Oliver Zipse. File photo: REUTERS/MICHAEL DALDER
Oliver Zipse. File photo: REUTERS/MICHAEL DALDER

Frankfurt — BMW board member Oliver Zipse, a company veteran, is the frontrunner to become the carmaker's new CEO  sources said on Friday after Harald Krüger announced he would not stay on beyond April 2020.

Krüger said he would not seek a potential extension of his contract, thereby pre-empting deliberations about whether or not to give him another five-year term.

BMW declined to comment on whether Zipse would be confirmed as CEO, saying the matter of potential executive appointments would be formally decided on July 18, when the full supervisory board was due to meet.

Zipse is the youngest of three potential successors, a possible advantage as BMW has an upper age limit of 60 for management board members.

He joined BMW as a trainee in 1991 and oversaw big increases in BMW's production capacity, particularly in China and the US.

Zipse is also a favourite because his current job is head of production, a role that previous BMW CEOs, including Krüger and BMW's current supervisory board chair Norbert Reithofer, also held before becoming CEO.

BMW, which also owns the Mini and Rolls-Royce brands, has a track record of delivering industry-leading profit margins despite its small scale, thanks in large part to efficient production methods.

Before becoming a management board member in 2015, Zipse was a vice-president of technical planning and for product strategy.

"The CEO candidate will not be a surprise," one of the sources said.

Zipse's potential rivals include R&D board member Klaus Froehlich and CFO Nicolas Peter. Another possible rival is Markus Duesmann, BMW's engine development expert, who left for Volkswagen in 2018.

Car sector under pressure

Under Krüger's leadership, BMW lost the title of best-selling luxury carmaking brand to Mercedes-Benz in 2016, and put the brakes on a plan to mass produce carbon-fibre based electric cars at a time when zero-emission vehicles made by Tesla were gaining traction with customers.

Krüger was hastily installed as CEO designate in December 2014 and formally took office in May 2015 following the defection of fellow BMW board member Herbert Diess to rival Volkswagen.

Vehicle sector shares have taken a hit since then, with VW's outperforming BMW's, as the Wolfsburg-based carmaker pursued a more radical electrification strategy.

Since Diess left BMW, VW's shares are down 18% while BMW's stock is down almost 30%. Germany's blue-chip Dax index is up 26% during the same period.

Krüger has avoided high-profile appearances in front of large crowds since he collapsed on stage during his first major news conference as CEO during the Frankfurt car show in September 2015.

At BMW's annual results news conference earlier in 2019, the company sidestepped questions about whether Krüger would receive a contract extension.

Krüger said on Friday he would be seeking new career opportunities.

"After more than 10 years in the board of management, more than four of which as the CEO of the BMW Group, I would like to pursue new professional endeavours and leverage my diverse international experience for new projects and ventures," he said in a statement. 

Reuters