BMW recalls 1.5 million vehicles due to brake problems

The brake system responsible for the problem was supplied by Continental, a source said. Shares in the automaker fell 9% on the Frankfurt Stock Exchange following the recall announcement.

BMW said the recall would have a “negative impact on worldwide sales in the second half of the year”. It forecast the financial impact in the three months to the end of September would be in the “hundreds of millions” of euros.

BMW expects deliveries to fall slightly this year compared with last year, despite previously forecasting a slight increase. The company has also cut its profit target and expects profit margins this year to be 6-7%, down from 8-10%.

This is further bad news for BMW, which has been hit by weak demand in China, as well as for the wider German auto industry after Volkswagen last week also considered the unprecedented step of closing its German plants.

Last month, BMW also had to recall 1.4 million vehicles in China due to airbag defects.

BMW reported an 8.6% drop in second-quarter net profit to 2.7 billion euros ($2.9 billion) as revenue fell 0.7% to just under 37 billion euros, hit by weaker business in China and higher production costs.