BMW has announced a recall of 1.5 million vehicles due to defective brake systems, which is expected to negatively affect global sales in the second half of the year. The company, which includes the Rolls-Royce and Mini brands, stated that the financial impact for the third quarter will be in the “high three-digit million” euro range.
This recall adds to the struggles facing BMW, which has already been grappling with weakening demand in China. The broader German auto industry is also under pressure, with Volkswagen recently considering the drastic measure of closing factories in Germany due to similar challenges. According to a source familiar with the situation, the faulty brake system was supplied by Continental.
In addition to the recall, BMW acknowledged that slow demand in China is further affecting its sales. “Despite government stimulus measures, consumer confidence remains low,” the company said in a statement.
Based in Munich, BMW now expects a slight decrease in vehicle deliveries for the year, having previously predicted a small increase. While it did not provide a specific number, BMW’s 2023 deliveries across its brands—BMW, Rolls-Royce, and Mini—totaled 2.56 million vehicles.
The company also revised its profit expectations, projecting margins between six and seven percent for the year, down from the earlier forecast of eight to ten percent. Following this announcement, BMW’s shares dropped by nine percent on the Frankfurt Stock Exchange.
Last month, the automaker recalled 1.4 million vehicles in China due to defective airbags, according to the country’s market regulator.
BMW’s second-quarter financial performance was also affected, with net profit falling by 8.6 percent to 2.7 billion euros ($2.9 billion), while revenue dipped by 0.7 percent to just under 37 billion euros, largely due to poor sales in China and increased manufacturing costs.
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