BMW’s Profits Drop 84%, Hit By Slumping China Sales, Recall

In the most recent indication of the crisis engulfing the European auto industry, German luxury carmaker BMW said it faced "extraordinary challenges" as its quarterly profits fell as a result of declining Chinese sales and a vehicle recall.
BMW's net profit fell 84 percent between July and September due to the crisis, reaching $512 million, which was even lower than analysts had predicted.

The automaker, which also produces Mini and Rolls-Royce, saw a 13% decline in vehicle deliveries compared to a year ago, and a roughly 30% decline in the important Chinese market.

According to the group, there were "extraordinary challenges" in the third quarter, specifically "weak demand in China" and braking system issues that resulted in a costly 1.5 million vehicle recall. 

The Munich-based manufacturer, like other German automakers, has become increasingly dependent on China, accounting for about one-third of its sales. However, BMW has suffered greatly as the second-largest economy in the world has been dealing with long-term economic issues and new domestic competitors are posing a threat to established European automakers, especially in the market for electric vehicles. Oliver Zipse, CEO of BMW, stated, "In the fourth quarter, we are back on track for stronger earnings in order to achieve our annual targets, despite planned high upfront expenditures,"

When it announced the recall in September, the group had already lowered its outlook. In addition to lower profit margins, it anticipates a minor decline in vehicle deliveries this year.