German premium carmaker BMW was forced to cut its annual targets on Tuesday, September 10, due to a faulty brake system that led to recalls and delivery halts affecting 1.5 million vehicles.
The problems concern the integrated braking system (IBS) of a supplier, whose name and technical details BMW has not revealed. According to Bloomberg, the German equipment manufacturer Continental is the only supplier of these systems to BMW, which equips its BMW, Mini and Rolls-Royce vehicles with them. This information was confirmed to Agence France-Presse (AFP) by people close to the Bavarian manufacturer.
Consequence of these recalls: In 2024, deliveries of BMW vehicles should now “slightly decrease” over the course of a year, when they were expected to increase slightly according to the initial forecast, after the record level of 2.56 million units reached in 2023.
This will also affect the group’s profitability, as the operating margin in the automotive business, its flagship division, is now expected to be in the range “from 6% to 7%”compared to 8% to 10% previously, according to a press release. The tax base of the group, which also supplies motorcycles, must now “take a step back clearly” and nothing else ” slightly “ As previously anticipated, BMW and Continental shares on the Frankfurt Stock Exchange lost more than 7 percent following the announcement.
New blow
Sales of the maker of the i6 electric sedan are also being penalized by still-weak demand in China, a key market, BMW said on Tuesday. “Despite government support measures, reluctance to buy continues”adds the group.
This is a further blow to the German car industry following the surprise announcement by Volkswagen in early September that it was preparing a drastic austerity plan, with possible factory closures and layoffs in Germany.
The position of German manufacturers is increasingly being challenged by the high-speed electrification of the Chinese car fleet, which is mainly benefiting local brands. BMW’s third-quarter results, due to be published in early November, will largely reflect the negative effects related to the current measures on vehicles, the group says.
