TOP TUNE-UP

The Next 100 Years

Reithofer DPA
Fast lane driver Reithofer. The BMW share price doubled since he took up office in 2006.
  • Why it matters

    Why it matters

    The current CEO had a successful run at BMW, but environmental and competitive challenges await his successor.

  • Facts

    Facts

    • Departing CEO Norbert Reithofer led BMW to record profits in eight years since taking over in 2006.
    • The carmaker’s new chief will be Harald Krüger, the company’s production head who rose through the ranks and was once project engineer at BMW’s U.S. plant in South Carolina.
    • In a related move, rival Volkswagen lured away BMW’s R&D manager, Herbert Diess, to head its core VW brand.
  • Audio

    Audio

  • Pdf

They are still young (at least for members of a supervisory board) they love technology – and they want to see some big changes before BMW turns 100 years old in 2016.

Members of BMW’s controlling family – Susanne Klatten, 52, and her brother Stefan Quandt, 48 – revamped company leadership this week in what Mr. Quandt called a “generational change.”

Next year, chief executive Norbert Reithofer will step down early to chair BMW’s supervisory board, which hires and fires chief executives and approves board decisions. At 59, Mr. Reithofer led the company to record profits, but faced the carmaker’s traditional 60-year age limit for executives, according to a market observer. The new chief executive will be 49-year-old Harald Krüger, now the company’s production head.

In a smoldering rivalry between two potential chiefs at the firm, Mr. Krüger won out over research-and-development manager Herbert Diess, who will move on to competitor Volkswagen. Mr. Diess, 56, will take over as head of the core VW brand next October. Fierce competition between the two BMW stars was one reason the supervisory board decided to change leaders early.

The current head of BMW had a stellar run marked by big achievements, including carbon fiber production, dazzling sales figures, solid profits and the i3 electric car launch.

The future might not be as easy for his successor.

When he took over in 2006, Mr. Reithofer pushed his “Number One” strategy to streamline BMW and increase profits. Thanks to rigid cost- and process-management — both internally and with suppliers — BMW got through the 2008 car-sales crisis relatively unscathed. Its models continued to sell well and production was expanded in China and the U.S. factory in Spartanburg, S.C. In addition, new factories were planned for Mexico and Brazil.

BMW is being nudged toward more efficient cars which pollute less by German politicians who are setting new standards for the industry.

In China, where competitor Audi got a head start in the 1980s, BMW caught up; it now sells every fifth passenger vehicle there. The range of models was also expanded, and in 2014 BMW will sell two million cars for the first time. In Mr. Reithofer’s eight years, the company’s share price more than doubled.

Even BMW workers’ representatives are showing their respect for Mr. Reithofer. Both the workers’ council and IG Metall union have supported the BMW leadership despite an austerity program designed to slow rising costs.

But Mr. Reithofer also leaves behind work to be done.

BMW is being nudged toward more efficient cars which pollute less by German politicians who are setting new standards for the industry. Plus, there’s still no prospect of profit for the development and production of electric cars — and it’s still an open question whether BMW will be able to meet strict environmental and efficiency benchmarks that will be enforced starting in 2021.

There will also be tough negotiations ahead. Mr. Krüger – who has led BMW’s Mini and Rolls-Royce lines and was once project engineer at the U.S. plant in South Carolina – will have to win favor among political leaders in Berlin and Brussels.

At the same time, the company will have to extend its range of models because rival Daimler is determined to gain market share from both Audi and BMW. Mr. Reithofer and finance chief Friedrich Eichiner recently acknowledged that 2015 will be a difficult year for the carmaker.

So far, BMW’s only response to the contraction of its core youth market has been “Drive Now,” its car-sharing program which runs in five German cities, San Francisco, Vienna and London. It is also still unclear how BMW can attract additional skilled female employees. The company’s goal is to raise the percentage of women managers from 15 to 17 percent by 2020 and the Quandt family wants Mr. Krüger’s team to deliver results in this area fast.

The company has always been open to change. On March 7, 1916, BMW marks its beginning with the founding of Bayerische Flugzeugwerke on March 7, 1916. That company manufactured airplanes and later worked with Bayerische Motoren Werke in engine construction. By 1928, BMW started making cars.

When BMW celebrates this anniversary in 15 months, Mr. Krüger will be sure to recall this story of change as he describes his vision for where the company will go in its next 100 years.

 

023 BMW-01

 

Susanne Stephan is a freelance report for Handelsblatt. To contact the author: susanne@stephantext.com

We hope you enjoyed this article

Make sure to sign up for our free newsletters too!