When pro sports teams lose the top player in a position, coaches often rely on the phrase “next man up” when it comes a replacement. BMW’s found its “next man” for the role of CEO: Oliver Zipse.
The Bavarian automaker named 55-year-old Zipse as its new chief executive, continuing the tradition of promoting a manufacturing leader to the company’s top job.
“The Supervisory Board of BMW AG appointed at today’s meeting Oliver Zipse as the new Chairman of the Board of Management with effect from 16 August 2019,” the company said in a statement on Thursday.
Zipse takes over for Harald Krueger, who declined a second term as CEO, ending talks about renewing his contract before they began. Krueger’s contract renewal was not a slam dunk, given some of the low points of his tenure, in particular, ceding the luxury car sales crown back to Mercedes-Benz in 2016.
Additionally, BMW was an early leader in the electric vehicle market, but has since been passed by Volkswagen Group, Tesla Inc. and, perhaps, even rival Daimler AG. For a manufacturing leader, he’s going to have his hands full tackling the technology side of the business, some observers noted.
“Zipse will certainly be tasked with increasing BMW’s share in the EV market, and another area of focus may be finding the right balance with the number of models within the portfolio,” said Jeff Schuster, president of global forecasting with LMC Automotive. “BMW has taken a fragmentation approach in the past, with some models overlapping others within the showroom.”
Another challenge facing Zipse is to get the company senior leadership in line. Despite signing up for a long list of partnerships with Daimler during the past three years, one of the criticisms of BMW was the slow pace of decision making at the board level, according to multiple reports, also noting it was that sluggish pace that played a role in Krueger’s departure.
If nothing else, Zipse will need to reverse the company’s tide financially. BMW’s automotive division posted its first loss in a decade during the first quarter. Sales are only going to get tougher with Lexus and Audi nipping at BMW from behind and a trade battle looming between the European Union and the United States.
Zipse does have a few things working for him. Fluent in English and seemingly more comfortable in suit-and-tie than business casual, he’s put his time in at BMW. He joined BMW as a trainee in 1991, holding posts including head of brand and product strategies before becoming board member for production.
In short, he understands the culture, politics and climate of BMW. Zipse got the job ultimately because of BMW’s efficient production network, which he expanded in Hungary, China and the United States, has helped the company deliver industry-leading profit margins despite its relatively small scale.
Zipse will take over the Krueger when his resignation takes effect on Aug. 16, 2019. “The Supervisory Board greatly respects the decision by Harald Krueger and today expressed our sincere appreciation for his many years of successful work within the BMW Group. On behalf of the entire company, we all wish him all the best in the future and hope that the BMW Group will always have a special meaning for him,” said Norbert Reithofer, chairman of the Supervisory Board of BMW AG, in a statement.