New BMW CEO

The Car's the Star, Harald

bmw
Harald Krüger is about to embark on the ride of his life.
  • Why it matters

    Why it matters

    BMW is hoping the new 7-Series will kickstart sales as its revenue engine, China, is beginning to weaken and it is being outsold in the luxury sector by Mercedes-Benz.

  • Facts

    Facts

    • BMW unveiled the new top-end 7-Series at its factory in Dingolfing, near Munich, that is set to go on sale in October.
    • Harald Krüger took over from former CEO Norbert Reithofer in May.
    • BMW wants to sell 50,000 7-Series cars in the first year, half of them in China.
  • Audio

    Audio

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Yesterday at 10:45 a.m. in Assembly Hall 50 at BMW’s factory in Dingolfing, a town northeast of Munich, it was nearly showtime. Several hundred hand-picked workers in boiler-suits were gathered in a semi-circle. Thousands more watched the proceedings on screens in factory cafeterias. Tension mounted.

Then, onto the stage stepped Harald Krüger, the new boss of BMW, in a suit and patent leather shoes. He was there, as if the staff didn’t know, to publicly unveil the first production model of the 2016-version of the 7-Series sedan, the company’s flagship car.

Mr. Krüger, who took up his new post last month, is made for the stage. As soon as the camera is pointed at him, he radiates a boyish charm. The new 7-Series is “the most innovative sedan in the world,” the chief executive said in praise of the luxury car that will go on the market in October.

He used Wednesday’s unveiling as an opportunity to gee up the Dingolfing staff, who will be responsible for cranking out thousands of 7-Series cars in the coming months. “I’m sure that as CEO I can count on Dingolfing,” said Mr. Krüger at the end of his first public performance as head of BMW.

Such praise is important. Dingolfing is the workhorse and engine room of BMW. More than 17,000 people work at the company’s largest production site, located 90 kilometers northeast of Munich.

If business is good in the Far East, then the assembly line hums in Dingolfing and the cash register jingles in Munich.

Entire families work for BMW here. Busses bring workers from towns next to the Czech border. In the factory vending machines there are sandwiches and reduced-alcohol beer.BMW’s shiny headquarters in Munich is a distant dream for most of them.

The mood in Dingolfing is delicate. It is a matter of trust between headquarters and workshop. Here the company produces BMW’s main models, the 5-, 6- and 7-Series models that are its largest cash cows.

During the financial crisis in 2009, the assembly lines were shut down for months. Since then, things have improved; 70 percent of production is for export. Every second 7-Series model will go to China, the world’s largest car market. In short, if business is good in the Far East, then the assembly line hums in Dingolfing and the cash register jingles in Munich.

That is also a burden for Mr. Krüger. His predecessor, Norbert Reithofer, turned China into the largest BMW market in the world and made billions for the company. But the success recently began to wobble. At the beginning of this year, BMW had to pay €700 million, or $786 million, to its Chinese dealers because sales of the 7-Series were less than expected.

To make matters worse, an anti-corruption campaign by the government in Beijing is hampering business just as much as heightened competition. Daimler’s newly introduced S-Class model has outperformed the 7-Series in China and beyond. About 125,000 S-Class cars were sold worldwide in 2014 compared to only 38,000 7-Series models.

Word from the supervisory board is that Mr. Krüger must close this gap. Insiders say that the goal is to sell at least 50,000 7-Series in the coming year.

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But BMW’s sales in China in May were not an encouraging sign for the new boss. The company sold just 0.6 percent more of BMW and Minis compared with the same month a year ago, it said on Friday.

On the other hand, global sales of BMW, Mini and Rolls-Royce vehicles increased by 5.9 percent to 188,287 cars, making it the best May ever for the carmaker. Strong demand in the Americas and a recovery in the European car market underpinned sales growth.

Mr. Krüger, who was head of production before taking on his present position, has helped develop the new 7-Series’ assembly line himself, and the company invested a good €500 million in Dingolfing. For the first time, BMW is making widespread use of carbon fiber in order to make the car lighter.

The executive knows that as long as things proceed smoothly in Dingolfing and the new 7-model sells well, he won’t have any problems in Munich.


Video: BMW’s 7 Series preview video.

Markus Fasse is a Handelsblatt correspondent specializing in the automotive and aviation industries. Gilbert Kreijger, an editor with Handelsblatt Global Edition in Berlin, contributed to this article. To contact the author: fasse@handelsblatt.com

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