BMW’s first profit warning in decade adds to board tension
September 27 2018 12:16 AM
The BMW logo sits atop the towers of the company’s headquarters in Munich. The luxury car maker has set up a special working group to help new sales head Pieter Nota get on the front foot, and CEO Harald Krueger is considering a broader shakeup of the sales structure, sources say.

Bloomberg Munich

BMW AG’s first profit warning in a decade comes on top of existing leadership tension under chief executive officer Harald Krueger, who’s tasked with reviving sales momentum and staving off encroaching competitors like Mercedes-Benz and Tesla Inc.
Sluggish growth was a problem even before BMW slashed its outlook on Tuesday and said it would rein in expenses. The Munich-based luxury car maker has set up a special working group to help new sales head Pieter Nota get on the front foot, and Krueger is considering a broader shakeup of the sales structure, according to people familiar with BMW’s strategy.
Boardroom bickering has intensified amid a prolonged period of lacklustre show under Krueger, a BMW lifer at the helm for the past three years, said the people, who asked not to be identified discussing internal deliberations. The company has gone from a leader to laggard on electric cars, and in 2016 it lost its luxury-sales crown to Daimler AG’s Mercedes. The stagnant performance was already putting pressure on Krueger to respond, the people said.
A BMW spokesman declined to comment on board discussions or on any potential overhaul in the company’s sales organisation.
Tuesday’s profit warning, blamed on trade conflicts and price competition, comes after BMW struggled with tentative model overhauls that have left the manufacturer looking staid after a decade at the pinnacle. Moving early among major carmakers with the electric i3 in 2013, BMW won’t match a fresh generation of Mercedes and Audi battery-powered sport utility vehicles unveiled this year until 2020. At next week’s Paris auto show, the carmaker will present the revamped 3-Series sedan, a bread-and-butter vehicle that’s among its biggest seller by volume that’ll vie for attention among popular SUVs and attention-grabbing self-driving prototypes.
Nota joined BMW from consumer-electronics giant Royal Philips NV last year, a rare top hire from outside the company signalling a search for fresh expertise. BMW’s delivery growth of 4.2% in 2017 has been cut by more than half this year through August. Nota has started working with Chief financial officer Nicolas Peter and Krueger to come up with new strategies, with Chairman Norbert Reithofer checking in regularly, one of the people said.
BMW is also considering whether to bundle group sales in one management-board position again, after creating a dual structure that splits responsibilities. While Nota leads sales for BMW’s namesake brand, Peter Schwarzenbauer has oversight of all operations including sales for Rolls-Royce ultra-luxury vehicles, Mini city cars and motorcycle nameplates.
The ranks of top management are being tested at a time when they’ve also been thinned out, following the surprise departure of procurement head Markus Duesmann to Volkswagen AG. Duesmann was a strong candidate to replace Klaus Froehlich, 58, as development chief once the latter reaches BMW’s age limit in two years, one of the people said. Duesmann was also a potential eventual successor to Krueger.
The loss of Duesmann, after former BMW executive Herbert Diess became VW’s CEO, irked both chairman Reithofer and Deputy chairman Stefan Quandt, who holds a 26% stake. As a result, Duesmann is unlikely to be released early from non-compete provisions of his contract, the people said. This would prevent Duesmann working for VW for two years. Spokesmen for the executives declined to comment.

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