ifo Business Climate Index falls to minus 21.5 points after minus 15.8 points in August

The mood in the German automotive industry has darkened once again. The ifo Institute’s (https://www.ifo.de) new business climate index for the sector slumped in September after strong rises in July and August. It fell to minus 21.5 points, down from minus 15.8 points in August.

Waiting for politicians

According to economic researchers, this decline is primarily due to significantly more pessimistic business expectations. ‘Companies had hoped that the government would make Germany more competitive through substantial structural reforms. So far, they have not seen these hopes confirmed,’ says ifo industry expert Anita Wölfl.

Car manufacturers and suppliers assessed their business situation as worse in September: the indicator fell to minus 19.9 points, down from minus 16.9 points in August. Above all, they were noticeably more pessimistic about business in the coming months: expectations fell to minus 23.1 points in September, down from minus 14.8 points in August.

Frustration despite good exports

Export expectations in the automotive industry rose to 16.7 points, the highest level since April 2023. ‘The decline in the business climate index in September cannot therefore be attributed to the uncertain situation in foreign trade, but rather reflects the continuing overall economic weakness in Germany,’ emphasises Wölfl.

Just at the beginning of the week, the German Association of the Automotive Industry (https://www.vda.de) published a survey according to which 80 per cent of small and medium-sized enterprises in the automotive sector want to postpone, relocate or completely cancel planned investments in Germany due to the economic downturn. In 2024, the figure was only 75 per cent, as reported by pressetext (https://www.pressetext.com/news/20251006017).