The ifo index for the German automotive industry dropped from -9.5 points in June to -18.3 points in July. This decline was influenced by both the index assessing the current situation in the sector and the one examining expectations for the next six months.
Regarding the current situation, the indicator fell from 3.2 points in June to -6.8 points in July.
“The automotive sector is sinking into an increasingly deeper crisis,” said Anita Woelfl from the ifo Center for the Organization of Industry and New Technologies.
Additionally, the surveyed representatives of the German automotive industry are very pessimistic about the next six months.
The expectations index fell further below the neutral level to -29.1 points in July from -21.3 points in June.
“We should not expect any significant improvement in the coming months” says Woelfl.
As many as 43 percent of automotive companies surveyed by the ifo Institute reported no new orders in July. Back in April, it was 29 percent, which already seemed disastrous.
Over the last month, the indicator of expectations regarding foreign sales also deteriorated dramatically. It fell to -16.8 points, which is 13 points lower than a month earlier.
It must be remembered that the automotive sector has traditionally been the driving force behind German exports. As a result, the capacity utilization of production plants in the sector amounted to 77.7 percent in July, which is 9 percentage points below the long-term average.
It is not only the automotive industry that is in terrible condition in Germany. The entire manufacturing sector along the Rhine and Elbe is in deep crisis.
The latest PMI reading from a few days ago was 43.2 points for Germany. This is not only below the neutral level of 50 points, indicating an expansion or slowdown of industrial activity, but also below 44 points, below which industrial production shrinks.
Photo: Bybbisch94, Christian Gebhardt, CC BY-SA 4.0, via Wikimedia Commons