- BMW has revealed their Integrated Braking System recall impacts more than 1.5 million vehicles.
- This is expected to cost the automaker nearly a billion euros in additional warranty work.
- The company is also facing a slowdown in China as well as issues with BMW Motorrad.
BMW delivered a gut punch to investors as they announced plans to revise their financial guidance due to a massive brake recall that impacts more than 1.5 million vehicles globally. In particular, the automaker said their will be “additional warranty costs in a high three-digit million amount in the third quarter.”
That suggests the company will take a hit well in excess of €500 ($550 / £421) million and BMW also noted stop sale orders will have a “negative worldwide sales effect in the second half of the year.” If that wasn’t bad enough, the automaker also mentioned “muted demand in China” as well as weak consumer sentiment.
More: BMW Recalls Nearly 80,000 Models Over Potential Loss Of ABS
Given all of these developments, BMW is now expecting a slight sales decrease for the year instead of a slight increase. The automaker also lowered their earnings before interest and taxes (EBIT) forecast to a more modest 6% to 7%.
Unfortunately, the problems aren’t just on the automotive side as BMW Motorrad is facing an “ongoing competitive situation across core markets” including the United States and China. The company said this is having a “major impact on volume and price realization,” which will likely result in flat sales for the year.
BMW saved the big kicker for last, as they revealed group earnings before tax will “decrease significantly.” The company was already expecting a “slight decrease,” but things have gotten significantly worse since that original forecast.
The developments helped to push BMW stock down to $77.10 on Tuesday. That’s down 11.43% from Monday’s close of $87.05.
