German car industry remains pessimistic

Companies still assess their current business situation as worse than in 2009

Germany’s automotive industry remains pessimistic, shows the result of the Munich-based ifo Institute’s latest Business Survey. Participants in the survey still assess their current business situation as worse than during the financial crisis in 2009. 

From minus 87.2 points in April 2020, the index rose only to minus 84.4 points in May 2020. In April 2009, the index stood at minus 82.9 points. At least companies’ business expectations are no longer quite so pessimistic: the corresponding index rose from minus 44.4 points to minus 13.4 points.

The industry is down in a dark cellar, and although it’s managed to climb back up a few steps, there’s still no sign of light, said Klaus Wohlrabe, Head of Surveys at ifo. Demand is still lower than at any time since 1991. The corresponding indicator rose to minus 78.7 points in May from its seasonally adjusted level of minus 108.6 points in April. At the height of the Lehman Brothers crisis in December 2008, the index stood at minus 78.6 points.

Companies also continued to take a critical view of their order books. From minus 75.2 in April, the corresponding index rose to minus 65.2 points in May. Many companies feel that the stock of finished goods in May was too high: that index rose from plus 40.8 points in April to plus 42.5 points in May.

At least the index of production expectations rose to plus 22.7 points in May from its level of minus 41.5 points in April. This means more companies reported that they wanted to expand their currently very low production. The indicator of export expectations rose from minus 65.3 points in April to minus 9.8 points in May. This indicates that from now on, companies expect their exports to shrink more slowly.

For the employees, the problems are only just beginning: the personnel planning index fell from minus 31.3 points in April to minus 49.6 points in May.

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