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BMW It cut its 2024 profit margin forecast on Tuesday due to sluggish demand in the key Chinese market and issues related to braking systems supplied by suppliers. Continental Airlinessending the automaker’s stock price to a nearly two-year low.
Affected by this news, the share prices of BMW and Continental fell by about 9%, becoming the stocks with the largest decline in Germany’s benchmark DAX index, which also dragged down European automobile stocks.
BMW said delivery delays related to braking systems will have a negative impact on sales in the second half of this year, adding that more than 1.5 million vehicles were affected.
BMW said that about 1.2 million of the vehicles have been delivered to customers and faults can be checked remotely through wireless software, but the remaining 320,000 vehicles cannot be handed over for the time being.
Overall, BMW said it will incur “high three-digit warranty costs” in the third quarter.
The German luxury carmaker said it expected 2024 EBIT margins to be between 6% and 7%, compared with previous guidance of between 8% and 10%.
Deliveries are now expected to fall slightly in 2024, compared with the group’s previous forecast of modest growth.
Continental said in a separate statement that only a “small number” of the brake systems it produces and supplies to BMW will be partially replaced due to possible damage to electronic components.
The car supplier said it had set aside millions of euros in provisions and assumed the amount would be used for warranties.
BMW also noted that continued sluggish demand in China has affected sales there, joining the ranks of automakers facing difficulties in the world’s second-largest economy and the world’s largest car market.
“Despite government stimulus measures, consumer confidence remains weak,” BMW said in a statement.
