[Brookside]

Dr. Norbert Reithofer was named new BMW AG CEO!
It's official.

BMW AG supervisory board named new BMW CEO earlier today: Dr. Norbert Reithofer (50) - current BMW Chief of Production - , succeeding Dr. Helmut Panke (59).

New CEO function will start on Sept 1st 2006.

The new Chief of Production will be Frank-Peter Arndt (50) - current Chief of Dingolfing plant.

Dr. Burkhard Goeschel (60) - BMW Chief of Research, Development & Purchase - is also being replaced due to "rule 60".

He will be succeeded by Dr. Klaus Draeger (49) - current Chief of BMW large vehicles line (5er, 6er, 7er). His function starts on Nov 1st 2006.

New Board of Directors BMW AG from Nov 1st on:
Dr. Norbert Reithofer (50), CEO;
Frank-Peter Arndt (50), Production;
Ernst Baumann (58), Human Resources & Chief of Labour;
Dr. Klaus Draeger (49), R&D and Purchase;
Dr. Michael Ganal (52), Sales & Marketing;
Stefan Krause (43), Finance.

Source: BMW Press

[Brookside]

BMW's new CEO, Dr. Norbert Reithofer.

BMW's Accelerated U.S. Push.
Incoming CEO Norbert Reithofer lays out a 300,000-car sales target and a likely expansion of Stateside production in 2008.

BusinessWeek, July 24,2006
BMW Chief Executive Helmut Panke left no doubt in recent weeks that he would have been pleased to have his contract extended beyond the mandatory retirement age of 60. As the "captain of the team," he's having great fun, Panke said earlier this month. But when the company's supervisory board announced the week of July 16 that Production Chief Norbert Reithofer, 50, would succeed Panke as CEO on Sept. 1, the day after Panke's 60th birthday, the energetic physicist switched gears quickly. "Where's the top dog?" he joked, referring to his successor, after a luncheon meeting on July 24 with Reithofer and journalists at the company's Munich research center.

That's classic BMW. Few large corporations enjoy the kind of team culture BMW works to foster from production-line workers through the ranks of top management. And even fewer companies discourage the cult of the CEO with the vigor that BMW does. So the intimate luncheon in which Panke and Reithofer took gentlemanly turns fielding questions offered a rare glimpse into a smooth and collegial top management transition at the world's No. 1 premium auto maker.

The message from Reithofer, not surprisingly, is that BMW will continue on the path that Panke has forged. Why change a winning formula? And there's no doubt that BMW's expansion of its premium car lineup under Panke has reestablished BMW as the industry leader in premium cars. Reithofer promised to keep building cars that push the envelope on production flexibility and efficiency. As production chief, he's already delivered annual productivity gains of 5% and worked closely with development engineers to make BMW's factories among the most flexible in the industry.

"BIGGER ROLE."* Still, plenty of challenges lie ahead. Japanese challenger Lexus is likely to invest in production in Germany's backyard. To develop premium engineering cachet, Lexus might locate in the golden luxury-car triangle in southern Germany between Mercedes in Stuttgart, BMW in Munich, and Audi in Ingolstadt. That would put Toyota right in the heart of a region rich in auto engineering expertise. "They need to take the step into Germany's heartland to say, 'We play in the top league,' " says Panke. Nissan's luxury brand, Infiniti, is likely to follow the same path.


Reithofer says BMW will turn up the pressure in the U.S. market as it strives to boost sales to exceed 300,000 autos. As part of that effort, BMW is likely to expand production and purchasing in America in 2008 when it launches a new crossover model likely to be built in its Spartanburg (S.C.) plant. "The U.S. could play a bigger role," says Reithofer, who as head of U.S. operations during the 1990s ran the Spartanburg plant, reporting to Panke.

One thing Reithofer is not likely to do is chase a big global alliance. BMW learned its lesson about such marriages with Britain's Rover. Instead, BMW prefers highly targeted collaborations, such as the link with Austrian supplier Magna Steyr to produce BMW's X3 baby SUV. Linking up with Magna helped get the X3 to market faster. "We think we need cooperation partners, but not an additional car company," says Reithofer.

