Decline in expectations in the German automotive industry due to tariffs and supply chain disruptions

In the German automotive industry, according to the latest measurements, sentiment further deteriorated in April, with companies becoming increasingly cautious about the months ahead, according to data from the Ifo Institute reported by the DPA news agency. The sector, which has long been under pressure from growing competition from China and a slower transition to electric mobility, is now additionally affected by announced U.S. tariffs and disruptions in global supply chains.

The business climate index in the automotive industry fell to -23.8 points in April, down from -19.0 points in March. This indicator is based on company surveys, and a negative value means that more firms expect a deterioration than an improvement. An even sharper decline was recorded in the business expectations index, which dropped from -15.3 points in March to -30.7 points in April.

Although companies assessed their current business situation somewhat more positively than in the previous month, their outlook for the coming period has worsened significantly. Additional pressure stems from trade relations with the United States, as President Donald Trump announced an increase in tariffs on cars imported from the EU to 25 percent. Such a measure would further complicate the position of European manufacturers in the U.S. market.

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The situation is also complicated by geopolitical tensions in the Middle East, which are affecting the supply of certain raw materials. According to the Ifo Institute, 9.3 percent of companies reported shortages of key intermediate goods in April, compared to less than 1 percent in March. Particular attention is drawn to helium, a gas used in the automotive industry for chip production, airbags, metal processing, and leak detection in batteries. This is further underscored by the fact that the European Union sources approximately 40 percent of its helium needs from Qatar.

With high energy prices, tariff pressures, and rising uncertainty, manufacturers also fear weakening demand, as some consumers may postpone the purchase of new cars.

Simple example of how the index is calculated:

If 50 percent of companies say “it will improve,” while 20 percent say “it will worsen” → the index = +30 points