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 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 nearly 16%, and the company faces ongoing challenges in the competitive auto market.