BMW's third-quarter profit experienced a significant decline year over year as braking system troubles and persistent demand weaknesses in China resulted in slower automobile deliveries. The luxury car manufacturer disclosed an attributable profit of 389 million euros for the three months ending on September 30, a stark contrast to last year's profit of 2.68 billion euros.
Revenue also saw a sharp decline, dropping to 32.41 billion euros from 38.46 billion euros. The primary cause of this profit slump was delivery interruptions tied to a defective integrated brake system component supplied to the company, which led to a 13% reduction in car deliveries, totaling 540,881 units.
Motorcycle deliveries also fell by 3.2%, with a total of 50,364 units shipped. Furthermore, earnings were under pressure due to increased warranty costs associated with the technical issues linked to the braking system, which are expected to resolve shortly. The German automaker recorded growth across all divisions except for the automotive sector, where revenue dropped by 13.2%, totaling 27.85 billion euros.
In China, where weak consumer confidence adversely affected sales volumes, the decline in regional deliveries was evident, despite the Chinese government implementing stimulus measures. Looking to the future, BMW remains committed to its 2024 targets, albeit expects group pre-tax profit to "decrease significantly" year over year due to lower car deliveries and subdued demand in the Chinese market. "Given the Q3 Auto EBIT miss and the fact that consensus was at the top end of the guide range, we could see Q4 numbers come lower," analysts at RBC Capital Markets mentioned in a report.
"'24 is less important in our view. Focus is really on '25 prospects," they further commented. In response to this news, the stock price dropped by over 4% during midmorning trading..