BMW has revised its profitability forecast for 2024, now expecting an EBIT margin of 6% to 7% instead of the previously anticipated 8% to 10%.
This adjustment is due to technical problems, including delivery stops caused by issues with the Integrated Braking System (IBS) from Continental, and weak demand in the crucial Chinese market. The announcement led to an 8% drop in BMW’s shares and a 4-5% decline in other major car manufacturers’ shares.
The technical issues with the IBS, which affects over 1.5 million vehicles, will result in additional warranty costs and impact BMW’s performance in the third quarter. Continental, the supplier of the braking system, reported that only a small portion of its systems will be replaced due to an electronic component fault.
In addition to the technical setbacks, BMW is also facing reduced demand in China, the world’s second-largest automotive market. The company has updated its delivery expectations, forecasting a slight decrease instead of an increase.