New BMW chief Krueger takes charge as tech challenges mount

Tue May 12, 2015 6:03pm EDT
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By Edward Taylor

MUNICH (Reuters) - Harald Krueger takes over as CEO of BMW (BMWG.DE: Quote) after the group's annual shareholders' meeting on Wednesday, a job needing nerves of steel, or maybe carbon fiber given recent trends, as the company battles to keep its lead over Mercedes and Audi.

Under outgoing chief executive Norbert Reithofer, BMW invested between 1.5 billion euros ($1.7 billion) and 2 billion to develop carbon-fiber electric and hybrid cars, according to analysts' estimates.

Saving 100 kilograms (220 lb) in vehicle weight can translate into a cut in fuel consumption of 0.6 liters per 100 kilometers, helping BMW meet stringent anti-emissions rules, consultants at Frost & Sullivan said.

But carbon fiber is expensive, driving up production costs. A kilo of carbon fiber costs around 16 euros, compared with less than a euro for a kilo of common steel, according to Leonidas Dokos, a sales director at Frost & Sullivan.

Metzler Bank autos analyst Juergen Pieper said: "BMW's forte has been efficiency. Can Krueger keep it up as the number of vehicle variants increases and as cars become more complex, particularly with ambitions to use more carbon fiber?"

Since 2005, BMW Group has defended the title of being the top-selling premium auto maker by volume sales, mainly by expanding its presence in emerging markets and diversifying its range into sports utility vehicles.

At the same time, it has maintained profit levels for its autos division at between 8 and 10 percent of sales, in large part thanks to efficiency gains in production of 5 percent every year.

Krueger, a 49-year-old German currently board member for production, has paid a key part in the expansion by increasing manufacturing to record levels, including at factories in China, while expanding the company's range.   Continued...

German premium automaker BMW's designated Chief Executive Harald Krueger reacts during the company's annual news conference in Munich March 18, 2015.   REUTERS/Michaela Rehle