German automaker BMW announced on Tuesday that it has had to lower its annual sales targets due to a defective braking system that has resulted in the recall and halt of deliveries for 1.5 million vehicles.
Defect Leads to Disruptions
This recall affects a wide range of models, including those under the BMW, Mini, and Rolls-Royce brands, according to RTS.
The issue centers around the Integrated Braking System (IBS) from a "supplier" that BMW has not publicly identified. However, sources from Bloomberg suggest that the supplier is Continental, the sole provider of these braking systems to BMW.
The defect has led to significant disruptions in production, raising concerns about the company's operational efficiency and profitability.
As a direct consequence of the recalls, BMW now expects vehicle deliveries for 2024 to "slightly decrease" compared to the previous year, a shift from earlier predictions that anticipated a modest increase. This follows a record delivery of 2.56 million units in 2023.
Another Blow to German Automotive Industry
The situation is also expected to impact the company's profitability. BMW has revised its operational margin forecast for its automotive division to between 6% and 7%, down from the previously anticipated range of 8% to 10%.
This development is yet another blow to the German automotive industry, which has been grappling with various challenges. Earlier this month, Volkswagen announced plans for drastic cost-cutting measures that may include factory closures and layoffs in Germany.
The rapid electrification of the Chinese automotive market poses additional pressure on German manufacturers, who are increasingly questioned about their competitiveness in a rapidly changing industry.
