BMW CEO to step down in wake of disappointing earnings
FRANKFURT, Germany -- BMW CEO Harald Krueger is stepping down amid weakening profits at the luxury automaker and pressure to meet challenges from new technologies.
The Germany company said Friday that Krueger, 53, would not seek an extension of his contract, which expires at the end of April 2020. The board of directors will meet to discuss the issue of a successor on July 18 and Krueger will remain in his job until a decision is made.
The news comes after BMW lost money on its automotive business in the first quarter of the year after the company was hit by a 1.4 billion euro ($1.6 billion) charge for an anti-trust case and by higher upfront costs for new technology. Only the financial services and motorcycle divisions kept the group as a whole in profit.
The automotive loss was in sharp contrast to the steady profits and fat profit margins that the carmaker used to rack up quarter after quarter. Profit margins excluding the anti-trust charge had not been so weak since 2006-7 by one analyst reckoning, not counting the global financial crisis and recession in 2008-9 when the company turned in several lossmaking quarters.
BMW, which is based in Munich, is facing pressures that are affecting the car industry in general, including high costs to develop electric vehicles to meet tighter emissions regulations in Europe and China, and investments in autonomous vehicles to compete with tech companies like Waymo and Uber. BMW has been hit by increased tariffs on vehicles exported to China from its plant in Spartanburg, South Carolina, due to the trade dispute between the U.S. and China.
The company downgraded its profit outlook for the year and announced a cost saving plan in March that aims to trim 12 billion euros in costs by the end of 2022 by dropping some models and streamlining vehicle development.
A company news release quoted Krueger, who became CEO in 2015, as saying he would like to pursue "new professional endeavors."
It's typical for German executives' contracts to be renewed a year ahead of their expiration, and the lack of an announcement on a renewal had led to speculation in the German news media that his tenure might be shaky.
Board Chairman Norbert Reithofer - who was Krueger's predecessor as CEO during years of strong profits - praised Krueger's "unwavering dedication to the BMW Group" and said he had "complete respect and understanding for his decision and his future plans."