The business climate in the automotive sector in Germany continues to deteriorate

Anita Woelfel, an expert at the institute, explained that the main reason is weak demand, noting that the backlog of orders from the beginning of 2021 has been resolved, but new orders are not enough to fully utilize the factories’ capacities.

“The sector is stuck in a combination of radical transformation, intense competition and a weak economy,” Woelfel added, which is affecting the labor market as many companies hold back hiring or discuss layoffs. Jobs.

However, the export expectations index experienced an unexpected improvement, rising by 12.1 points and reaching minus 19.2 points.

Woelfel indicated that companies are waiting for the development of trade policy, whereby exporters will benefit from a high exchange rate Dollar after American elections.

The case of the German automotive sector

confirm The German automotive sector There has been a noticeable decline in production, which has fallen by 25 percent since 2018, as a result of falling demand in key markets such as China and rising local production costs.

Companies also face challenges in transitioning to… Electric carsWith the decline in demand for these vehicles, thousands of jobs have been cut in recent years.

In addition, German automakers are experiencing intense competition from Chinese companies, which offer electric cars at competitive prices, increasing the pressure on German companies to accelerate their transition to electric mobility.

Also, the increase in energy and labor costs Germany This increases the challenges this sector faces.

Against this background, companies such as Volkswagen lowered their financial forecasts for 2024, citing a difficult market environment and declining demand for cars.

The company also announced plans to close some of its factories in Germany, putting thousands of jobs at risk, and was exposed to warning strikes earlier this week.