(Reuters) – BMW on Tuesday cut its margin forecast for the current year, citing technical problems that have led to car deliveries being halted and continued sluggish demand in the Chinese market.

The German carmaker expects its earnings before interest and taxes (EBIT) margin to be between 6% and 7% in 2024, compared to a range of between 8% and 10% previously.

BMW said the downward revision to its forecast was partly triggered by difficulties in its main automotive segment, resulting from delivery stoppages and technical actions related to the integrated braking system (IBS), supplied by Continental.

In a statement, the latter said that only a “small proportion” of the braking systems it produces and supplies to BMW will be partially replaced due to an electronic component that could be defective.

The problems with integrated braking systems affect more than 1.5 million vehicles and will result in additional warranty costs of several hundred million during the third quarter, the company added.

The automaker also reported that weak demand in China was hurting sales in the country, joining a group of automakers facing difficulties in the world’s second-largest economy.

Volkswagen said earlier this month that it was considering closing factories in Germany for the first time, reflecting the pressure Europe’s largest carmaker is under from cheaper Asian competition.

BMW shares were down 7.2% at 1130 GMT after the announcement.

Other names in the sector are falling in its wake: Mercedes-Benz, Volkswagen, Stellantis, Porsche Holding, Renault are losing around 4 to 5%.

Manufacturers and suppliers of spare parts Continental, Valeo and Forvia are also declining.

The automotive segment of the STOXX index fell by 3.65%, to its lowest level since the beginning of August.

(Reporting Paolo Laudani, Diana Mandiá, editing by Kate Entringer)

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