BMW picks insider Zipse as CEO to catch up with rivals

Oliver Zipse
Updated 20 July 2019

BMW picks insider Zipse as CEO to catch up with rivals

  • German giant has lost ground to Mercedes-Benz and Tesla as tech steps up

FRANKFURT: BMW has named Oliver Zipse as its new CEO, continuing the German carmaker’s tradition of promoting production chiefs to the top job even as the auto industry expands into new areas such as technology and services.
Hailing Zipse’s “decisive” leadership style, BMW hopes the 55-year-old can help it win back its edge in electric cars and the premium market  from rival Mercedes-Benz.
But some analysts questioned whether Zipse was the right choice with new fields such as software and services like car-sharing becoming increasingly important.
“What is intriguing is the cultural bias to appoint the head of production. It works sometimes but ... being good at building cars is not a defining edge the way it was 20 years ago,” said Jefferies analyst Philippe Houchois.
Current CEO Harald Krueger, and former chiefs Norbert Reithofer, Bernd Pischetsrieder and Joachim Milberg were all former production heads.
Zipse joined BMW as a trainee in 1991 and served as head of brand and product strategies and boss of BMW’s Oxford plant in England before joining the board.
He will become chief executive on Aug. 16, taking over from Krueger who said he would not be available for a second term.
“With Oliver Zipse, a decisive strategic and analytical leader will assume the Chair of the Board of Management of BMW. He will provide fresh momentum in shaping  the future,” said Reithofer.
Zipse helped expand BMW’s efficient production network in Hungary, China and the US, in a move that delivered industry-leading profit margins.
Under Krueger, BMW was overtaken in 2016 by Mercedes-Benz as the best-selling luxury car brand.
It also had an early lead over US  rival Tesla in electric cars, but scaled back ambitions after its i3 model failed to sell large numbers.
Reithofer initially championed Krueger’s low-key consensus-seeking leadership, but pressured him to roll out electric vehicles more aggressively, forcing Krueger to skip the Paris Motor Show in 2016 to reevaluate BMW’s electric strategy.
Krueger’s reluctance to push low-margin electric vehicles led to an exodus of talented electric vehicle experts, including Christian Senger, now Volkswagen’s (VW) board member responsible for software, and Audi’s Markus Duesmann, who is seen as a future CEO of the company.
Both were poached by VW CEO Herbert Diess, a former BMW board member responsible for research who was himself passed over for BMW’s top job in 2015.
VW has since pushed a radical 80 billion euro ($90 billion) electric car mass production strategy, and a sweeping alliance with Ford.

Other skills
“A CEO needs to have an idea for how mobility will evolve in the future. This goes far beyond optimising an existing business,” said Carsten Breitfeld, chief executive of China-based ICONIQ motors, and former BMW engineer. “He needs to build teams, attract talent, and promote a culture oriented along consumer electronics and internet dynamics.”
German manufacturers have dominated the high-performance market for decades, but analysts warn shifts towards sophisticated technology and software is opening the door to new challengers.
“Tesla has a lead of three to four years in areas like software and electronics. There is a risk that the Germans can’t catch up,” UBS analyst Patrick Hummel said.
Germany’s Auto Motor und Sport car magazine, normally quick to champion German manufacturers, this week ran a cover questioning BMW’s future.
“Production expertise is important, but if you want to avoid ending up being a hardware provider for Google or Apple, you need to have the ability to move up the food chain into data and software,” a former BMW board member said.


Italy cabinet approves 2020 budget that cuts taxes, cracks down on evaders

Updated 46 min 19 sec ago

Italy cabinet approves 2020 budget that cuts taxes, cracks down on evaders

  • Italian budget draft to be submitted to Brussels
  • Budget drops previous commitment to reduce deficit

ROME: Italy’s government approved a draft 2020 budget in the early hours of Wednesday that aims to cut taxes for middle-earners and crack down on tax evaders, while holding the deficit at the same level as this year, government officials said.
The package was agreed at a cabinet meeting of the anti-establishment 5-Star Movement and its center-left coalition partner the Democratic Party. It will now be sent to Brussels for scrutiny by the European Commission.
The budget scraps a hefty increase in sales tax worth 23 billion euros ($25.35 billion) which had been scheduled to take effect in January, but which the coalition feared would push Italy’s already-stagnant economy into recession.
However, since setting the economic targets that provide the framework for the budget in September, the ruling parties have struggled to agree on many of the measures to adopt.
Full details of all the agreed measures were not immediately available, but a final version of the text seen by Reuters ahead of the late night cabinet meeting showed the government planned income tax cuts for middle-earners. The reduction will cost state coffers some 3 billion euros in 2020.
The financial bill targets the 2020 deficit to remain at 2.2% of gross domestic product for a third consecutive year.
Deputy Economy Minister Laura Castelli, from the 5-Star Movement, said in a statement on Tuesday that the lengthy negotiations with the PD had yielded “an expansionary budget” that will increase benefits for poor families and the disabled.
To help finance these measures, the government has put together a raft of measures to curb rampant tax evasion which costs the state some 109 billion euros every year, according to Treasury estimates.
The budget must be presented to parliament by Oct. 20 and approved in both houses by the end of this year.
It remains to be seen whether it will be rubber-stamped by the European Commission.
The package targets the structural deficit — which strips out the effects of economic growth fluctuations — to rise by 0.1% of GDP next year, reversing a commitment made in July to reduce it by 0.6 points.
The anti-tax-evasion plan, targeted to raise an ambitious 7 billion euros, aims to encourage the use of easily traced credit and debit cards rather than opaque cash transactions.
The budget draft seen by Reuters introduces sanctions of up to 2,000 euros for retailers and service providers that do not accept credit cards. It lowers to 2,000 euros from 3,000 the threshold above which it is illegal to make cash transactions. The amount is expected to be further pushed down to 1,000 euros from 2022.
To encourage people to ask retailers for receipts, the budget also launches lotteries in which holders of the winning receipts, identified with a number, get a tax-free cash prize.
These “receipt lotteries” have already been adopted in several countries including Portugal, Slovakia and Malta.
A new “web-tax” on digital companies aims to raise around 600 million euros each year, the draft showed.
The levy, applied on companies with annual global revenues worth at least 750 million euros and digital services exceeding 5.5 million euros in Italy, obliges them to pay a 3% levy on Internet transactions conducted in Italy.