German car industry facing difficult times ahead
The German car industry will face significant challenges over the coming months, according to a new report.
The IFO Business Climate survey saw the demand index fall to minus 11.8 for February, down from minus 2.1 in January.
The survey revealed a difficult picture across the industry with export expectations falling minus 15.4 in February from minus 5.2 in January.
Automotive companies including Daimler, Volkswagen and BMW traditionally been one of Germany’s strongest export earners.
This comes at a particularly challenging time for the international car industry due to the coronavirus disrupting supply chains and a movement away from combustion engines.
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Car manufacturing supply chains are closely tied to China, where there has been a large-scale lock down to try and contain the virus.
Fears are growing over how the virus could affect the global economy as shares and oil prices fell last week.
However, the German car industry faces additional challenges to its international competitors.
One is the need to develop electric cars following the 2015 diesel scandal involving Volkswagen.
Germany also has a heavy trade surplus with the UK.
This means the country could be adversely affected by tariffs which would be imposed if the EU and UK failed to reach a trade deal at the end of the year.