When it comes to the future, no words are too grandiose for leaders of the German automotive sector.
“We are on the threshold of the reinvention of the automobile,” said Daimler boss Dieter Zetsche, assessing the upcoming digitalization process and development of new engines.
“Our ambition is to be the engine of change,” declared Volkswagen chairman, Martin Winterkorn.
Norbert Reithofer, chairman and chief executive officer at BMW, envisions a new industrial revolution comparable to the transition from the “typewriter to the computer” for the automotive sector.
As impressive as the comparisons are, however, the realization of this potential remains difficult, particularly with regard to personnel policies.
More than almost any other business sector, the auto industry repeatedly selects similar managerial types for the executive suite. Usually this means a male engineer who has spent many years at the company. Messrs. Winterkorn, Zetsche, Reithofer and his successor, Harald Krüger, are typical examples. Outsiders or women such as Mary Barra, who is the chief executive officer of General Motors, are exceptions.
“The male-oriented world of cars has barely managed to present itself to the important female target group in an emotional and interesting manner.”
Those are the findings of a wide-ranging study by the personnel consultant Russell Reynolds, which studied the profiles of 185 executives at the most important carmakers and automotive parts suppliers throughout the world.
The study found that 92 percent of senior executives are male and 74 percent have been appointed from within the company, while 57 percent have worked exclusively in the auto industry.
“Up to now, the automotive industry has oriented itself toward competitors from an internal perspective,” said Walter Friederichs, managing director and partner at Russell Reynolds. “Promotions and hires primarily are made according to criteria from the past.”
A focus on product made the German auto industry extremely successful in the past and made it the industry leader worldwide, but Mr. Friederichs argues that won’t be enough for the future. “There is a need for looking past the framework of the industry, integrating other capabilities and characters and meeting partners eye to eye,” he said.
That is a tall order for an industry that looks at first glance to be at the zenith of its creative output. Mercedes, BMW and Volkswagen regularly post record-breaking sales figures with products and processes that have proven their worth over decades. Yet the introduction of alternative engines, the connection of cars to the Internet and the digitalization of customer relationships are beginning to radically change the business model.
Industry outsider Elon Musk, who developed not only the engine but also the marketing and service orientation of Tesla, is the most striking example of this new reality, though he is hardly alone. At Apple, Google and Uber, a new generation of executives is working on commercial ideas and methods that are turning the traditional car business on its head.
But a rethinking has begun in the automotive industry and there are clear efforts to attract new people and fresh ideas.
Daimler’s Mr. Zetsche, an engineer who has been with the company for 39 years, bundled car sharing and online activities into the subsidiary Moovel to gain some ground in the digital business. At BMW, project i has set the stage for the firm’s future-oriented approach to building electric cars while opening the company hierarchy to new talent, though it remains to be seen if it will succeed.
The new head of BMW, Harald Krüger, an engineer with 22 years at the company, currently is scrutinizing the strategy of his predecessor. What certainly will emerge is more restructuring at BMW.
Marketing plays an outsized role in the brave new world with both BMW and Daimler using their marketing departments to introduce changes. Jens Theimer, Mercedes-Benz vice president of marketing, brings experience from outside the automotive sector after his years at Communications and Network Consulting.
Increasingly, the automotive sector is looking for women executives to bring a more dynamic approach to the future. And with good reason. A new study by the CAR Institute at Duisburg-Essen University found that women in Germany are buying fewer cars, especially women under the age of 25, where only 3.9 percent have purchased a vehicle. The sobering report also found that the share of female car buyers fell again in the first half of 2015, with only 32.2 percent of new cars sold to women.
“The male-oriented world of cars has barely managed to present itself to the important female target group in an emotional and interesting manner,” said Ferdinand Dudenhöffer, the director of the study and the head of the CAR Institute.
Experts cite many reasons for the lack of interest. Some argue women wait to take advantage of one-day registrations in order to receive higher markdowns on what is then considered a used car. Others point to the mix of models offered and argue they are not oriented toward women buyers. They buy very few sport utility vehicles or sports cars, for example, despite heavy marketing efforts by manufacturers.
Increasingly, women managers are viewed as critical to bringing a fresh approach to the automobile industry, particularly those who have worked in other business sectors.
One high profile example is Tina Müller, chief marketing officer and a board member at Opel, who previously worked at consumer products companies Wella and Henkel. “The share of women in top managerial positions in the car business is still too small, but new winds are blowing,” she said, adding that as more women rise to the top they will “give other women the inspiration to pursue careers in the automotive industry.”
Input from female executives can help in the development of new vehicles, Ms. Müller said. “There are no exclusively women’s or men’s vehicles,” she explained. “For that reason, it is important to have mixed teams in product marketing with engineers as well as designers. We want to make sure female customers find our products appealing. The compact car segment is particularly important for us because it is strongly influenced by female customers.”
Opel has the highest percentage of women buyers among German brands with 35.4 percent. It is led by the compact model Adam, which was heavily promoted on the television show “Germany’s Next Top Model” and has achieved a female market share of 70 percent, one of the few models in addition to the Audi A1 and the Fiat 500 to attract more than 50 percent women purchasers. The only brand with a share of women buyers higher than 50 percent is the BMW subsidiary, Mini.
Yet being small is not enough to guarantee success with women buyers. The diminutive Smart, which is produced by Daimler, attracts only 28.1 percent, significantly below the industry average, even though the chief executive officer is Annette Winkler.
The same issue is affecting luxury brands. Only one in five Audis, BMWs and Mercedes-Benz’s are sold to women.
At BMW, they’ve turned to Hildegard Wortmann, a veteran marketing executive at Unilever, who is now senior vice president of product management, where she has responsibility for the Munich-based automaker’s worldwide portfolio of products. Her approval is required for each car.
Meanwhile, BMW and Daimler have ensured 40 percent of participants in their junior staff programs are women. Additionally, Daimler has set a quota of 40 percent for international talent for its career program. “This is gradually changing the composition of managerial echelons,” a spokesperson said.
Meanwhile, the industry is watching Wolfsburg intently, where Volkswagen chief executive officer Martin Winterkorn, an engineer who has spent 34 years at the firm, intends to restructure the company and prepare the way for his successor. No decisions have been made yet, with the company annoucing on Wednesday that Mr. Winterkorn’s contract will be extended by two years.
However, observers expect that his eventual successor will have three characteristics: Male, engineer and homegrown.