The recall on Tuesday is expected to negatively impact global sales in the second half of 2024, according to BMW, which also oversees Rolls-Royce and Mini, The Straits Times reports.
BMW has announced a recall of approximately 1.5 million vehicles due to brake issues, which led the company to cut its 2024 outlook, causing its shares to plummet.
The recall on Tuesday is expected to negatively impact global sales in the second half of 2024, according to BMW, which also oversees Rolls-Royce and Mini, The Straits Times reports.
The financial hit for the third quarter will be in the "high three-digit million" euro range.
This adds to BMW’s recent challenges, including declining demand in China, and comes on the heels of Volkswagen considering factory closures in Germany.
A source told Agence France-Presse that the faulty braking systems were supplied by Continental.
Of the 1.5 million vehicles affected, 1.2 million have already been delivered and can be remotely inspected for faults via over-the-air updates, but 320,000 vehicles remain undelivered.
In a separate statement, Continental said that only a "small proportion" of its brake systems would need partial replacement due to a potentially impaired electronic component.
The supplier has set aside provisions in the mid double-digit million-euro range, which it believes will cover warranty costs.
In addition to the recall, BMW noted that weak demand in China is further affecting sales volumes, despite government stimulus measures.
As a result, the company now anticipates a slight decrease in vehicle deliveries for 2024, compared to its previous expectation of a slight increase.
In 2023, BMW, Rolls-Royce, and Mini delivered 2.56 million vehicles.
BMW also revised its profit margin outlook for 2024, lowering expectations to between 6% and 7%, down from its previous forecast of 8% to 10%.
Following the announcement, BMW’s shares dropped 9% on the Frankfurt Stock Exchange.
In August, BMW also recalled 1.4 million vehicles in China due to defective airbags. The company reported an 8.6% decline in net profit for the second quarter, dropping to €2.7 billion, with revenue down 0.7% to just under €37 billion, driven by weaker performance in China and higher production costs.