By Sara Germano
BERLIN -- BMW AG has picked its head of production, Oliver Zipse, to be its next chief executive, as the German auto maker contends with shrinking profit, global trade fights and the intensifying race to develop electric cars.
Mr. Zipse, a 28-year company veteran, will take the helm Aug. 16, BMW said Thursday. The announcement follows Harald Krüger's decision two weeks ago to step down as the car maker's chief executive. BMW said that Mr. Krüger and the company mutually agreed he would resign on Aug. 15.
Nobert Reithofer, chairman of BMW's supervisory board, described Mr. Zipse as "a decisive strategic and analytical leader." Mr. Zipse, 55 years old, has experience in engineering and has served as the company's production chief since 2015.
The shake-up is expected to be one of the luxury-auto maker's remedies for a host of problems, including a global economic slowdown, uncertainty around the U.K.'s plans to leave the European Union and the challenge of building costly electric vehicles to meet stricter emissions regulations.
In March, the Munich-based company issued a profit warning and said it aimed to cut as much as EUR12 billion ($13.5 billion) in costs while effectively freezing hiring for 2019, in part because of the cooling global economy.
The company's auto business swung to a loss in the first quarter largely because of a charge it took to cover potential fines stemming from a European antitrust probe. The European Commission said a preliminary investigation determined that BMW and German rivals Daimler AG and Volkswagen AG had colluded to prevent competition in emissions technology. The companies denied the allegations, and BMW has said it would contest the judgment.
The German auto makers are in the middle of a rough year. Last week, Daimler issued its second profit warning in a month because of higher-than-expected costs relating to an airbag recall, as well as legal proceedings involving the Mercedes-Benz maker's diesel vehicles. Volkswagen and some of its management face fresh charges this year from U.S. and German authorities regarding the car company's involvement in a four-year-old diesel-emissions scandal. The company has already paid more than $25 billion in fines, penalties and compensation to settle civil and criminal litigation related to emissions cheating.
Those challenges, along with stricter emissions regulations, are pushing auto makers into a competitive race to develop electric and self-driving vehicles.
Last week, VW and Ford Motor Co. expanded an alliance to develop electric vehicles and invest in autonomous driving startup Argo AI, valued at $7 billion. Likewise, BMW and Daimler have agreed to cooperate on developing autonomous vehicles, as traditional auto makers contend with competition from technology companies including Alphabet Inc.'s Waymo LLC, Apple Inc., and Uber Technologies Inc.
Industry watchers say BMW's naming Mr. Zipse chief executive is straight out of the company's playbook. Philippe Houchois, equity analyst for Jefferies, said the auto maker has traditionally promoted its production chief to the top role. Mr. Krüger held that title before becoming CEO in 2015. But given BMW's recent struggles, Mr. Houchois added, it remains to be seen if the safe bet is the best bet.
"Whether they need something evolutionary or more creative, that's a question that remains," he said.
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