As the Ifo Institute for Economic Research writes, the mood in the German auto industry is rapidly deteriorating. The German automobile industry’s business climate index fell from -28.6 points in October to -32.1 points in November.

“The sector is stuck in the current mix of far-reaching transformation, fierce competition and a weak economy,” says ifo industry expert Anita Welfl.

Industry participants assess their current business situation as much worse than in October and are even more pessimistic about the next six months: the Business Situation Indicator fell to -33.9 points compared to -29.0 points in the previous month. The business expectations indicator fell from -28.2 to -30.4 points in October.

The main reason for the pessimistic atmosphere stems from weak demand: “The mountains of orders that companies in the automotive industry have accumulated since the beginning of 2021 in the context of the pandemic and problems in supply chains have been processed. New orders are coming in, but they are not enough to fully load the capacities,” says Welfl.

The crisis in the automotive industry also affects labor demand. “Many companies in the auto industry are cautious about hiring new employees or discussing layoffs,” says Welfl.

Companies such as Continental, Bosch and Schaeffler have already announced plans to cut thousands of jobs, while Volkswagen has said it will have to close factories in Germany.