Automotive companies face bleak months
In spring, the German automotive industry was hoping for an end to the economic downturn - but it seems that was just a brief respite. Now, the industry expects the situation to worsen.
The mood among top executives in the German automotive industry has significantly deteriorated in July. The corresponding indicator for business climate in this key sector fell to -18.3 points, from -9.5 in June, according to the Munich-based Ifo Institute's manager survey. "The automotive industry is sliding further into crisis," said Anita Woelfl from the Ifo Center for Industrial Economics and New Technologies.
The deterioration in mood is reflected in both the assessment of the current business situation and the expectations for the next six months. The indicator for the current situation fell by ten points, from +3.2 to -6.8 in July. The barometer for the outlook plummeted to -29.1 points, from -21.3 in June. "Improvement is not likely in the coming months," said Woelfl.
Factories producing less
Capacity utilization in factories has also fallen to 77.7 percent, nine percentage points below the long-term average. 43.1 percent of companies are complaining about lack of orders, up from 29.2 percent in April. Earlier this year, the Ifo indicator had temporarily risen, raising hopes for an end to the economic slump.
No positive impulses are expected from abroad either, according to the latest survey: export expectations have fallen to -16.8 points, more than 13 points lower than the previous month. The German automotive industry is particularly affected by the weakness on its most important sales market, China. The Munich-based BMW sold around four percent fewer cars in the People's Republic in the first half of the year, but still fared better than competitors Volkswagen and Mercedes-Benz. However, BMW recently stated that it expects the Chinese economy to stabilize in the third quarter. Competitors Mercedes and Porsche are preparing for continued headwinds.
German car market suffers from electric car slump
Meanwhile, the German car market has had a weak start to the second half of the year. In July, around 238,000 vehicles were newly registered, two percent less than in the same month last year, according to data from the Federal Motor Transport Authority. The weak demand for pure electric cars is weighing on the new car market, as the federal government ended the state subsidy for their purchase at the end of last year. Registrations here fell by 37 percent to just under 31,000. The market share of battery-electric vehicles was 13 percent.
Most new cars have a gasoline engine (35 percent) or a hybrid drive (33 percent), which leads to a higher burden on the climate: the average emission of the greenhouse gas CO2 increased by seven percent to 121 grams per kilometer.
The Manufacture of motor vehicles in Germany is currently facing challenges, as indicated by the decline in capacity utilization in factories. The crisis in the automotive industry is further highlighted by the significant drop in the business climate indicator, with the current situation and outlook both showing negative trends.
