BMW downgrades 2024 outlook over brake issues and weak demand in China
BMW cut its profit margin forecast for the year Tuesday due to sluggish demand in China, its key market, and problems related to a braking system supplied by Continental, sending the carmaker's shares close to a two-year low.
The German luxury carmaker said delivery hold-ups linked to the braking system would have a negative effect on sales in the second half of the year, adding that more than 1.5 million cars were affected.
Around 1.2 million of those vehicles have been already delivered to clients and can be remotely checked for faults via over-the-air software, but the remaining 320,000 vehicles cannot be handed over to the buyers for now, BMW said.
Overall, BMW said, it will incur "a high three-digit-million amount" in warranty costs in the third quarter as a result.
The company said it expects its margin on earnings before interest and tax to be between 6% and 7% for 2024, having previously forecast a figure between 8% and 10%.
People pose and take photos with the new Mona M03 electric vehicle by Chinese EV manufacturer XPeng, during its launch in Beijing on August 27, 2024.
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In a separate statement, car parts maker Continental said that only a "small proportion" of the braking systems it produces and supplies to BMW would be partially replaced due to an electronic component that it said is possibly impaired.
BMW also flagged ongoing muted demand in China affecting sales in the country, joining the automakers facing difficulties in the world's second-biggest economy, which is also the world's largest auto market.
"Despite stimulus measures from the government, consumer sentiment remains weak," BMW said.
