Technical problems with the braking system and weak demand in China are weighing on the quarterly results.
The BMW Group is facing significant headwinds in the current financial year: the Munich-based premium car manufacturer’s profit slumped by more than a third (> 33 %) in the past quarter compared with the same period last year. The main reasons for this development are costly delivery suspensions linked to a faulty braking system supplied by a component manufacturer, as well as persistently weak demand in the core Chinese market. Nevertheless, the group is sticking to its future investments in the „New Class“ model offensive.
Key figures at a glance
- Slump in earnings: a fall in consolidated net profit of more than 33 % compared with the same quarter last year.
- Technical problem: Worldwide recall and delivery stop for approximately 1.5 million vehicles due to issues with the Integrated Brake System (IBS).
- Strategic focus: Unwavering commitment to research and development investment for the next generation of electric vehicles (the „Neue Klasse“).
Main causes: brake recall and intense market competition in China
The primary burden factor in the reporting period stemmed from unforeseen quality issues with a supplied brake component. This not only necessitated extensive service campaigns for vehicles already delivered but also temporarily forced the group to halt deliveries of new cars not yet handed over. The consequences were noticeable delays in revenue and profit, as well as additional operational burdens.
Alongside this, continued consumer restraint in the Chinese market is impacting the entire industry. Intensified price competition and the strengthening of local competitors in the electric vehicle segment are noticeably putting pressure on margins in the East Asian core market.
Sticking to the electric strategy and the „New Class“
Despite the short-term damper on the key figures, the management of the BMW Group emphasises that the strategic direction remains intact. Preparations for the launch of the „Neue Klasse“ – the next generation of fully electric BMW models from 2025/2026 onwards – are continuing according to plan.
„The current challenges demand operational discipline from us. The expenditure on the quality assurance of our vehicles is our top priority. At the same time, we will not be diverted from our clear future course by short-term market disruptions – the transformation towards sustainable and digital mobility will be consistently continued.“
— Statement from Senior Management
Full-year outlook adjusted
Due to special effects, the BMW Group has revised its forecast for key financial figures for the full year. The EBIT margin in the automotive segment is expected to be lower than originally calculated. However, analysts and industry experts view the consistent quality measures as a necessary step to secure customer trust in the long term.
About the BMW Group
The BMW Group With its brands BMW, MINI, Rolls-Royce, and BMW Motorrad, it is the world's leading premium manufacturer of automobiles and motorcycles and provider of high-quality financial and mobility services. The company operates a global sales network in over 140 countries and manufactures at 30 production sites worldwide.