The business climate in the German automotive industry continued to decline in April, new data from the ifo Institute has revealed.
The business climate indicator fell to -23.8 points in April, down from -19.0 points in March, the data showed, and while many firms viewed their current business situation as better than the previous month, they are ‘considerably more pessimistic’ about the coming months.
Business expectations fell to -30.7 points in April, down from -15.3 points in March.
‘Additional strain’
“The Iran crisis is placing an additional strain on the already weakened automotive industry,” commented ifo industry expert Anita Wölfl.
Early signs of supply constraints have begun to emerge. In April, 9.3% of automotive firms reported shortages of key intermediate products, compared with just under 1% in March.
“The Iran crisis is affecting the production and supply of helium, for example, an inert gas that is important both directly and indirectly for automotive production,” Wölfl added.
Helium is required in semiconductor manufacturing, airbag systems, metal processing and battery leak detection. The European Union sources a significant share of its helium imports from Qatar, and alternative sources are limited, increasing the vulnerability of supply chains.
The broader impact of the geopolitical situation is also affecting business sentiment. ‘General uncertainty among companies and households is growing. Combined with the high energy prices, this could lead to a reluctance to buy new cars,’ the ifo Institute noted. Read more here.
