BMW recalls 1.5 million cars over brake issues, cuts outlook for 2024
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BMW reported a drop in net profit in the second quarter, due to the impact of poorer business in China and higher manufacturing costs.
PHOTO: AFP
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FRANKFURT – BMW said on Sept 10 it was recalling about 1.5 million vehicles due to problems with their brakes and cut its outlook for 2024, sending the German luxury carmaker’s shares tumbling.
The recall will have a “negative worldwide sales effect in the second half of (2024)”, said the group, which also includes the Rolls-Royce and Mini brands.
The financial impact in the three months to the end of September will be in the “high three-digit million” euro range, it said.
It was further bad news for BMW, which has been hit by weakening demand in China, and for the broader German car sector after Volkswagen said last week it was mulling over the unprecedented step of closing factories in Germany.
The braking system behind the problems was supplied by Continental, a source close to the matter told Agence France-Presse.
Around 1.2 million of those vehicles have been already delivered to clients and can be remotely checked for faults via over-the-air software, but the remaining 320,000 vehicles cannot be handed over for now, BMW said.
Continental in a separate statement said that only a “small proportion” of the braking systems it produces and supplies to BMW would be partially replaced due to an electronic component that it said is possibly impaired.
The car supplier said it has set aside provisions in the mid double-digit million euro range, and that it assumes that this amount will cover the warranty.
As well as the impact of the recall, “the ongoing muted demand in China is affecting sales volumes. Despite stimulus measures from the government, consumer sentiment remains weak”, BMW said in a statement.
Munich-headquartered BMW now expects a slight decrease in vehicle deliveries in 2024 compared to 2023, having previously forecast a slight increase.
It did not give a precise figure. In 2023, deliveries of BMW, Rolls-Royce and Mini vehicles stood at 2.56 million.
The carmaker also trimmed its guidance for profitability, and expects margins in 2024 at between 6 per cent and 7 per cent, down from 8 per cent to 10 per cent previously.
The carmaker’s shares were down 9 per cent on the Frankfurt Stock Exchange after the announcement.
In August, BMW also recalled 1.4 million vehicles in China due to faulty airbags, the country’s market regulator announced.
BMW reported a drop in net profit in the second quarter, due to the impact of poorer business in China and higher manufacturing costs.
Net profit at the group declined by 8.6 per cent to €2.7 billion (S$3.9 billion) between April and June, on the back of revenues down 0.7 per cent to just under €37 billion. AFP
