also rated their order backlog as worse again than in the previous month. According to the company, the earnings situation, which is always surveyed quarterly, fell significantly in the third quarter compared to the previous quarter.

In other industrial sectors such as the electrical and chemical industries, the mood has recently brightened noticeably. One reason for the weakness of the auto industry is the growing competition from China, for example in electric vehicles. Chinese car manufacturers are pushing hard into the European market because their own market is weakening and there is enormous overproduction. The US market is closed to them due to trade policy.

The German auto industry therefore no longer generally rejects import tariffs. The head of the Automotive Industry Association, Hildegard Müller, recently explained that the priority must continue to be strengthening one's own competitiveness and a dialogue with China as a trading partner.