Fatal mood among German companies
Expectations of German automotive companies in July they deteriorated to minus 18.3 points. A month earlier, in June, they were at an already low level of minus 9.5 points – according to a study published on Monday by the Ifo Institute in Munich. Many car manufacturers reported poor financial resultswhich have been recorded in recent weeks.
Declining demand for electric cars
German car manufacturers today have to deal with falling demand for electric cars, having previously allocated billions of euros for the development of this technology. In addition, companies from the Rhine they have big problems in Chinawhere German car sales are falling.
A month earlier, Mercedes lowered the upper end of its full-year margin forecast, while Volkswagen is looking to make deeper cost cuts to prevent further declines.
The crisis is coming
“The automotive industry is sinking deeper into crisis” – Anita Wölfl, a representative of the Ifo Institute, wrote in a commentary on the results of the study. “We probably shouldn’t expect any significant improvement in the next few months,” she added.
Capacity Utilization in the German Automotive Industry dropped to around 78%, according to Ifo data. That’s 9 percentage points lower than the long-term average, as carmakers, including Volkswagen, are cutting production at the most expensive plants. More than 43% of companies surveyed by Ifo complained about a lack of orders. Meanwhile, in April, the corresponding figure was much lower at 29%.
Sentiment in the German economy, which is Europe’s largest economy, are now at the level they were at in February 2022, when Russia invaded Ukraine, according to data European Commission.
