BMW's new CEO sets fresh auto course

Harald Krueger, would be the youngest CEO of a major carmaker when he takes over in May 2015

BMW's designated CEO Harald Krueger introduced the new 2-Series compact last summer by riding it up a ski gondola in the Austrian Alps.

When he reached the waiting crowd, fog at the 7,100-foot elevation was too thick to see much of the car or the floppy-haired executive. Krueger was unfazed, presenting the van-like hatchback as calmly as if he were on the Frankfurt Motor Show floor.

There have been few hiccups during the 49-year-old manager's career at the world's biggest luxury-car maker, where he started almost straight out of Aachen University, Germany's top-ranked engineering college.

"He's known...as a straight shooter, a good motivator...who commands respect," says Arndt Ellinghorst, a London-based analyst at Evercore ISI. Krueger has a reputation for "looking beyond the usual production and engineering topics."

Yesterday's appointment will make Krueger the youngest CEO of a major carmaker when he succeeds Norbert Reithofer after BMW's annual shareholder meeting in May. The Munich-based company billed the switch, which came earlier than expected, as its response to far-reaching changes in the auto industry.

Carmakers need a younger generation with "creative energy," says Stefan Quandt, deputy supervisory board chairman and a member of the billionaire family that controls about 47 per cent of BMW's voting stock. The carmaker didn't make Krueger available for this article.

Sweeping change
Krueger follows a CEO who has already made sweeping strategic changes. Reithofer spearheaded BMW's shift to more environmentally-friendly cars, including the battery-powered i3 city car, and made a gamble by investing in mass production of lightweight carbon-fibre parts. He did that while steering BMW to record sales and earnings since taking the top post in 2006.

BMW again defended its top rank in the luxury segment last month. Deliveries of its namesake brand rose 6.2 per cent last month to increase sales to 1.63 million cars through the first 11 months of 2014, beating Audi's 1.59 million and Mercedes-Benz's 1.49 million vehicles.

Under Reithofer, BMW was responding to increasingly strict emissions rules. There were also geographic changes as Asia became the leading region for sales growth, while shifting social values have made car ownership less of a rite of passage among youth.

Krueger has been involved in projects addressing these issues almost since he started at BMW in 1992.

Following a successful three-year period leading BMW's engine factory in the UK, the engineer in 2008 joined the management board to head personnel for four years. Short stints as head of the Mini, Rolls Royce and motorcycle brands and as head of production followed, typical for executives being groomed inside BMW.

'New era'
His appointment as production chief in 2013, during which BMW launched both the i3 and i8, was a clear sign that he was a top candidate to succeed Reithofer, who had headed manufacturing before his own appointment as CEO.

"His comparatively young age is remarkable. Assuming he doesn't make mistakes, he'll start a new era for BMW," says Stefan Bratzel, director of the Centre of Automotive Management at the University of Applied Sciences, Germany. "That's interesting also because of the paradigm shift that we're seeing with powertrains, connectivity and business models."

At a BMW event in Berlin last month on the future of driving and vehicle production, Krueger was already speaking on topics far outside production. He touted automated production with a robot named Olaf, but he also talked about BMW's cars parking themselves and called for a broad European framework for in-car Internet connectivity.

As CEO, Krueger will be younger than industry counterparts such as Mary Barra, 52, at General Motors, Mark Fields, 53, at Ford Motor, and Carlos Ghosn, 60, who runs French carmaker Renault and Japanese partner Nissan Motor.