BMW has announced a major recall of approximately 1.5 million vehicles due to brake issues, significantly impacting its financial outlook for the year. This move, affecting the luxury carmaker's BMW, Rolls-Royce, and Mini brands, has led to a sharp decline in the company's share prices.
The recall is expected to have a "negative worldwide sales effect" in the latter half of the year, with financial repercussions projected to be in the "high three-digit million" euro range for the three months ending September. This follows recent challenges, including weakening demand in China and potential factory closures by Volkswagen, which has further strained the German auto industry.
The braking system at the center of the recall was supplied by Continental. BMW indicated that the recall, coupled with ongoing sluggish consumer sentiment in China despite government stimulus measures, is contributing to decreased sales volumes.
As a result, BMW has revised its vehicle delivery forecast for the year, now anticipating a slight decline rather than the previously expected increase. The company also adjusted its profitability outlook, predicting margins of 6% to 7%, down from the earlier forecast of 8% to 10%. BMW's shares dropped 9% on the Frankfurt Stock Exchange following the announcement.
In addition to this recall, BMW had previously recalled 1.4 million vehicles in China due to defective airbags. The company's net profit for the second quarter fell by 8.6% to €2.7 billion, with revenues down 0.7% to nearly €37 billion, reflecting the ongoing challenges in the market.