BMW has reduced its profit margin forecast for the year, citing weak demand in China and issues related to a braking system supplied by Continental.
The announcement on Tuesday caused BMW’s shares to drop to their lowest point in nearly two years.
The German luxury carmaker said delays in deliveries caused by problems with the braking system would negatively impact sales in the second half of the year.
More than 1.5 million vehicles are affected by the issue, according to BMW. Of these, around 1.2 million cars have already been delivered to customers and can be remotely checked for faults via software updates.
However, the remaining 320,000 vehicles cannot be handed over to buyers for now.
As a result, BMW expects to face significant costs, estimating “a high three-digit-million amount” in warranty expenses during the third quarter.
BMW has also revised its earnings forecast, now predicting a profit margin between 6% and 7% for 2024, down from its previous forecast of 8% to 10%.
Continental, the car parts supplier, issued a separate statement, saying only a “small proportion” of the braking systems it provides to BMW would need partial replacement due to a possible fault in an electronic component.
In addition to the braking system issue, BMW highlighted ongoing challenges in China, its key market. Despite government stimulus measures, consumer demand in the world’s largest auto market remains weak, further affecting BMW’s sales outlook.
Email your news TIPS to Editor@Kahawatungu.com — this is our only official communication channel
