| BMW puts new man in the driving seat as CEO retires |
| Last Updated(Beijing Time):2006-07-21 13:01 |
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BMW AG, the world's largest luxury carmaker, named Norbert Reithofer to succeed Chief Executive Officer Helmut Panke, who will retire upon turning 60 next month.
Reithofer, 50, will take over duties as chief executive on September 1, the German company said yesterday in an e-mailed statement to Bloomberg News. Frank-Peter Arndt, 50, will join the management board and replace Reithofer as head of production, and Klaus Draeger, 49, will replace development and purchasing head Burkhard Goeschel, who is also retiring.
BMW shares have fallen 19 percent since Panke, 59, became head of the carmaker in May 2002. At the same time, Panke has posted record earnings by stretching the main BMW brand with models such as the X3 sport-utility vehicle and 1-Series compact car. Reithofer joined BMW in 1987 after studying engineering and working as a researcher at the Technical University of Munich.
"I would have wished for someone from outside the company ranks to become CEO in order to inspire the team with new ideas," Jens Ehrhardt, who manages 4 billion euros (US$5 billion) in assets including 1 million BMW shares at Dr Jens Ehrhardt Kapital AG in Munich, said before the announcement.
Net income in 2004 rose 14 percent to a record 2.24 billion euros. BMW is forecasting another record profit this year after a 0.1 percent decline last year because of steel and oil costs and currency shifts.
The drop in BMW's share price during Panke's tenure has resulted from "macroeconomic factors" and the weakening of the dollar against the euro, which reduces revenue on BMW cars built in Germany and sold in the US, Michael Raab, an analyst at Sal Oppenheim in Frankfurt, said before BMW made the appointment official.
Reithofer has been the most likely choice to succeed Panke because of his role in making BMW production a benchmark for flexibility and efficiency in the auto industry, said Raab.
"With Reithofer's production and engineering background, he's the hottest candidate," said Raab, who has a "buy" recommendation on the stock. "The engineering guys are always the ones who do a good job at car companies."
BMW's top managers are required to retire at age 60, Marc Hassinger, a spokesman, said. Panke turns 60 in August.
"The 60-year rule is total nonsense," said Ehrhardt. "You are only wasting a huge amount of experience and further potential."
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