BERLIN (Reuters) – The business climate in Germany’s auto sector suffered its biggest slump in April and hit its lowest level since 1991, when the Ifo economic institute began collecting data post-reunification, a survey showed on Monday.
FILE PHOTO: A worker wears a protective mask at the Volkswagen assembly line after VW re-starts Europe’s largest car factory after coronavirus shutdown in Wolfsburg, Germany, April 27, 2020, as the spread of the coronavirus disease (COVID-19) continues. Swen Pfoertner/Pool via REUTERS
The news came ahead of a conference call that Chancellor Angela Merkel will hold with senior representatives of the auto industry on Tuesday to discuss the impact of the coronavirus pandemic on production and sales.
Ifo said its survey of 75 auto firms showed a current business index for the sector fell to -85.4 points in April from -13.2 in March. The April reading fell below a reading of -82.9 points registered in April 2009, during the financial crisis.
“We have never seen such bad figures for this key sector,” said Klaus Wohlrabe, head of forecasting at Ifo.
Sub indices on orders, and production expectations and export prospects all fell, with capacity utilisation down to 45%.
Government spokesman Steffen Seibert said on Monday no decisions would be taken during Merkel’s conference call with auto industry representatives on Tuesday.
Merkel would discuss supply chains and job issues with representatives of companies producing cars in Germany, Seibert told a regular news conference. Car industry association VDA, trade union IG Metall as well as Finance Minister Olaf Scholz and Economy Minister Peter Altmaier would join the meeting.
Ahead of the meeting, Volkswagen (VOWG_p.DE) and Daimler (DAIGn.DE) have urged the government to help boost demand for cars. The pandemic hammered first-quarter profits and forced both carmakers to drop their outlooks for the year.
Car sales across the world have slumped as measures to contain the pandemic forced production lines to shut and showrooms to close, starving manufacturers of much needed cash for investments.
Volkswagen restarted production at its Wolfsburg factory in Germany last week, the latest of a fleet of European carmakers to take advantage of eased coronavirus lockdown rules to resume manufacturing.
Merkel and Scholz are working on a post-crisis stimulus package to support the economic recovery. Proposals discussed by senior members of the ruling coalition include a higher cash incentive for buying electric cars.
Scholz said late on Sunday that the government would present the package late May or early June.
The VDA car lobby group wants any cash incentives to also include vehicles with combustion engines. But Merkel said last week that she wanted to combine the task of helping companies recover with the challenge of reducing carbon emissions.
Reporting by Paul Carrel and Thomas Seythal; Editing by Michael Nienaber