Boyden Executive Search

Under outgoing CEO Harald Krüger, BMW has lagged in adapting to change and profits have suffered. His successor will need to switch gears quickly.

On July 5 Harald Krüger announced his resignation as CEO and Chairman of the Board of Management, saying that he “would like to pursue new professional endeavours”. This came less than a year before the end of his five-year term – and days before the next meeting of BMW’s Supervisory Board on July 18. It was expected that this meeting would address Krüger’s future with the company. Now its focus is CEO succession and other critical executive appointments.

With CEO succession at the top of the agenda, the German carmaker intends to make a decision this month. It is showing a preference for an internal appointment, and several candidates from its existing bench have emerged as frontrunners. The most talked-about is Oliver Zipse, an automotive executive who has been with BMW since 1991 and currently serves as head of production. Other contenders include R&D board member Klaus Froehlich and Chief Financial Officer Nicolas Peter.

BMW’s cars still attract a following, and its returns have been respectable, but the new boss will certainly inherit challenges. The company’s financial performance has stalled since Krüger’s appointment in 2015. Its share price peaked that year, but has since fallen by 45%. Last year, despite record sales of some 2.5m vehicles, operating profits fell by 8% to €9.1bn ($10.7bn), according to The Economist. Less tangibly but importantly, BMW’s reputation for technological prowess has diminished.

A bit of context is relevant here. The automotive industry overall is in transition, propelled as much by changing consumer trends as by disruptive technologies. Electric vehicles, self-driving cars and mobility services like ride-sharing are game-changing. Economic factors, including the slowdown in China, trade squabbles, and the high costs of tighter emissions rules are testing the mettle of every automotive executive.

That said, Krüger has been slow to adapt BMW to the seismic changes taking place in the global automotive industry. His competitors have not made the same mistake. Mercedes took BMW’s place as the world’s best-selling premium car brand for three consecutive years, beginning in 2016. BMW has not capitalized on the SUV trend, continuing to produce mostly saloons, also known as sedans, for which demand is dwindling. Further, BMW has not launched an innovative new EV since the i3 and i8, in 2013 and 2014, while Daimler, Audi and Jaguar all have in more recent years.

BMW appears to have been asleep at the wheel, but it is waking up. The company aims to introduce 25 new electric and hybrid vehicles by 2023. On July 9 it debuted a battery-powered version of its popular MINI Cooper, which it expects to roll out in 2020. BMW is also partnering with Daimler on mobility services, and with Jaguar Land Rover to ramp up electric vehicles. The company’s CEO succession will need to instate a leader who can build on these strides, as its competitors continue to race ahead.

This website uses cookies to ensure you get the best experience on our website.  Learn more