BMW has announced a large-scale recall of more than 1.5 million vehicles due to problems with the braking system. The decision also includes a temporary suspension of delivery of 320,000 vehicles that have not yet been delivered to customers, reports Komersant ukrainskyi
with reference to DW.
The main reason for these emergency measures was a malfunction of an electronic brake component that could affect brake performance. Continental, the parts supplier responsible for manufacturing these systems, confirmed the problem but stressed that braking performance would not fall below the legal safety standards.
The significant cost of fixing the problem resulted in high warranty costs, which affected the company’s financial performance. In particular, the cost of repairing and replacing the brakes is estimated to be in the “high triple-digit million euro range” for this quarter alone.
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As a result, BMW was forced to revise its financial forecasts. Initially, the company expected a slight increase in sales and profits in 2024, but now they are forecasting a slight decrease in deliveries. This is due not only to the recall but also to weak demand in the Chinese market, where, despite government stimulus measures, consumers remain passive. China remains a key market for BMW, and the decline in sales in this region creates additional challenges for the company.
BMW has adjusted its full-year margin forecast to a range of 6 to 7%, down from 8 to 10% previously. This reflects the seriousness of the impact of the recall and other problems on financial performance.
As a result of this news, BMW shares fell by almost 8% and Continental shares fell by 7%. Investors are concerned not only about the impact of this recall, but also about the overall instability of the global car market due to economic problems and weak demand in different regions.
It’s worth noting that this is not the first time BMW has recalled cars this year. Last month, the company announced the recall of 1.4 million vehicles in China due to airbag problems. These frequent technical malfunctions could undermine customer confidence in the brand, which will be another challenge for the German automaker in the coming months.