By William Boston
FRANKFURT-- Volkswagen AG has poached a senior BMW executive in
a reshuffle of its executive management aimed at bolstering the
German car maker's VW brand which is struggling with weak profits
and falling sales in major markets.
Volkswagen on Tuesday said its supervisory board has appointed
Herbert Diess to take over as head of the VW brand on October 1,
2015. Mr. Diess is currently head of development at BMW and was
disappointed at being passed over for the CEO's job, according to
two people familiar with the situation.
BMW announced separately that CEO Norbert Reithofer would step
down a year early to pass the wheel to Harald Krüger, who is 49
years old and is BMW's board member in charge of production. Mr.
Krüger takes charge in May. Mr. Reithofer is expected to become
chairman of the supervisory board, replacing Joachim Milberg.
The separate moves mark the first of a number of anticipated
successions at the top of Germany's automotive companies.
With the departure of Mr. Reithofer, BMW is taking "the first
steps of a generational change, which combines the need for
continuity and experience with the creative energy of the younger
generation," said Stefan Quandt, a member of the family that
controls BMW, in a statement.
Daimler AG, which owns Mercedes-Benz cars, last year extended
CEO Dieter Zetsche's term until the end of 2016. Mr. Zetsche hasn't
made clear whether he is eager to stay on or to make room for a
younger executive to move into the driver's seat.
Volkswagen's decision to put Mr. Diess in charge of the
company's biggest business, which has sold 5.59 million cars so far
this year, puts the BMW veteran in pole position to succeed CEO
Martin Winterkorn, whose term expires at the end of 2016.
Mr. Winterkorn will remain CEO of the Volkswagen group, but will
no longer run the day-to-day operations of the VW brand. The
namesake brand is Volkswagen's biggest business and produces a
range of models from the Golf compact, Passat and Jetta sedans to
the Touareg sport-utility vehicle.
VW brand sales to the end of November rose about 2% from a year
earlier. Growth is driven largely by China, where sales rose 12%
during the same period. Sales were up about 5% in Europe, but have
fallen sharply in Russia, Brazil and the U.S., key markets in
Volkswagen's drive to overtake Toyota Motor Co as the world's
biggest car maker by sales.
Investors have complained that Mr. Winterkorn is too busy
overseeing Volkswagen's broad portfolio of car brands from VW, Audi
and Porsche to Skoda, SEAT, Bentley and Bugatti to be able to focus
on fixing the VW brand's struggling business and boost the
division's profit margins to 6% by 2018.
That job will now be left to Mr. Diess, who is "well known for
his direct and straight management style," said Arndt Ellinghorst,
head of automotive research at Evercore ISI research group.
"This step puts the executive management of both the group and
the brand on an even broader footing," Mr. Winterkorn said in a
statement.
Mr. Winterkorn will continue in his role as CEO of the
Volkswagen group.
Natalia Drozdiak contributed to this article.
Write to William Boston at william.boston@wsj.com
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