Harald Kruger
The CEO retires after 27 years at BMW.
(Photo: Sepp Spiegl)
Munich is two weeks Harald Kruger still BMW-Chef, the 16th of August is his last working day. Before his designated successor Oliver Zipse the Transactions in the corporate headquarters takes over, Harald Krüger took stock on Thursday. over the first half of the Munich car manufacturer and about his nearly four-year term as CEO,
“The BMW Group is robust, strong in innovation and well positioned, “Krüger says of his heritage. In fact, the half-year results show a mixed picture. Unlike the competitors Daimler and Audi In the first six months, Munich succeeded in selling slightly more cars than in the previous year, and its market share is growing.
While the paragraph in the United States and Europe declined slightly, it rallied strongly in China. On the largest single BMW market, sales are 16.8 percent higher than in the previous year. The downside: More than ever, BMW depends on its success in the Far East.
BMW is also dependent on the increasing shares of SUVs in the portfolio. With the compact X2 and the giant X7 BMW has two new models on offer, also the X5 was fundamentally renewed. Now that the X3 is built not only in the US, but also in China and South Africa, BMW can serve all markets sufficiently. competitor Daimler has been struggling for months with production difficulties at his SUV plant in Alabama.
The expensive and well-equipped SUVs help BMW to stabilize the result. Although the operating result in the car business collapsed by a quarter compared to the same quarter of the previous year, unlike at the beginning of the year, BMW is no longer in the red.
Kruger and CFO Nicolas Peter had to issue a profit warning in the first quarter, as BMW must fear a billion-dollar antitrust fine of the European Commission in terms of emission control.
The prices are under pressure
BMW is no longer running as smoothly as in previous years, even without special charges. Because the additional paragraphs are apparently also bought with higher discounts. “We had hoped that we could lower even more the discounts,” admitted CFO Peter.
Especially in the US and Europe, prices are under pressure, BMW and Mercedes are already throttling the construction of new capacity. Although BMW has a new plant under construction in Hungary – when cars are produced there, the board leaves open.
More important for Peter is the stabilization of the results. With an EBIT margin of 6.5 percent in the car business, BMW is now two percentage points below the previous year. The target for the full year is between 4.5 and 6.5 percent.
By 2022, the costs are to be reduced by around twelve billion euros, primarily through savings in material purchasing, in the development and purification of models and equipment. However, the “target corridor” of eight to ten percent spent in recent years remains “the basic aspiration that BMW strives for in a stable environment,” the Group explained.
But the environment is anything but stable: The threat of US President Donald Trump is still in the area to provide car imports from Europe to the US with a penalty of 25 percent. Even the latent conflict between the US and China can cost BMW a lot of money if the SUVs built in South Carolina are again subject to punitive tariffs on imports into China.
A hard Brexit should also jeopardize the BMW forecasts. Great Britain is not only an important sales market, but also the home and production base of the group’s subsidiaries Mini and Rolls-Royce,
Challenges that Oliver Zipse will have to deal with in the future. Krüger had declared at the beginning of July that he would not renew his contract expiring in May 2020 as CEO. Critics in the company accused him of not having acted decisively enough, especially with the introduction of electric mobility.
At the end of July, the Supervisory Board then appointed Production Director Zipse as his successor. The 55-year-old is expected to take over as CEO in just two weeks. So far it is not clear which course the future BMW boss wants to take.
Krüger wishes Zipse at least “much success”. He himself drew a positive balance of his term. As one of his most important decisions, he described the majority takeover of the Chinese joint venture with Brilliance, which should secure BMW more penetration and more profitability in China in the future. The model offensive initiated by Krüger will also help his successor.