According to media reports, the Munich-based research institute Ifo Institute stated that the capacity utilization rate of Germany's automotive industry has dropped to around 78%, which is 9 percentage points below the long-term average. This decline is attributed to automakers, including Volkswagen Group, reducing production at high-cost plants. More than 43% of respondents complained about insufficient orders, compared to 29% in April this year.
On August 5, Ifo announced that the business expectations index for Germany's automotive industry fell from "-9.5 points" in June this year to "-18.3 points" in July. Several German automakers have reported poor quarterly financial results in recent weeks.
Anita Wölfl of Ifo stated in a press release, "Germany's automotive industry is further sinking into crisis. Significant improvement in the coming months is unlikely."
After investing billions of euros to advance electric vehicle technology, Germany's automotive industry is now facing declining demand for electric vehicles, coupled with pressure from the Chinese market.
Due to declining electric vehicle sales, German automakers, including Volkswagen Group and Mercedes-Benz Group, are experiencing weak performance in the Chinese market, leading to increasing uncertainty about the future of the automotive industry.
In the first half of this year, Volkswagen Group's operating profit margin dropped to 6.3%, down from 7.3% in the same period last year, with its core Volkswagen brand's operating profit margin falling to 5%. The high-end brand Audi's operating profit margin was also impacted by supply chain bottlenecks. Mercedes-Benz Group reported that its net profit for the first half of this year was 6.087 billion euros, a 20% year-on-year decrease; during the same period, sales fell by 6%, with electric vehicle sales down by 17%. BMW Group's net profit for the first half of this year fell by 14.6% year-on-year to 5.656 billion euros.
Mercedes-Benz Group has also lowered the upper end of its full-year profit margin forecast range, while Volkswagen Group has promised greater cost reductions to cope with the decline in market sales.
