BMW is navigating what it calls "extraordinary challenges" as its profits took an 84% plunge in the third quarter, impacted by weak sales in China and a large-scale vehicle recall. The German automaker's net profit fell to 476 million euros ($512 million) from July to September, missing market expectations. Total vehicle deliveries dropped 13% year-over-year, with sales in the crucial Chinese market down by nearly 30%. Overall, BMW’s revenue slipped 16%, totaling 32.4 billion euros.
The profit hit was compounded by a costly recall involving 1.5 million vehicles due to a brake system defect supplied by Continental, although BMW noted that brake performance was not compromised. The recall, however, affected BMW’s quarterly results by hundreds of millions of euros and led the company to revise its full-year outlook, anticipating lower delivery volumes and slimmer profit margins.
China has been a critical market for BMW, representing roughly a third of its sales. However, the ongoing economic slowdown and rising competition from local electric vehicle manufacturers are posing new risks for the German automaker, mirroring struggles faced by other European carmakers.
Despite these setbacks, CEO Oliver Zipse remains cautiously optimistic, aiming for a stronger close to the year. "In the fourth quarter, we are back on track for stronger earnings to meet our annual targets, despite planned high upfront expenditures,” he stated. The company has positioned itself for a rebound, but it remains to be seen if BMW can navigate the challenges of shifting market dynamics and operational hurdles as it closes out the fiscal year.
