Business confidence among German carmakers improved in March, but the gauge for morale in the sector remained in negative territory.

German economic thinktank ifo (Munich; www.ifo.de/en), which polls the managers across the country’s various industries each month, said its business climate indicator for the car sector improved to -5.8 points in March from -9.9 in the previous month. “The German automotive industry seems to have finally emerged from its economic low in the second half of 2023 and is looking to the future with more confidence,” said Anita Wölfl, a specialist for the sector at ifo.

Expectations for exports and business in the coming half-year showed significant improvement, according to the economic institute. “One reason for this is likely to be the positive development in the US and China, the two most important sales markets for the German automotive industry.”

The reliability of the supply of key intermediate products has improved, the institute noted. “Here, the efforts that the German automotive industry has undertaken since the pandemic to make supply chains more resilient are paying off,” Wölfl said.

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While the future looks brighter for carmakers in Germany, the past has been nothing to cheer about: domestic production slid 15% in March compared with a year ago, according to the national automotive manufacturers association VDA (Berlin; www.vda.de/en). 

It noted that the Q1 output of 1 mn passenger cars was 9% lower than in the first three months of last year and 18% under the result from the same period in 2019, before the pandemic.

The industry group said domestic orders fell at a yearly rate of 4% in March.

While production was slumping in Germany in Q1, new car registrations rose 4% to nearly 700,000 units. In March, however, they dropped 6%, the VDA said, and for strictly German brands, registrations tumbled 10%. 

The sector weakness has forced German and other components suppliers in Europe to either close shop or slash their workforce, with German automotive supplier and sunroof specialist Webasto (Stockdorf; www.webasto-group.com) recently announcing plans for job cuts. While Swiss car parts supplier Autoneum (Winterthur; www.autoneum.com) is planning new manufacturing plants in China and India, the company initiated consolidation of facilities in Germany and the UK.