Germany’s automotive industry crisis deepens, uncertainty over US duties weighs heavily

Brussels – Cars, Germany now looking to the future with pessimism. The business climate of the German automotive industry deteriorated again in May 2025 in the wake of global uncertainties. According to the Ifo Economic Institute, the Business climate index for the industry fell to -31.8 points, compared to -30.7 recorded in April). “The confusion around US duties is creating difficulties for the automotive industry in Germany,” said Anita Wölfl, an Ifo expert on the sector.

The overall worsening was mainly due to considerably more pessimistic expectations for the coming months, with the indicator falling from -25.2 to -28.3 points. By contrast, the current situation was assessed slightly better by companies than in April, but remains at very low levels: the business situation indicator rose from -36.1 to -35.3 points.

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The uncertainty generated by the US trade policy continues to affect the sector, although the export expectations index shows a recovery after the sharp drop in April. It stood at -0.8 points in May, an improvement from -11.6 in the previous month, but still far from reassuring.

The picture that emerges is one of a sector under pressure, caught between weak domestic demand and unstable external markets. In the absence of clarification on global tariff policies, especially from the US, the confidence of German automotive companies remains fragile, exacerbating an already complex situation.