On Tuesday, the German stock market experienced a notable downturn as the DAX index fell by 0.96% at closing, primarily influenced by setbacks in automotive stocks stemming from a significant earnings guidance revision by BMW. The prestigious German luxury vehicle manufacturer witnessed a substantial decline of 11.15% following the announcement of its updated forecast for 2024, which was primarily driven by delivery halts and technical complications linked to the integrated braking systems on their vehicles.
The company also pointed to a decrease in demand from China as a contributing factor that adversely impacts sales volumes. In a statement, BMW highlighted, 'The delivery stops for vehicles that are not yet in the hands of customers will undoubtedly have a negative effect on worldwide sales during the latter half of the year.
The technical issues related to the integrated braking systems affect over 1.5 million vehicles, resulting in additional warranty costs that are anticipated to reach a high three-digit million amount in the third quarter.' This revelation has understandably raised concerns among investors. Moreover, Continental, the supplier of the affected braking systems, also faced scrutiny as its stock plummeted by 10.51% amid the continued fallout from the BMW recall, reflecting a broader anxiety within the automotive sector.
The implications of this situation are likely to reverberate through the supply chain, affecting not only the companies involved but also raising questions about consumer confidence in automotive safety and reliability. In parallel economic developments, data released by Germany's Federal Statistical Office offered further insight into current inflationary pressures within the country.
The finalized figures indicated that consumer prices surged by 1.9% year over year in August, a notable deceleration from the 2.3% increase reported in July. Core inflation figures revealed a modest rise of 2.8% year over year, slightly down from the 2.9% seen in the previous month. Destatis President Ruth Brand commented, 'The decline in energy prices contributed significantly to the slowdown of inflation in August compared to prior months, while the persistent increases in service prices, which remain above the average, have kept inflation elevated.' These economic indicators underscore a complex economic landscape in Germany as market participants navigate challenges both from within the automotive industry and overarching inflationary trends..