BMW shares were flat on Wednesday after slumping 11% to a four-year low on Tuesday after it acknowledged it would have to recall 1.5 million vehicles over its braking system, leading to a downgrade of its 2024 outlook. The problem at BMW adds uncertainty to the European auto industry, whose plants produced at less than half capacity last year.
This Wednesday, after 10:45 am, the shares of the German luxury car manufacturer were showing a modest increase of 0.78%. The failure of the BMW braking system is caused by an electronic component supplied by a German supplier, Continental, whose shares fell another 0.2% this Wednesday after having fallen more than 10% on Wednesday.
The error will prevent the German brand from reaching the 17.1 billion euros in profits it had initially forecast for 2024 and will keep its profit margin at 6%, compared to 9.8% achieved in 2023. BMW estimates that 1.5 million units are affected. About 1.2 million of these vehicles have already been delivered to customers and can be checked remotely using specific software, but the remaining 320,000 vehicles cannot be delivered at this time, BMW said.
Half throttle
This new problem adds uncertainty to the European auto industry. The news comes after, a few days ago, German Volkswagen announced unprecedented cost-cutting measures, including the possibility of closing two factories in Germany, given the competition concerns with the strength of Tesla and the threat of Chinese electric models.
The problems are common across the European auto industry. Last year, about a third of the largest manufacturing plants of Europe’s five largest automakers (BMW, Mercedes-Benz, Stellantis, Renault and Volkswagen) were underutilized, producing less than half the vehicles they can assemble, according to data from Just Auto consulted by Bloomberg.
Annual car sales in Europe are stagnating at around 3 million units, below pre-pandemic levels. Last year, Tesla’s Model Y became the best-selling car in Europe, with more than 250,000 registrations. And European automakers are now facing the strength of Chinese manufacturers like BYD.
This Wednesday, the President of the Government, Pedro Sánchez, asked, during his official visit to China, to “reconsider” the position of the Member States of the European Union and the European Commission on the tariffs announced in July on electric cars manufactured in China. the Asian giant, which has planned investments in the automotive industry in Spain. Sánchez asked to be “constructive” and to seek a solution involving a compromise between the EU and China.
