The Ifo Institute reported on Monday that the business climate for the automotive industry deteriorated significantly in April. The indicator dropped to -23.8 points, down from -19.0 points recorded in March. While companies rated their current business situation better than in the previous month, they displayed considerably more pessimism regarding the coming months.
The decline is particularly stark in future business expectations, which fell to -30.7 points, sharply down from -15.3 points in March. According to Ifo sector expert Anita Wölfl, the ongoing Iran crisis adds extra strain to an already weakened auto sector.
Furthermore, the industry is beginning to show signs of material scarcity. In April, 9.3% of companies reported lacking crucial precursor materials, a sharp increase from just under one percent in March. Wölfl noted that the Iran crisis specifically complicates the production and delivery of helium, a noble gas vital-both directly and indirectly-to vehicle production. Helium is used, for example, in chip production, airbags, metal processing, and diagnosing battery leaks. According to the German Raw Materials Agency, the EU sources approximately 40% of its helium needs from Qatar, and alternative import sources are limited.
Compounding these issues is the indirect effect of the Iran crisis, which is reflected in the lower business outlook. General uncertainty among both companies and households continues to rise. This accumulated instability, coupled with high energy prices, could lead to purchasing caution when consumers consider buying new vehicles.