Recently, BMW announced that it is recalling approximately 1.5 million vehicles due to brake issues, which has led the company to revise its annual outlook downward, causing a significant drop in its stock prices.

The recall is expected to have a "negative worldwide sales effect in the second half of the year," according to the automaker, which also encompasses the Rolls-Royce and Mini brands.

The financial repercussions for the quarter ending in September are anticipated to be in the "high three-digit million" euro range.

This development adds to the challenges faced by BMW, which is experiencing declining demand in China, and it reflects broader concerns within the German automotive industry, particularly after Volkswagen indicated last week that it is considering the unprecedented move of shutting down factories in Germany.

A source familiar with the situation revealed that the braking system involved in the recall was supplied by Continental.

In addition to the recall's impact, BMW noted that "ongoing muted demand in China is affecting sales volumes," with consumer sentiment remaining weak despite government stimulus efforts.

The Munich-based company now predicts a slight decline in vehicle deliveries this year compared to the previous year, having initially anticipated a slight increase, although it did not specify exact figures.

In 2023, deliveries of BMW, Rolls-Royce, and Mini vehicles totaled 2.56 million.

The automaker has also adjusted its profitability guidance, now expecting margins to be between six and seven percent, down from the previous estimate of eight to ten percent.

Following this announcement, BMW's shares fell by nine percent on the Frankfurt Stock Exchange. Additionally, last month, BMW recalled 1.4 million vehicles in China due to defective airbags, as reported by the country's market regulator.

The company also experienced a decline in net profit during the second quarter, attributed to weaker performance in China and rising manufacturing costs, with net profit dropping by 8.6 percent to 2.7 billion euros ($2.9 billion) from April to June, while revenues decreased by 0.7 percent to just under 37 billion euros.