BMW AG has revised its financial outlook for 2024, citing significant challenges in its Automotive Segment. The German automaker announced today that the decision was prompted by delivery stops and technical actions related to the Integrated Braking System (IBS), which is supplied by a third-party vendor. These issues are expected to impact more than 1.5 million vehicles and incur warranty costs in the high three-digit million range in the third quarter.
As a result of the IBS-related problems, BMW is forecasting a decrease in worldwide sales during the second half of 2024, particularly for vehicles not yet in customer hands. Compounding the situation, muted consumer demand in China is further weakening the company’s overall sales outlook, despite stimulus measures from the Chinese government.
BMW has adjusted its guidance for the 2024 financial year as follows:
- Deliveries are now expected to see a slight decrease compared to the previous year (previously: slight increase).
- EBIT margin has been revised to a range of 6% to 7% (previously: 8% to 10%).
- Return on Capital Employed (RoCE) is forecast to be between 11% and 13% (previously: 15% to 20%).
- Free cash flow in the Automotive Segment is projected to be above €4 billion.
The company anticipates that the impact on earnings will be felt more acutely in the third quarter than in the fourth, and BMW’s Group Earnings before Tax are now expected to decrease significantly (previously: slight decrease).
In the Motorcycles Segment, BMW has also lowered its expectations, citing tough competition in key markets such as China and the USA. Deliveries are now forecast to remain at last year’s levels, with an EBIT margin between 6% and 7% (previously: 8% to 10%).
