FRANKFURT, Germany (AFP) — BMW said Tuesday it was recalling about 1.5 million vehicles due to problems with their brakes and cut its outlook for the year, sending the German luxury carmaker’s shares tumbling.

The recall will have a “negative worldwide sales effect in the second half of the year,” said the group, which also includes the Rolls-Royce and Mini brands.

The financial impact in the three months to the end of September will be in the “high three-digit million” euro range, it said.

It was further bad news for BMW, which has been hit by weakening demand in China, and for the broader German auto sector after Volkswagen said last week it was mulling the unprecedented step of closing factories in Germany.

The braking system behind the problems was supplied by Continental, a source close to the matter told AFP.

As well as the impact of the recall, “the ongoing muted demand in China is affecting sales volumes. Despite stimulus measures from the government, consumer sentiment remains weak,” BMW said in a statement.

Munich-headquartered BMW now expects a slight decrease in vehicle deliveries this year compared to last, having previously forecast a slight increase.

It did not give a precise figure. In 2023 deliveries of BMW, Rolls-Royce and Mini vehicles stood at 2.56 million.

The automaker also trimmed its guidance for profitability, and expects margins this year between six and seven per cent, down from eight to 10 previously.

The carmaker’s shares were down nine per cent on the Frankfurt Stock Exchange after the announcement.

Last month BMW also recalled 1.4 million vehicles in China due to faulty airbags, the country’s market regulator announced.

BMW reported a drop in net profit in the second quarter, due to the impact of poorer business in China and higher manufacturing costs.

Net profit at the group declined by 8.6 per cent to 2.7 billion euros (US$2.9 billion) between April and June, on the back of revenues down 0.7 per cent to just under 37 billion euros.