German auto-sector confidence falls 4.8 points in May to −23.8 as Iran crisis and US tariffs hit outlook
Business confidence in Germany's auto sector fell 4.8 points to minus 23.8 in May, the Ifo Institute reported, with the forward expectations index nearly halving from minus 15.3 to minus 30.7. Companies reporting shortages of key intermediate products jumped to 9.3 percent in April from 1 percent in March, with helium imports from Qatar — used in chip production, airbags and battery testing — flagged as the central supply risk. The deterioration coincides with President Donald Trump's announcement that EU vehicle tariffs will rise from 15 to 25 percent this week.
Business confidence in Germany's auto industry dropped sharply in May, with the Ifo business climate index for the sector falling 4.8 points to minus 23.8 from minus 19 in April, the Munich-based Ifo Institute reported. The forward-looking business expectations index fell almost in half to minus 30.7 from minus 15.3 a month earlier. Current-conditions readings showed only limited improvement, the institute said, but expectations for the coming months "deteriorated markedly."
Supply pressure is the most concrete driver in the data. The share of companies reporting shortages of key intermediate products climbed to 9.3 percent in April from 1 percent in March. Helium gas — used in chip production, airbag manufacture, metal processing, and battery leak-testing — is at the centre of those concerns. The German Mineral Resources Agency estimates the European Union sources around 40 percent of its helium imports from Qatar, with limited alternative supply routes if Gulf shipping is disrupted.
"The Iran crisis is adding pressure to an already strained sector facing weak demand and supply bottlenecks," said Anita Wolfl, an expert at Ifo's Center for Industrial Organization and New Technologies. Wolfl said helium remains difficult to substitute in key industrial processes, making any disruption a significant risk for manufacturers and suppliers. Ifo separately warned that rising insecurity and energy costs could further dampen new-vehicle demand inside Germany.
The trade picture is moving in the same direction. President Donald Trump said tariffs on EU vehicle imports would rise this week to 25 percent from 15 percent. Hildegard Muller, president of the German Association of the Automotive Industry (VDA), said the higher duties would impose significant costs on European automakers already operating in a difficult environment and would ultimately raise prices for US consumers.
The Ifo reading lands against a German economy that grew 0.3 percent in the first quarter of 2026 despite Iran-war headwinds, and against polling reported on 3 May showing a majority of Germans expect the governing coalition to collapse before the 2029 election.