BMW production chief Zipse to succeed Krueger as CEO, paper says

FRANKFURT -- BMW's production chief, Oliver Zipse, will be picked to succeed Harald Krueger as CEO, the Frankfurter Allgemeine newspaper reported, citing people within the company as its source.

BMW said on Friday that Krueger will not seek another term of office beyond his current contract running until April 30, 2020, pre-empting deliberations about whether he would get another 5-year extension at the automaker.

BMW declined to comment on "speculation" about potential CEO candidates and said the matter would be discussed at a supervisory board meeting on July 18.

German business paper Handelsblatt reported last month that there were two internal front-runners for Krueger's job. The paper named Zipse, 55, but also said Klaus Froehlich, head of development, was a candidate.

Froehlich, 59, may be too old for the top job because BMW normally imposes a 60-year age limit on its upper management. Both executives currently sit on the automaker's management board. Froehlich will continue in his current post, the Frankfurter Allgemeine said on Friday.

Reuters and Bloomberg both reported on Friday that Zipse is the frontrunner to become CEO, citing company sources.

Investment analysts Evercore ISI said BMW has "potentially the strongest bench of talent and the most balanced hierarchy" to deal with a change of leadership.

"We believe it shows a lot of character and respect for his team and the company that Harald Krueger is taking this decision ahead of a supervisory board meeting," Evercore said in a note to investors.

Krueger, 53, has led BMW since 2015, after becoming the youngest CEO of a major automaker at the time.

BMW Chairman Norbert Reithofer said in a statement that the company has "complete respect and understanding" for Krueger's decision to step down. Krueger "has demonstrated unwavering dedication to the BMW Group in all of the various positions he has held," said Reithofer, who was Krueger’s predecessor as CEO.

In May, Bloomberg reported that some supervisory board members were questioning whether Krueger was the right choice to lead the company.

After leading the luxury competition for a decade, BMW’s momentum petered out under Krueger’s tenure. It lost the global lead to Mercedes-Benz in 2016 and has since struggled to regain the top spot with cautious model redesigns. Since last year, weaker global markets and trade tensions have shrunk profits.

Krueger, a former production chief, was hastily installed as CEO designate in December 2014 and formally took office in May 2015 following the defection of Herbert Diess to rival Volkswagen Group.

Krueger 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 show in September 2015.

The company sent Chief Financial Officer Nicolas Peter to high-profile meetings including a visit to the White House last year.

In 2018, when French President Emmanuel Macron invited automakers to an auto industry summit on the eve of the Paris auto show, Peter, who speaks fluent French, was also chosen to be BMW's representative.

At BMW's annual results news conference earlier this year, the company sidestepped questions about whether Krueger would receive a contract extension. BMW spokesman Maximilian Schoeberl at the time said succession was "not a topic" being discussed.

Bloomberg contributed to this report