The automotive sector’s business climate in Germany has experienced a notable downturn this September, reversing the positive momentum seen in July and August, according to the Ifo Institute’s latest figures released Thursday. The Ifo Business Climate Index for the auto industry plummeted to -21.5 points, a significant drop from the -15.8 points recorded in August.
This decline is primarily attributed to a marked deterioration in business expectations, indicating a growing sense of disillusionment within the industry. Anita Wölfl, Ifo’s industry expert, directly linked the shift to emerging disappointment with the policies of the current German federal government. “Companies had hoped for significant structural reforms to enhance the competitiveness of Germany as a business location” Wölfl stated, “and these hopes have, so far, not been realized.
The current assessment of the business situation within the industry also worsened, with the corresponding indicator falling to -19.9 points from -16.9 points in August. However, the most severe drop was observed in future business expectations, which plummeted to -23.1 points – a considerable decrease from -14.8 points the previous month. This suggests a growing anxiety regarding the operational landscape in the coming months.
Interestingly, exporter expectations within the auto industry saw a rise to 16.7 points, the highest level since April 2023. This suggests that concerns over international trade uncertainty aren’t the primary driver of the overall business climate deterioration. Rather, Wölfl argues, it highlights the persistent underlying economic weakness within Germany itself. The trend raises questions about the government’s ability to deliver on promises of economic revitalization and risks further fueling anxieties amongst key industrial sectors like automotive, potentially impacting long-term investment and job creation. The data adds to the growing debate surrounding the effectiveness of the government’s economic strategy and its impact on Germany’s global competitiveness.
