Now Krueger will lead BMW into battle against its major competitors, Audi and Mercedes-Benz. Those brands haven't matched BMW's investment in electric vehicles but have moved into new segments and niches.
BMW has subsequently slipped behind in some areas. Its cars don't have the advanced safety, driving assist and semi-autonomous features that brands such as Mercedes-Benz boast.
At the upper end, BMW is competing against a new range of Mercedes-Benz S-class models -- including a coupe and soon a flagship Maybach and a convertible -- with an aging 7 series that gets redesigned late next year.
BMW doesn't yet have vehicles to compete with the front-wheel-drive Audi compact A3 sedan, and the Mercedes-Benz CLA sedan and GLA crossover. The Mercedes CLA in particular surprised BMW executives, according to insiders.
The first fwd BMW, the 2-series Active Tourer, is so bland looking that the U.S. subsidiary is questioning whether to import the hatchback.
Even the Mini brand, which Krueger oversaw in his prior board member assignment, has slumped in the United States.
Krueger's strong suit is manufacturing, having worked at the Spartanburg factory in its early days and at an engine plant in the United Kingdom.
Krueger sat at Reithofer's side this spring when BMW announced it will make the X7 large crossover in the United States and expand Spartanburg production to 450,000 units, making it BMW's largest plant. As production chief, Krueger played a crucial role in the decision to expand Spartanburg rather than plants in Germany.
Krueger assured skeptical German journalists that every car made in Spartanburg "has a worldwide customer and that segment [SUVs] is stable across the globe."
One person who has worked with Krueger described him as "very approachable, very social, very humble and low key."
He has been to the United States more often in the past few years than Reithofer -- who hasn't attended U.S. auto shows for several years and won't even come to U.S. dealer meetings, said those in the know.
Krueger, who speaks excellent English, ran Mini's press conference in Los Angeles in 2012. It was his first major event in the United States.
Compared with Reithofer, who comes off as a confident German engineer who is clearly the boss and fiercely proud of being German, Krueger is more soft-spoken and seen as "more international," sources said.
Krueger caught the eye of the BMW board as director of the Hams Hall engine plant in the U.K. -- a post he held from 2003 to 2006.
"After BMW sold Rover, suddenly there was this enormous factory left over. Krueger completely restructured the place; he integrated it into the BMW engine manufacturing network and saw to it that it can still exist today," a source at the company said.
His vast knowledge of BMW, rather than just production or a vehicle line or brand, gave Krueger the edge over Diess.
A key insider said: "For me the most important thing for a CEO is not knowing one area by heart, but rather the whole company in all of its facets. All others on the executive board were -- as far as their age was concerned -- options that were likely limited in terms of time, due to the current BMW philosophy."
"Reithofer was also 49 when he was picked to be CEO, and that went well."
Christiaan Hetzner contributed to this report.