German automaker BMW said Tuesday it was recalling about 1.5 million vehicles due to problems with their brakes, prompting the company to cut its outlook for the year and lower the guidance for profitability.
The carmaker said it expects its margin of earnings before interest and taxes (EBIT) to be between 6% and 7% for 2024, having previously guided for a figure between 8% and 10%.
The company’s shares slipped 8% at 11:28 a.m. GMT following the announcement, dragging Mercedes-Benz, Volkswagen, Stellantis, Porsche Holding and Renault down between 4% and 5%.
BMW said the downward revision was triggered partly by headwinds in its core automotive segment resulting from delivery stops and technical actions linked to the Integrated Braking System (IBS), which is provided by Continental.
In a statement, Continental said that only a “small proportion” of the braking systems it produces and supplies to BMW will be partially replaced because of an electronic component that may be impaired.
Its shares were down 6%.
BMW also flagged ongoing muted demand in China affecting sales in the country, joining the group of automakers facing difficulties in the world’s second-biggest economy.
The company also forecasts a slight decrease in deliveries, it said, without providing a specific figure, after having previously expected an increase.
The technical actions related to the integrated braking systems impact over 1.5 million vehicles and will result in additional warranty costs in a high three-digit million amount in the third quarter, the company added.
