German Economy To Hit Slowdown As Auto Industry Is ‘Critical’ – ‘Much Worse’ Than Months Ago | World | New
The Munich-based Ifo Institute warned that confidence fell to its lowest level in six months following prolonged shortages in September, causing the world’s largest auto industry to fall. Ifo said: âThe situation in Germany remains critical: order books rose from 17.1 points in August to 5.3 points. [in September]. In July, the order book was still valued at 52.5 points.
âDemand is down for the first time since May 2020: the figure fell from 1.7 points to minus 15.7 points. Throughout the supply chain, companies have found the inventory of finished goods to be too large.
A global supply and production problem surrounding semiconductors vital for the production of modern, high-tech vehicles is largely to blame.
The indicators showed that confidence in the industry fell 32 points to just 13.2.
The gauge measures the difference between optimism and pessimism of automakers regarding the production and distribution market. He was at a three-year high of 50 points as recently as July.
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The big three German automakers, Mercedes Benz, owner of Daimler, Volkswagen and BMW, have all been forced to cut production as the chip shortage means vehicles cannot be completed to the usual high specifications.
In addition to confidence indicators on production and distribution, the monitoring of orders pending production also fell from 17.1 points to only 5.3 points in September as the reality of the shortage manifested itself.
Ifo director Oliver Falck said the industry was “most severely affected by supply bottlenecks in intermediates”.
There seems to be a light at the end of the tunnel, however, in the form of exports.
Mr Falck told the Telegraph: âThis should not hide the fact that the uncertainty of many consumers in China, due to the crisis at real estate developer Evergrande, is weighing on the mood of German manufacturers, who are now producing more cars. in China than in Germany. “
Automakers around the world fear that the shortage of semiconductor chips will last until 2023 following the impact of the COVID-19 pandemic on the supply chain.
UK auto production fell 27% year-on-year in April, a combination of shortages and bottlenecks wreaking havoc at UK assembly plants, according to a report by the Society of Motor Manufacturers and Traders.
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The gross output value of the automotive industry in Germany represents around 498 billion euros in total sales.
In 2019, around 3.49 million vehicles were exported, including around â¬ 217 billion to the European Union.
The industry employs around 809,000 people in Germany and accounts for around 10% of the total national GDP.
With a new coalition government set to replace outgoing Chancellor Angela Merkel, all eyes will be on whether talks between the Greens and the FDP will temper some of the Greens’ policies on vehicle emissions.
Matthias Schmidt, a Berlin-based auto industry analyst, told Politico: âIn general, the auto industry is quite happy that it’s not red-red-green because the FDP will put the brakes on the plan. Greens for 130 kilometers. – speed limits per hour on highways.
Andreas Scheuer, outgoing transport minister, is keen to protect the industry known by some as the backbone of the German economy, having previously told the Bild newspaper that the combustion engine with synthetic fuels is “the engine of the innovation “in Germany.
With the establishment of Brexit, the UK market also had an impact on the German export industry, with the UK falling outside the top ten trading partners with Germany, which is in part due to the trade barriers which add an additional Â£ 600million in costs to UK importers. with German vehicles strongly included in the figure.