German Car Zone

There have been many speculations why Dr. Panke really had to leave CEO position. I've spoken with one of my sources that told me the "Rule 60" was not the reason Panke had to leave.

Dr. Panke was too much concentrated on financial aspects of the business. He was indeed responsible for taking BMW out of the Rover debacle (excellent crisis manager), yet when BMW had to respond to the future Dr. Panke proved to be a very rigid decision maker. He was absolutely not keen on further expansion, which could hurt profitability in short terms, yet it is essential for future profits in long terms. Dr. Panke strongly disagreed with such outlook.

He insisted on very high profit margin at any price – even sacrifing further expansion. The company became too much financially oriented, and less product & marketing focused (eg. cost cutting and lower development budgets). Product planning strategists warned Dr. Panke & the Management Board many times BMW had to develop & launch new model lines more quickly in order not to lag behind the competition growth in the future. But Herr Panke was still not keen on the too radical expansion idea. He & his team rather worked on financial aspects of the business. He even blocked some projects. Of course investors were pleased with the financial results, but especially the Quandts have long-term interest in the BMW AG, and therefore are interested in stable & healthy company.

1er & 2er line, 6er & X3 were confirmed before Panke becoming a CEO. He even voted against 1er line when he was still a CFO (he thought 1er profit margins would be too low). The only two new projects that get green lights under Panke were X6 & F5. The lack of new products in years 2011 & 2012 (last years of E90 lifecycle) could hurt BMW very much – in the years when E90 sales are expected to decline to the insufficient level, and when income will be much lower. Product planning strategists declared red alert.

Herr Reithoffer & Herr Krause were more keen on expansion. And the Supervisory Board decided one of them would be more appropriate for CEO position (Rule 60 came as a very convenient excuse for Panke’s dismissing) . In the end Herr Reithoffer was chosen – because Herr Krause & his financial expertise would be still very needed, and Herr Reithoffer being an engineer and a ex production chief would be able to rationalize production even more extensively.

So, not everythink is as rosy in BMW AG HQ as they try to paint it in the public.

So, in the last 2 months some projects were already approved (Z8 successor, F3), and some that were put on ice will be taken in the consideration again. Till May 2007 the product gap for 2010 – 2012 will be filled – some decisions will be taken urgently, and new models decided – some also for the post year 2012. New models include eg. X4 SAC, X7 SAV, X8 SAC, 1er sedan, 1er touring, 2er shooting brake, 2er targa, Z2 roadster, X1 SAV, X2 SAC, Z6 roadster / coupe, 4er 4dr coupe, 3er shooting brake, 8er / 9er coupe or 4dr coupe, MINI coupe, MINI sedan, MINI AWD, RR baby coupe & cabrio, etc).

So, next 5 months will be very interesting. I hope I’ll find some extra time to report the development.

Interesting news Eni. It seem like BMW was an ideal company for Dr. Panke. A person with his type of goals, morals and leadership style is more suited for a manufacturing company of furniture or home electronics. The automotive industry is very delicate. Although high profits margins are important, they can be acheived if the company is on a stand still and doesn't develop new cars.
Taking chances by developing new products are neccessary for profits in future.

Porsche is very good example of a financially perfect automotive company. Their profits are very high but at the same time they have the latest years presented new cars like the Cayenne, Cayman. Cars in the pipeline are the Panamera, a new GT and possibly as smaller US.

The complete opposite of Porsche is Jaguar which have only introduced 3 new car models the latest 10 years. The result? Jaguar is in a very bad shape with a very weak and non-competative line up.

More proof on why car companies should always be headed by engineers and not finance guys.

Amen to that!

I would say a good combination of both. Having only engineers would definately not be good for the financial health/survival.

That's not true, there are rigid finance guys but there are also crazy (but fantastic) engineers (do you remember a certain ferdinand) and both aren't good managers.

I agree you with you that. Any company that is heavy on engineering should have an engineer with a financial mind to run it.

Thanks for this info, the future will indeed be interesting now that Panke is out.

I look forward to new models not only in existing lines but also in new segments.

I think a finance guy will make a good CEO. But from what i've learnt and -expeienced, CEOs with a finance background tend to take a defensive strategy, i.e cut costs and maintain high profit margins, and CEOs with an operations background tend to take a offensive strategy i.e expansive.

A good CEO is run by someone with the vision and ambition like a Piech, but with the financial discipline of a Panke. I hope Dr Reithofer has that vision but is supported with the financial discipline of Mr Krausee. I hope the Reithofer-Krausse will make a good combination. I also hope that Dr Draeger will also make a good R&D chief like Reitzle and Goschel.

I think Panke did a good job as a CEO, he left the company in better terms than when he began his tenure. He should be proud of what he achieved.

Absolutely Panke's role has been very important for BMW. He was the man who actually saved the company from Rover debacle. And lead BMW to a very bright future. But sometimes you can not rest on your laurels forever. New times are coming, new approach & new ideas are needed. He was thanked by Supervisory Board, and that's it.

Herr Krause is a "financial magician". I'm sure he will be able to steer BMW in a very healthy financial future.

Herr Reithoffer is a very good engineer & manager. He is responsible for very flexible production BMW are using now. Still his task will be to rationalize & optimize the production even further.

Dr. Draeger is also a very good manager (and engineer). More manager than engineer.

Like I said: the future will be more product & marketing (consumer) oriented, not so much financially oriented. Expect some lower profits for BMW in short terms, yet better products - and healthy & profitable company in the long run.


One example of Panke's philosophy: if he was in charge when a decision for MINI revival was made, he would had opposed to it strongly because of low profit margin. And now imagine what an opportunity would have been wasted. So much of too much financially focused managers.