GAS-MILEAGE ERA.* With sales up 8% in the first half of 2006 and forecasts for operating margins hovering around an enviable 7%, Reithofer has no pending crisis, but he may eventually need to steer BMW through a shift in direction. With oil prices soaring, Reithofer and his team will have to figure out how to sell cars that are not just fun to drive but also do better on fuel economy. Making cars that deliver the joy of driving but are in step with a growing social consciousness about fuel consumption is one of the biggest challenges for BMW, Panke says.

Panke will likely be remembered most for his success in globalizing BMW's operations, with manufacturing now in the U.S., China, and India. Reithofer's reputation may rise or fall on how well he adjusts BMW to a new era of high oil prices and renewed environmental concerns.

[Declan]

Great article. It's nice to read about a management that actually enjoys working with each other and is collegial. No doubt that plays a hand in BMW's success.

[Brookside]

Helmut Panke, outgoing BMW CEO.

Helmut Panke will retire Sept. 1 as chief executive at BMW.
“The political discussion has begun about raising the retirement age,” he said. “It will raise the question of whether the 60-year rule makes sense.”
Published 7/25/2006 NYT

Helmut Panke of BMW is one of the most successful auto chief executives in Europe. As of Sept. 1, he will be a retired chief executive — the date clearly not of his choosing.

On Monday, as Mr. Panke introduced his successor, Norbert Reithofer, to a group of journalists here, he suggested that BMW’s mandatory retirement age of 60 for senior executives had become outmoded.

“The German mentality used to be that we should lower the retirement age to open up jobs,” Mr. Panke said. “The political discussion has begun about raising the retirement age. This will inevitably enter the corporate sector. It will raise the question of whether the 60-year rule makes sense.”

Mr. Panke said he did not contest the rule because it applied throughout BMW to people in nonmanufacturing jobs. Other executives said he had not lobbied for a contract extension. Even if he had, industry executives say, the Quandt family, which controls this stylish carmaker, would not have agreed.

But Mr. Panke, who will turn 60 on Aug. 31, is raising an issue that resonates beyond the privileged corridors of corporate Germany. The German government plans to lift the age at which people are eligible for retirement benefits to 67 from 65 — to draw more people into the work force and to reduce costs of social programs.


Bertelsmann, the media conglomerate, waived its retirement age of 60 for Gunter Thielen, who was 59 in July 2002, when he succeeded Thomas Middlehoff In BMW’s case, Mr. Panke has been at the helm for only four years — a period in which the company, which is based in Munich, expanded into China, diversified with its hip Mini brand, earned record profits, and overtook Mercedes-Benz as the world’s largest maker of luxury cars in terms of volume.

“It’s fun for me,” Mr. Panke said, when asked if he would like to stay on. “I like being the captain of the ship.”

The 60-year rule is claiming another respected member of BMW’s management board, Burkhard Göschel , who oversees development and purchasing and is also retiring this year. In 2008, a third board member, Ernst Baumann, who heads human resources, will turn 60.

Losing three of the six members of BMW’s management board within two years raises an issue of “continuity,” Mr. Panke said. Still, Mr. Reithofer, who is 50 and the head of production for BMW, has been a board member for six years, working closely with the chief executive from the start of his tenure.

For all the respect Mr. Panke commands, analysts expressed few qualms about the management change.

“BMW wants to be sporty, the brand that anticipates tomorrow’s technology today,” said Ferdinand Dudenhöffer , director of the Center for Automotive Research in Gelsenkirchen. “To do that, you don’t want your key executives to be elder statesmen.”

He added that no single executive dominates BMW like Carlos Ghosn at Renault or Wendelin Wiedeking at Porsche. BMW’s chief financial officer, Stefan Krause, and the head of marketing, Michael Ganal, have strong profiles outside the company, and were viewed as potential successors to Mr. Panke.

Mr. Reithofer’s reputation rests on his management of BMW’s global production network, which is considered one of the most flexible and efficient in the industry. He ran an assembly plant in South Africa, as well as BMW’s plant in Spartanburg, S.C. And he oversaw the building of a factory in the Eastern German city of Leipzig, which turns out BMW’s popular 3 series.

“The production world is fine-tuned at BMW, but they could be more flexible in design,” Mr. Dudenhöffer said. “Reithofer can bring more flexibility into designing and engineering the cars.”

