Harald Krüger, BMW's chief executive since last May, will celebrate the carmaker's 100th anniversary on Monday, but the truly important event will take place a week later.
The 50-year engineer will next week present the luxury carmaker's strategy until 2025 and the main focus will be digitalization, business weekly WirtschaftsWoche, a sister publication of Handelsblatt, has learned.
"The subject of digitalization cuts across every area of the company," Mr. Krüger told WirtschaftsWoche. "That must be optimized."
BMW is still the world's largest maker of luxury cars, but it is seen as a laggard in developing a successful electrically-powered car as Silicon Valley-based Tesla Motors has done. There are also fears that Google, Apple and ride-sharing firm Uber might overtake the Munich-based firm when it comes to connecting the car to the Internet.
To boost BMW's digital operations, the carmaker has recently named former Google manager Jens Monsees as its vice president for digital strategy, the highest-ranking digitalization post at BMW, WirtschaftsWoche has learned.
The subject of digitalization cuts across every area of the company. That must be optimized. Harald Krüger, Chief Executive, BMW
Moreover, the company will announce a partnership with Austrian IT firm Loxone Electronics next week, when BMW will also present its annual results. Loxone Electronics offers the connectivity of almost all electronic functions and devices and appliances around the home.
BMW will most likely bring to the cooperation its home storage battery and its new Open Mobility Cloud, an online platform that makes available such things as the charging status of electric car batteries, the weather report and movie theater schedules.
Mr. Krüger also plans to restructure BMW's development department as the carmaker's digitalization and IT department are in a trench war and two high-ranking managers, leading electronics and IT respectively, are not working as team players, WirtschaftsWoche has learned from people familiar with the matter.
The development department's restructuring could start on April 1 - no joke - and could result in a new executive board position for digitalization, the people told WirtschaftsWoche. Mr. Krüger declined to comment on the planned changes.
Whether Mr. Monsees, a 45-year old business economist, will become the new digitalization executive was not clear, but in his currernt role as vice president digital strategy he reports to BMW strategist Markus Schramm, who does not sit on the executive board.
Mr. Monsees had worked at BMW before he left for Google seven years ago. As automotive director at the Internet giant, Mr. Monsees developed digital marketing strategies for all the major German automobile companies. Following that, he restructured sales and information technology (IT) as chief digital officer on the executive board of Arvato, a marketing subsidiary of Germany's largest media group, Bertelsmann.
Mr. Monsees is slated to build up a new division with a staff of about 20 that will bring under one roof the group’s existing projects and devise new business models, from car sales over the Internet to 3-D printing in production to use of big data, which means analyzing huge amounts of data and discovering ways to benefit the company.
Mr. Monsees is considered to be a digital innovator. The first time he worked for BMW, he developed BMWTV, an award-winning Internet website that featured videos about the company’s events and new products.
“To digitalize a company means not only to introduce new technologies but above all to change the organization, culture and communication,” Mr. Monsees once said at a public appearance.
BMW has lost ground in automotive engineering and innovation compared with that of the competition. In an index based on data from the Center of Automotive Management, BMW ranks behind five other automakers.
That’s a problem that Mr. Krüger inherited from his predecessor, Norbert Reithofer, who is now BMW's non-executive chairman. Mechanical engineers and engine developers still rule at BMW, while IT and software personnel are “at the very bottom of the food chain,” according to an insider involved in digitalization projects at BMW. “IT functions are regularly forgotten or thought about too late in the development,” the person said.
BMW hasn’t succeeded in hiring enough IT experts, and hundreds of such positions are still open. The current 4,000-plus software experts are overworked, one employee said. After a number of reshufflings, the source said, the division is on the verge of incapacitation, it has an extremely bad reputation inside the company.
If Mr. Monsees wants success, then he’ll have to convince the BMW boardroom to break with traditions. That also includes being more aggressive in presenting innovations.
While Elon Musk of Tesla Motors makes a show of presenting himself as the bringer of salvation to electric mobility and the decentralized supplying of energy, the Bavarians tend to make themselves appear rather small and conventional. The whole world is talking about Tesla’s solar-electric home battery pack, Powerwall, but no buzz exists about what BMW recently presented: its comparable home system to charge electric cars.
“We can’t leave the public discourse about the future of the automobile industry to Tesla or Uber,” Mr. Monsees said recently.
As his mission, Mr. Krüger will present out the comprehensive digitalization strategy for now through 2025. At the same time, he will have to address the company’s problems in its traditional business. Car sales are not running as hoped, above all in Germany. Daimler is about to dethrone the Bavarians in their home market.
“The 3 series and 5 series are getting me nowhere,” said the owner of a dealership that sells about 4,500 BMWs and BMW Minis annually. Sales of the BMW 1 series, however, are lagging behind expectations as is those of the 2 series Gran Tourer. At the moment, a discount of 20 to 40 percent is offered on some vehicles.
Above all else, Mr. Krüger must improve BMW’s presence on the Internet. So far, BMW customers in Germany have been able to order only the electric cars i3 and i8 online. In Britain, the whole range of BMW vehicles is available via the Internet. The British dealers are connected with customers via phone, live chat and email.
The model is “very successful” said Mr. Krüger, which is why BMW is examining “expanding it worldwide.”
What also is key is what Mr. Krüger has planned for the “sad subject of i,” as one BMW dealer referred to the company’s electric cars.
Mr. Krüger’s predecessor had carbon-fiber models developed while competitors were making cars built with sheet metal and aluminum frames. Even with special equipment and low prices, sales of the BMW electric models languished. Ever since it became known that new models were coming with more powerful batteries, few customers were interested in the older versions. BMW has sold only 50,000 i3 and i8 electric cars worldwide since 2014. Tesla sold that many electric Model S cars alone last year.
Mr. Krüger is now putting his hopes on the crossover i5 – as well as government subsidies for electric cars.
Some guests at the anniversary celebrations this coming week might be especially hopeful and happy about new developments at BMW. Namely, the guests are the members of the Quandt family. As major shareholders, the Quandts received €815 million in dividends from BMW last year.
Rebecca Eisert and Kerstin Dämon are reporters at WirtschaftsWoche. To contact the authors: [email protected]