BMW reported a sharp drop in profitability for its key automotive unit, hit by costs of a recall and weak demand in China, even as it forecast stronger earnings in the fourth quarter.

BMW AG’s profit margin fell to the lowest in more than four years in the third quarter as a costly recall and weak demand in China weighed on earnings.

BMW has warned of “extraordinary challenges” as it became the latest carmaker to post a large drop in China sales.

BMW on Wednesday reported a 61% drop in its third-quarter profit, missing analyst expectations because of slumping China sales and brake problems and sending its shares to their lowest level in more than 2-1/2 years.

BMW AG’s profit margin fell to the lowest in more than four years in the third quarter as a costly recall and weak demand in China weighed on earnings.

Technical problems with braking systems and weak demand in China saw third quarter profits fall 84% on the year to €476 million ($512 million) at German carmaker BMW in results published on Wednesday.

BMW reported an 84% drop in quarterly profits, primarily due to declining sales in China and a costly vehicle recall affecting 1.5 million cars. Overall sales decreased by nearly 16%, and the company faces ongoing challenges in the competitive auto market.