Krueger (shown projected on LCD screen) speaking at BMW AG's 99th annual general meeting in Munich on May 16.
MUNICH: BMW AG chief executive officer Harald Krueger’s job is hanging in the balance as the luxury carmaker steers towards a future of electric and autonomous vehicles and navigates weakening markets, people familiar with the discussions said.
Some supervisory board members are questioning whether he’s the right choice to lead the company and will discuss the CEO’s second-term prospects in the coming weeks, the people said, asking not to be identified discussing confidential deliberations. Krueger’s current tenure ends next May, with an announcement on his future due in June or July. The shares rose 0.3% at the start of trading Wednesday in Frankfurt.
BMW, like other carmakers, is making a costly transition to electric cars and new business models and is confronting deep-pocketed tech competitors encroaching with new mobility options including ride hailing. After leading the luxury competition for a decade, BMW’s momentum petered out in 2016 and the carmaker has since struggled to regain the top spot with cautious model redesigns. Since last year, weaker global markets and trade tensions have shrunk profits.
Any new CEO will be chosen from inside the Munich-based carmaker, and production head Oliver Zipse, 55, is considered a possible successor, one of the people said. A BMW spokesman declined to comment on CEO succession plans.
“There are doubts about Kreuger’s perspectives as CEO of BMW -- internally and externally,” Juergen Pieper, an analyst at Metzler Bank, said in an email. “Results of the past four years are mixed, profitability is turning down quite substantially” and “there are no clear strategic signals.”
Board tension
Krueger, 53, has been at the helm since 2015, when he became the youngest leader of a major automaker and was tasked with leading BMW through the industry’s transition. He is struggling to stamp his authority on a divided management board that’s failing to unite on plans for partnerships and spending on new technology, the people said.
While BMW merged its car-sharing business with Daimler AG last year, it hasn’t otherwise aligned with new competitors thus far. Daimler, Toyota Motor Corp. and Volvo Cars, meanwhile, have forged partnerships with Uber Technologies Inc., while Jaguar Land Rover is teaming up on self-driving electric cars with Alphabet Inc.’s autonomous-vehicle unit Waymo.
“BMW is a case of strong brand and strong capability, but they have stuttered in their commitment to a direction in an industry in transition,” said Bill Russo, CEO of Shanghai-based consultancy Automobility Ltd. “Several of BMW’s competitors are moving more rapidly and aggressively in forming partnerships with tech players in the internet of mobility era.”
Efforts to deepen ties with Daimler have run into resistance from some board members who are wary of new partnerships, the people said.
The last BMW CEO to leave after just a single term was Helmut Panke, who vacated the top position at BMW in 2006. He left a day before turning 60, which at the time was the proclaimed age limit for executives at the company. BMW’s largest shareholder are the Klatten-Quandt siblings, which together hold about 45% of the shares.
Zipse's name has been bandied about as a potential successor.
Krueger has struggled to emancipate himself from his predecessor and BMW’s now chairman Norbert Reithofer, who is credited with taking some bold steps such as adding a range of sport utility vehicles at a time when other luxury carmakers neglected the segment.
Reithofer also moved early with BMW’s first electric car and a push into mass-producing lightweight carbon fibre. Early in Krueger’s tenure, he fainted on stage during his first major presentation as CEO at the 2015 Frankfurt motor show and demonstrated obvious discomfort with speaking publicly in the weeks and months that followed.
BMW squandered its early lead in electric cars by pausing new battery-powered models after unveiling the slow-selling i3 in 2013. It now trails the electric SUVs of Jaguar, Audi and Mercedes already on sale.
Bloomberg columnist Chris Bryant recently wrote in a May 22 opinion piece that Krueger's pragmatic, cautious style could actually be a good thing at a time of unprecedented technological and regulatory upheaval in the industry.
At BMW’s shareholder meeting last week, Krueger told investors that putting all the company’s “eggs in one basket” on electric vehicles was the wrong approach. It is instead pursuing a mixture of electric, hybrid and fuel cell cars.
Bryant said that in hindsight, Krueger’s biggest “mistake” was fainting on stage at the Frankfurt show in front of hundreds of journalists just weeks after taking the job in 2015. The question of “is he up to it?” seems to have dogged him ever since, said Bryant.
