German luxury carmaker BMW has announced a recall of vehicles due to a brake problem. As a result, the Bavarian company is adjusting its sales and profit expectations downward.

On Tuesday, BMW announced an extensive recall of vehicles and a delivery ban on cars that have not yet reached customers. The manufacturer also revised its profit and sales forecasts downward due to this issue and ongoing subdued demand in China.

BMW reported that brake system problems affect over 1.5 million cars, resulting in warranty costs in the high three-digit million range for the current quarter. As part of the recall, deliveries will be suspended for 320,000 cars that are still awaiting delivery to customers.

The Munich-based company indicated that this situation will likely lead to negative global sales figures in the latter half of the year. Continental, the parts supplier responsible for BMW's integrated braking system, noted that the issue involves an electronic component that might be impaired and will require replacement. However, Continental assured that the braking performance will still meet legal standards.

The BMW group, which includes Rolls Royce and Mini brands, now anticipates a slight decrease in vehicle deliveries this year compared to last year, whereas it had previously expected a modest increase. The impact of the recall, coupled with continued weak demand in China despite government stimulus measures, is negatively affecting sales volumes. BMW acknowledged that consumer sentiment remains weak.

Additionally, the automaker has revised its profitability guidance, now expecting margins of 6 to 7% for the year, down from the previous forecast of 8 to 10%. In response to the profit warning, BMW shares fell nearly 8%, while Continental shares dropped by 7%. Last month, BMW also recalled 1.4 million vehicles in China due to faulty airbags.