Sept 10 (Askume) – BMW (BMWG.DE) said demand was weak in its key markets China and the Continental.The automaker ‘s shares fell to a nearly two-year low on Tuesday after it cut its profit margin forecast for 2024 due to problems with the supply of braking systems .
BMW shares fell nearly 12%, expected to be the biggest intraday drop in four and a half years, while Continental stocks also tumbled more than 10%, dragging Germany’s benchmark DAX (.GDAXI) the most and dragging European stock markets lower.
BMW said delivery delays related to braking systems would negatively impact sales in the second half of the year, affecting more than 1.5 million vehicles.
BMW said about 1.2 million vehicles have been delivered to customers and can be checked for faults remotely via wireless software, but the remaining 320,000 vehicles have not yet been delivered.
Overall, BMW said this would result in warranty costs reaching the “high three digits” in the third quarter.
BMW has also expressed concern about persistent sluggish demand in China, which is hurting sales in the country. BMW joins a growing number of automakers facing difficulties in the world’s second-largest economy and largest auto market.
Citi analysts wrote: “It is hard to see positive catalysts for BMW as things are getting increasingly difficult in China, where BMW has higher exposure, and expectations for improvement in the second half of the year look somewhat optimistic.”
The German luxury carmaker said it now expects EBIT margins of 6% to 7% in 2024, compared with a previous forecast of 8% to 10%.
The group now expects deliveries to fall slightly in 2024, compared with its previous forecast of modest growth.
Continental said in a separate statement that only “a small portion” of the brake systems it produces and supplies to BMW would be replaced, partly because electronic components can fail.
The car supplier said it has set aside millions of euros for funding and believes the amount will cover the warranty period.
