BERLIN (Reuters) -Sentiment in Germany's beleaguered automotive sector improved considerably in October, although it remained clearly in negative territory, a survey showed on Wednesday.

The Ifo institute's business climate index for the sector that is facing chip supply problems, high tariffs and competition from China improved by 8.4 points to -12.9 points.

"Business expectations in the automotive industry in particular are markedly brighter. Although still negative, they are higher than they have been for two years," said Ifo's sector analyst Anita Woelfl in a statement.

The index measuring the sector's expectations leaped by 18.2 points to -3.9 in October, with companies citing a strong rise in demand as well as high capacity utilisation in production.

Export expectations also rose to 18.0 points in October and once again slightly exceeded the comparatively high level in the previous month of 16.7 points.

Carmakers have been facing a supply crunch since the Chinese-owned but Netherlands-based Nexperia, which makes billions of simple but ubiquitous chips for cars, was seized by the Dutch government in late September.

(Writing by Miranda MurrayEditing by Madeline Chambers)