The BMW Group has had to adjust its forecast for the year due to a brake recall affecting more than 1.5 million vehicles worldwide. A faulty integrated braking system supplied by Continental AG was first recalled in February, but since then additional cases have been identified, according to an Associated Press report.

The affected vehicles were made between June 2022 and August 2024.

The affected models include select X models (excluding the X3 and X4), the 5- and 7-Series, the Rolls-Royce Spectre, and the Mini Cooper and Countryman.

The markets in which these units have been recalled include China, the US, Germany, Korea, and France, with 1.2 million already delivered to customers (the remaining units are either with BMW or in dealer stocks).

BMW has developed a diagnostic software to detect the brake fault before it occurs, with the system alerting the driver if the fault occurs and bringing the car to a dealership for a free system replacement.

Should the fault occur, it will trigger a “safe mode” that ensures the brakes will still function, albeit requiring more force to engage.

While this recall is covered under warranty, it will cost BMW “a high three-digit-million amount” in the third quarter as well as impacting deliveries. Low demand in China is also seen to affect overall sales volumes.

Thus, BMW has lowered its EBIT (earnings before interest and taxes) margin to 6-7% from a previous forecast of 8-10%. The return on capital employed (ROCE) has also been adjusted to 11-13%, significantly lower than a previously forecasted 15-20%.

However, free cash flow for the company’s automotive segment is estimated to be above €4 billion for the 2024 financial year. Share prices for BMW fell more than 11%—Continental fell over 10%—as a result of the recall.