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Business in the auto industry is doing better than it has been since 2018

The German automaker had a euphoric May – business was as good as it was three years ago. But the lack of chips is now causing pessimism.

Business for German car manufacturers and their suppliers was better in May than it has been for nearly three years. The corresponding barometer climbed by 12.9 to 36.6 points, as the Munich Ifo Institute announced on Wednesday for its monthly survey. This is the best value since September 2018.

“Business is still going very well at the moment,” said Ifo expert Klaus Wohlrabe. “But the first dark clouds are coming up again, probably because of the lack of chips.” The optimism of the auto managers for future business therefore waned: The corresponding indicator dropped to minus 1.4 points, after plus 23.2 points in April. This is the worst value since May 2020.

“The demand could not increase as strongly as it did last,” added Wohlrabe. This indicator fell to plus 4.7 from plus 40.2 in April. The growth of the order backlog slowed accordingly, and production is also expected to expand at a significantly slower pace. Export expectations also collapsed – to plus 0.2, after plus 28.6 in April.

This also has consequences for the willingness to hire. The employment plans provide for job cuts, emphasized the Ifo Institute.

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