Germany’s auto industry business climate fell from minus 15.7 points in February to minus 18.7 points in March, according to the Munich-based ifo Institute on Tuesday.

Germany’s business climate in its auto sector deteriorated last month amid firms reporting a worse operating environment, while expectations point towards a slowdown in sector-wide layoffs.

German manufacturers reported their immediate business situation to be far worse than in February, but they also raised their outlook for the coming months, said Anita Wolfl, industry expert at ifo.

The German automotive sector’s order backlog posted ongoing improvement despite still remaining in the red, reaching minus 13.5 points in March, following a steady upward trajectory since September 2025.

Meanwhile, export expectations fueled some optimism for the struggling industry, rising for the fourth consecutive month to 30.7 points, the data showed.

The massive wave of layoffs left its mark on the German auto sector since 2022, but layoffs seem to be stabilizing as of last month.

The ifo report showed employment expectations in the auto sector rose from minus 44 points in February to minus 19.8 points in March, marking a significant improvement.

Wolfl said the employment stabilization has already been reflected in official government data, such as a renewed rise in job listings for auto-related positions in the first quarter of the year.