It took carmaker BMW more than two years to discover the extent of a fault in its braking system that is expected to cost the company nearly 1 billion euros ($1.1 billion) to fix. Customers and dealers began complaining to the German automaker about faulty brakes in June 2022, according to a recall document seen by Bloomberg News. But it was only last month that BMW realized that up to 1.5 million cars could contain the faulty part. It is supplied by auto supplier Continental AG and is touted as a lighter and more efficient system.
A profit warning last week saw BMW’s value drop by five billion euros – a debacle for a premium carmaker known as a leader in driving technology. As the recall document shows, BMW launched an in-depth investigation into the braking system in October 2023, which found malfunctions affecting the braking system’s electrical signals.
The first recall of about 80,000 vehicles took place in the US in February this year. Now 1.5 million vehicles of various BMW brands are affected, including $420,000 Rolls-Royce Spectres, 7-series sedans and high-performance XM SUVs. “This is not a normal recall, but a significant shock,” said Ferdinand Dudenhöffer, director at the Center for Automotive Research in Bochum. “It is also noteworthy that BMW has strengthened quality control at suppliers with a task force, which suggests that they see the risks on a broader basis.” “BMW is usually very cautious and prefers stability to short-term peaks, which is also reflected in margins,” he added.
Under U.S. law, automakers risk fines if they fail to report safety problems to the National Highway Traffic Safety Administration in a timely manner. In some cases, a manufacturer may not know about a defect even after a long period of time. The NHTSA has not fined BMW for the brake recall. A BMW spokeswoman said it would take time to assess the extent and financial impact of the recall, adding that the automaker would need to discuss the matter with officials in different markets and estimate how much it would cost to fix the defects.
A recall notice that Rolls-Royce sent to its American dealers in March and obtained by Bloomberg News shows that the company was aware at the time that it had a problem with one of its most prestigious brands. In capital letters, the luxury car maker ordered a halt in sales and deliveries of all Spectres built between June 20, 2023, and June 23, 2023. The model’s braking system may have been faulty, and a mechanic had to go through a 26-step process to repair the affected cars.
The recall in the U.S. eventually expanded to 688 Spectres built between January 2023 and July 2024—more than a quarter of the vehicles produced annually. Given recalls in other markets, the total number of Spectres affected is likely higher. The braking system that prompted the recall is known as brake-by-wire. It uses electronic impulses instead of the hydraulic technology that has been built into most car brakes since the 1920s.