BMW has announced the recall of approximately 1.5 million vehicles worldwide due to problems with their braking systems.
This move is expected to have a “negative impact on the company’s sales for the remainder of the year”, said the group on Tuesday.
The financial impact in the three months to the end of September will be in the “high three-digit million” euro range, it said.
The German luxury carmaker has stated that the recall will affect vehicles across various models, including the BMW, Rolls-Royce, and Mini brands.
The issue is attributed to a faulty braking system supplied by Continental, according to a source close to the matter.
In addition to the recall, BMW has also revised its outlook for the year, predicting a slight decrease in vehicle deliveries compared to the previous year.
It did not give a precise figure. In 2023 deliveries of BMW, Rolls-Royce and Mini vehicles stood at 2.56 million.
The automaker also trimmed its guidance for profitability, and expects margins this year between six and seven percent, down from eight to 10 previously.
The company had initially forecast a slight increase in deliveries but has now trimmed its guidance due to muted demand in China and the impact of the recall.
“The ongoing muted demand in China is affecting sales volumes. Despite stimulus measures from the government, consumer sentiment remains weak,” BMW said in a statement.
The financial implications of the recall are expected to be significant, with BMW estimating a “high three-digit million” euro impact in the third quarter.
The company’s shares have already plummeted nine per cent on the Frankfurt Stock Exchange following the announcement.
Net profit at the group declined by 8.6 percent to 2.7 billion euros ($2.9 billion) between April and June, on the back of revenues down 0.7 percent to just under 37 billion euros.
This development comes on the heels of another recent recall in China, where BMW recalled 1.4 million vehicles due to faulty airbags.
The company has faced challenges in recent times, including a drop in net profit in the second quarter due to poor sales in China and higher manufacturing costs.