# BMW Expects Drop in Deliveries and Lowers Profit Forecast Due to Braking System Fault
## Introduction
In a recent announcement, the BMW Group revealed that it is expecting a decrease in deliveries this year and has consequently lowered its profit forecast. The reason behind this setback is a braking system fault that affects over 1.5 million cars worldwide. The faulty component, an integrated braking system (IBS) supplied by Continental, determines the amount of feel and feedback provided through the brake pedal. This article examines the impact of the braking system fault on BMW and Mini models, the extent of the recall, and the implications for the company’s profit margin.
## Widespread Impact and Recall
The braking system fault initially affected more than 80,000 BMW Group models earlier this year, leading to a recall. However, the recall was expanded as additional cases outside the original scope were identified, resulting in a halt in deliveries of Mini Cooper and Countryman models. The affected vehicles, built between June 2022 and the present, have defects in the anti-lock braking and stability control systems, which can potentially cause the power braking assistance to fail. This failure could lead to a loss of control for the driver.
## Safety and Measures Taken
Despite the braking system fault, the BMW Group assures customers that all affected cars remain safe to drive while awaiting a fix. The company is not aware of any accidents occurring globally due to the IBS. It is working closely with the Driver and Vehicle Standards Agency (DVSA) on a repair program. Cars that have not yet been delivered will be held by the company until the faulty components are replaced. The BMW Group emphasizes that even if the braking system issue occurs, braking is always possible.
## Global Impact and Profit Forecast
The BMW Group has identified over 1.5 million cars worldwide, including those already in customer hands and those yet to be delivered, fitted with the faulty parts that need replacement. However, the company has not disclosed the number of affected cars in the UK. As a result of the IBS fault, the BMW Group expects a slight decrease in deliveries across all its brands compared to the previous year’s figure of 2,555,341. This decrease, coupled with forecasted warranty costs in the “high three-digit million” range, has led to a revision of the profit margin forecast from 8-10% to 6-7%.
## Market Impact and Future Outlook
The announcement of the braking system fault and the subsequent adjustment of the profit forecast had a significant impact on the stock market. Shares in BMW dropped by 8% while Continental’s shares were down by 9% on September 10th. Furthermore, the BMW Group cited stifled demand in China, its biggest market, and ongoing competitive pressures across core markets as additional factors contributing to the adjusted output forecast. The third quarter of this year is expected to be the most dramatically impacted. The company will release full figures on November 6th.
## Conclusion
The BMW Group’s expectation of a drop in deliveries and the revision of its profit forecast due to a braking system fault highlights the importance of quality control and customer safety. The company’s swift response in expanding the recall and working on a repair program demonstrates its commitment to resolving the issue. However, the impact on the stock market and the challenges in key markets such as China indicate the need for continuous improvement in product quality and market competitiveness. The BMW Group’s ability to address these challenges and maintain its reputation for excellence will be crucial in navigating the automotive industry’s evolving landscape.