Mercedes, BMW, VW Chiefs Make Way For Younger Generation.

Mercedes, BMW, VW Chiefs Make Way For Younger Generation.

Some Older Leaders Move On, With One Notable Exception.

The German auto industry has freshened up its leadership by promoting new CEOs and signalling that the younger generation is ready to take over the top jobs.

Experts said leadership changes this month at Volkswagen, BMW and Mercedes represented a smooth, inter-generational transition, which was better done during these good times. Given the great success of the German industry, don’t expect to see much in the way of changing direction. But one move that might spook shareholders would be a decision by Volkswagen’s venerable leader Ferdinand Piech to move on, but that seems unlikely.

Earlier this month, Volkswagen announced that it had hired Herbert Diess, 56, from BMW to head up the troubled VW brand, replacing CEO Martin Winterkorn who will still lead led the entire group. Volkswagen owns premium brands like Audi, Porsche, Bentley and Lamborghini, as well as mainstream outfits like its own name brand VW, SEAT and Skoda.

BMW announced Harald Krueger, 49, will take over from CEO Norbert Reithofer, 58.

Daimler announced that Ola Kaellenius, 45, will take over as CEO for Mercedes, and elevating him as favourite to take over eventually from Dieter Zetsche as Daimler CEO. Zetsche relinquishes his Mercedes job.

Mercedes profit target
Evercore ISI analyst Arndt Ellinghorst said the elevation of Kaellenius will allow Mercedes to concentrate on its long-term target of raising profits to 10 per cent, from around 8.5 per cent now. This lags BMW and Audi.

“The company has gone quiet regarding this target and the market appears to have lost conviction that Daimler is still committed to this level of profitability,” Ellinghorst said.

Mercedes’ key long-term problem is efficiency, and it employs 40 per cent more workers than BMW but sells 20 per cent less cars.

Helmut Becker, head of the Munich-based think tank IWK, said this was a good time for German auto manufacturers to change crucial personnel.

“Because the German industry like VW, BMW and Daimler has had probably its most success in 2014 than it’s ever had, it’s a good time for change. The younger generation is coming. That’s the culture of the German car industry, better to make changes at the top in the good times, and not wait for a crisis,” Becker said.

None of these moves can be seen as heralding any change of direction in Germany’s world class car industry. It weathered the supply side storm engineered by Chancellor Gerhard Schroder in the mid-2000s which led to much modernization and cost cutting, preparing the way for the hugely successful car makers of today.

Piech remains though
Current changes in German leadership can be seen as seamless. One change that might shake up the industry and its shareholders would be the end of Ferdinand Piech’s reign as VW leader.

Chairman of the board Ferdinand Piech is now a robust 77 and the family has a voting majority. Some experts fear a big shake-up when Piech eventually steps down, and worry about a power vacuum.

But IWK’s Becker believes Winterkorn will replace Piech when he eventually steps down, and doesn’t see any insurmountable problems when this happens.