BMW has lowered its profit forecast for 2024 due to an ongoing recall affecting 1.5 million vehicles worldwide. The recall, which addresses issues with the braking system, is expected to impact sales and incur significant costs.
Recall impact and market challenges
BMW anticipates that the large-scale recall of 1.5 million potentially affected vehicles due to braking system problems will “lead to negative sales effects worldwide in the second half of the year.” The company expects additional costs “in the high three-digit million range” in the third quarter. Additionally, demand in China is currently low.
These factors have prompted BMW to revise its annual forecast for the 2024 financial year. Instead of a slight decline, the company now expects earnings before taxes to “decline significantly,” as stated in a company announcement. Furthermore, BMW anticipates a slight decrease in deliveries year-on-year, rather than the previously expected slight increase.
Understanding the recall numbers
The 1.5 million vehicles affected by the braking system issues is not a new recall, but rather a new figure. In April, BMW had already announced that ten model series needed to be checked due to these problems, including popular models like the X1 SUV, X5, and 5 Series. At that time, approximately 47,000 cars were affected in Germany alone. By the end of August, the recall was expanded to potentially affect 175,000 cars in Germany.
It’s important to note that “potentially” means not all of these cars have the technical problems, but they need to be checked for safety reasons. The 1.5 million figure represents the first time BMW has communicated the global scale of the recall, which is unusual as manufacturers typically only release figures relevant to specific markets.
This comprehensive disclosure helps provide a clearer picture of the recall’s scope and its potential impact on BMW’s operations and financial performance for the year.
