BMW announces recall of 1.5M cars due to technical measures related to IBS
Date
9/11/2024 9:20:24 AM
(MENAFN) On Tuesday, BMW, the Munich-based automaker, announced a significant global recall of 1.5 million vehicles due to necessary "technical measures" related to the Integrated Braking System (IBS). This recall has prompted the company to revise its profit forecast for the current year. BMW disclosed that its expected Group result before taxes will experience a substantial decline, a departure from the previously anticipated slight decrease. The revised forecast, detailing the expected EBIT margin and return on capital employed (RoCE), will be provided in BMW’s Quarterly Statement for the period ending September 30, 2024, scheduled for release on November 6, 2024.
The updated forecast projects that BMW’s EBIT margin for 2024 will fall between 6 percent and 7 percent, a reduction from the earlier estimate of 8 percent to 10 percent. Similarly, the RoCE is now expected to range from 11 percent to 13 percent, down from the previous forecast of 15 percent to 20 percent. This downward adjustment reflects the financial impact of the recall and associated technical issues, affecting the company's overall profitability.
BMW’s difficulties echo those of Volkswagen AG, another major German car manufacturer. On September 2, Volkswagen’s Board of Management revealed substantial restructuring plans, including the revocation of a long-standing employment guarantee and mass redundancies within its core business. The company is facing high costs and lower returns compared to its subsidiaries, such as Škoda, Seat, and Audi. Volkswagen has introduced a savings program aimed at enhancing earnings by €10 billion (USD11.03 billion) by 2026, which includes a 20 percent reduction in administrative personnel costs.
Volkswagen’s restructuring has faced significant opposition from its labor union and works council. The IG-Metall trade union, led by Thorsten Groger, has criticized the plans as a severe threat to jobs, locations, and collective agreements. Volkswagen, which has never closed a production plant in Germany since its establishment in 1949, currently operates eleven production facilities in the country, including six for vehicle assembly and five for components, employing around 120,000 people.
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