BMW Chief Executive Helmut Panke has just sped into a tight curve at high speed and is gaining on the competition. While European rivals groan about stagnant economies, sluggish sales, and careening profits, Panke is overseeing a rapid model expansion that's driving impressive growth. Launched in 2002, the roll-out of new models aims to boost sales by 40% by 2008. And Panke wants to push the company's lofty profits even higher.
So far, Panke is right on track. Last year the 57-year-old physicist increased sales at BMW by 4.5%, to 1.1 million cars. And that was before a slew of stylish new models hit showrooms from Los Angeles to Shanghai. The real acceleration comes this year as an expanded model lineup, including the 6-Series coupe ($70,000), the X3 baby SUV ($31,000), and the much-awaited 1-Series (an estimated $26,000) -- come onto the market. BMW's new models will help the auto maker come nose-to-nose in global passenger-car sales this year with Mercedes-Benz, the world's largest luxury brand, according to a forecast by market researcher Global Insight's Frankfurt office.
Panke demands top performance from his troops, and from himself. A hands-on CEO who routinely swings through factories, sales offices, company cafeterias, and research labs, he's as comfortable racing a BMW down a test track as he is spotting problems on the production line or analyzing industry trends. Panke is BusinessWeek's leading star manager because of his deft stewardship of BMW through its strenuous expansion drive.
Since he took over as CEO in 2002, he has kept BMW firing on all cylinders. Last year, BMW edged out Toyota Motor Corp.'s (TM) Lexus in the U.S. market as No.1 seller of luxury sedans. Sales in Asia are booming, and European growth is outpacing the competition. Panke first demonstrated his skills at building BMW's global business as head of North American operations in the mid-1990s. On his watch the U.S. has become BMW's largest market.
Panke's management style could be called Socratic. He loves to pose questions and lead debates with groups of managers -- a practice that reflects his academic training and gets results. After earning a doctorate in nuclear physics from the University of Munich, he conducted research at the Swiss Institute for Nuclear Research while also teaching physics in Munich. In 1978, he was lured away by McKinsey & Co.'s Munich office, where he eventually wound up consulting for BMW. In 1982, the auto maker hired him as head of planning at its research and development division. Since then, he has tracked every facet of the business, from corporate strategy to production and sales.
By encouraging debate, Panke has forged a performance-driven culture that isn't afraid to send tough questions up the ranks. "Panke takes a huge amount of time to discuss with people, then he lets them manage on their own. That way he gets 120% from everyone," says a manager who has seen Panke rise up the ranks over 20 years. Panke also gets high marks for consistently honing BMW's brand image, launching new models without production glitches, and focusing the company's strategy. "My biggest challenge is saying 'no' to projects that are exciting but don't fit BMW's strategy," he says.
The market is applauding. Although a strong euro dented sales and profits slightly in 2003 -- sales were down 2.1%, to $50 billion, while net profit fell 3.6%, to $2.3 billion -- BMW's stock price has risen 27% in the past year. Once thought too small to survive on its own, BMW now boasts a $27.3 billion market value, the fifth in the industry. Not bad for a CEO who's two years into the job -- and Panke is only warming up.