Auto Weekly: That was the week

Research evidence excerpt

Auto Weekly: That was the week

Deutsche Bank

Research

Europe Industry Date

26 June 2026

Auto Weekly Market Update

That was the week

Tim Rokossa

Figure 1: Will Germany's trade balance with China follow Head of European Equity Research

the real exchange rate? Christoph Laskawi

Research Analyst

Nicolai Kempf

Edison Yu

Bin Wang

Nikita Papaccio

Winnie Dong

Laura Li

Research Associate

Source : Deutsche Bank Research, Haver Analytics, Deutsche Bundesbank, China National Bureau of

Statistics. For Q2 we estimate the real exchange rate using PPI data up to May and the trade balance using

trade data up to April. James Mulholland, CFA

German manufacturing has suffered a considerable 'China shock' in recent years:

Wei Huang

relative price competitiveness has declined by up to 40% since the pandemic.

Producer prices have diverged sharply and failed to be offset by the FX rate. The

sharp decline in Germany's trade balance with China since the pandemic is largely Bodhie Fernando

a result of this fundamentally unjustified appreciation in the real FX rate. As we Research Associate

noted in spring, however, the tide began to turn late last year; it has continued to do Mira Wiegratz

so in recent months. Although producer prices have risen more in Germany than in Research Associate

China on the back of the energy price shock, China's nominal FX rate keeps

appreciating from undervalued levels—slowly but gradually. On our estimates, this Excerpted from research published titled,

"Germany Schnappschuss: The tide is

will not have made an appreciable dent in Germany's trade deficit in Q2, possibly

turning"

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