The Munich-based car manufacturer BMW has cut its forecast due to problems with a braking system from supplier Continental and the ongoing slump on the Chinese market. A slight decline in sales is now expected, the company announced on Tuesday. The Munich-based company had previously predicted a slight increase. The profit margin in the car business, which is important for BMW, is now expected to be six to seven percent, lower than the eight to ten percent previously forecast.
BMW shares plummeted on the stock market and were at the bottom of the DAX with a loss of more than nine percent. Continental shares lost 8.5 percent.
Braking system may not work properly
The reason for the lowered forecast is problems with Continental’s Integrated Braking System (IBS), which may not be working properly and therefore needs to be checked. According to BMW, more than 1.5 million cars affected. Of these, around 1.2 million have been handed over to customers. In these cars, remotely installed diagnostic software can detect the fault, which then has to be repaired in a workshop. Around 320,000 vehicles are still with the manufacturer and cannot be delivered for the time being. This will dampen sales in the second half of the year, explained BMW.
As a company spokesman told Bild announced that the brake problem affects numerous models. Among them are the BMW 2er Active Tourer, 5er, 7er, X1, X5 and X6. The MINI Cooper and the MINI Countryman are affected, as well as the Rolls-Royce SpectreAccording to the spokesman, there is no acute danger for BMW drivers. The brakes are functional and braking is possible at any time.
The company estimated the additional costs to be in the high three-digit million range. However, BMW is likely to demand compensation in order to be able to pass on at least part of the costs to Continental. It is unclear how high the additional costs for the Munich-based company will ultimately be.
Brake booster could fail
A Conti spokesperson explained the error in more detail: In individual cases, the brake booster may fail due to an electronic component being damaged. In this case, more force is needed to brake. “Based on the systems that have already been replaced and our current knowledge, we continue to assume that only a small proportion of the brake systems delivered actually need to be replaced,” he said.
But it is not just the difficulties with the component that are causing problems for BMW. The Chinese market is also not growing as expected, the company explained. Despite government support measures, buyers are still reluctant to buy, it said. Recently, other German car manufacturers such as Mercedes and Volkswagen have also felt the effects of the weakness in China.
As a company spokesperson told BILD, the brake problem affects numerous models. These include the BMW 2 Series Active Tourer, 5 Series, 7 Series, X1, X5 and X6. The MINI Cooper and MINI Countryman are also affected, as is the Rolls-Royce Spectre. According to the spokesperson, there is NO acute danger for BMW drivers. The brakes are functional and braking is possible at any time.