BMW annouced Tuesday a revision to its financial guidance due to a major brake recall affecting over 1.5 million vehicles globally. The automaker revealed that the recall will lead to “additional warranty costs in the high three-digit million range in the third quarter,” likely exceeding €500 million.

Moreover, stop-sale orders related to the recall are expected to negatively impact global sales in the second half of the year. The company also pointed to weak demand in China and declining consumer sentiment as factors contributing to its revised outlook.

As a result, BMW now anticipates a slight decrease in annual sales, reversing its previous forecast of a slight increase. The automaker has also lowered its earnings before interest and taxes (EBIT) forecast to a range of 6% to 7%.

The issues extend beyond the automotive division, as BMW Motorrad faces an “ongoing competitive situation” in key markets like the United States and China. This is limiting both volume and pricing power, leading to a projected flat sales performance for the year.

In a final blow, BMW announced that group earnings before tax will “decrease significantly,” surpassing the previously anticipated “slight decrease.”

These developments caused BMW’s stock to plummet 11.43% on Tuesday, closing at $77.10.