A buttoned-down engineer, Mr. Reithofer is a contrast to the ebullient Mr. Panke. He turned aside questions about BMW’s competitors and seemed ill at ease when asked about his summer vacation plans.

But Mr. Reithofer spoke confidently about BMW’s goals. The company intends to increase production in the United States — a strategy that would allow it to hedge against the rise in the euro versus the dollar. Mr. Reithofer said he could envision BMW increasing the capacity of the Spartanburg plant from 140,000 cars a year to 200,000 cars a year, though he did not give a timetable.

“We see room for improvement in the U.S. market,” he said. “It’s the largest market in the world.”

[Brookside]

Why Did Helmut Go?
Speculation as Panke is replaced as CEO of BMW
Bloomberg News Wire/July 25, 2006

Why is BMW replacing Helmut Panke, the company's CEO since 2002, with soft-spoken manufacturing whiz Norbert Reithofer?

Officially, because Panke turns 60 on Aug. 31, reaching the company's mandatory retirement age. But BMW has bent that rule before, notably for longtime boss Eberhard von Kuenheim.

Here is what German analysts and newspapers say are the reasons Panke will be replaced Sept. 1:

Although he has boosted sales and revenues, BMW's operating profit has not grown proportionately.

BMW's supervisory board wants an engineer as CEO, to focus on improving quality and introducing more niche models. Panke is BMW's former CFO.

Panke has angered members of BMW's controlling Quandt family by publicly lobbying to keep his job beyond the retirement age.

BMW's handling of Panke's pending exit upset Munich's daily newspaper. "Panke did not deserve such a hasty farewell," the Sueddeutsche Zeitung wrote last week.

The company is indeed the world's third-most-profitable carmaker. Earnings as a percentage of revenue in 2005, before interest and taxes, were 8.1 percent. That compares with Porsche's 17.3 percent and Toyota's 8.9 percent, according to HypoVereinsbank of Munich.

But critics say that's not good enough. They also say Panke didn't move fast enough to expand the product lineup. New cars introduced in recent years -- such as the X3 and the 1 and 6 series -- were all developed under a previous regime.

Panke had hoped to stay longer.

"I would stay," he told reporters in April. "But the decision is up to the supervisory board."

Panke noted that von Kuenheim served until he was 63. In today's world, Panke said, "60 is not old."

Reithofer, 50, ran BMW's U.S. manufacturing operations in Spartanburg., S.C,. from 1998 to 2000. As global manufacturing boss since then, he is credited with accelerating the company's flexible-manufacturing strategy.

The supervisory board also appointed Frank-Peter Arndt, 50, Reithofer's successor as production boss. Arndt heads the BMW plant in Dingolfing, Germany.

Klaus Draeger, 49, takes over product development and purchasing. He replaces Burkhard Goeschel, 60, who will retire. Draeger is currently responsible for the 5, 6 and 7 series.

[Brookside]

Quandt Family sells $448m stake in BMW


The Quandt family, one of Germany’s richest, is selling 350 million euros ($448 million) worth of shares in Bayerische Motoren Werke AG, the world’s largest maker of luxury cars.

Dresdner Kleinwort is placing 8.7 million shares at ‘‘close to the prevailing market price,’’ a spokeswoman for Dresdner Kleinwort confirmed today. Johanna Quandt is selling 3,118,452 shares, Susanne Klatten is selling 2,343,277 shares and Stefan Quandt is selling 3,261,373 shares, according to an e-mail sent to clients by Dresdner.
BMW spokesman Marc Hassinger declined to comment.

The Quandt family owns stakes in BMW, Altana AG, a drugmaker, and Delton AG, a holding company. The members that hold most of the family’s fortunes are siblings Stefan and Susanne Klatten and their mother Johanna Quandt, the widowed third wife of Herbert Quandt.

Herbert Quandt saved the then-struggling BMW in 1959 by buying control for $1 million.

Johanna and Stefan Quandt and Susanne Klatten together held about 299 million shares, or 49.7%, of BMW, according to data compiled by Bloomberg News as of April 2006. The company is valued at 26.1 billion euros, based on Wednesday’s market price.


The Quandts are the major shareholders in BMW AG...this move is said to be a re-adjustment and re-apportioning of their stock portfolio.
The stocks that were sold went to what one BMW insider is characterizing as a "friend of the family."