Bayerische Motoren Werke AG extended Chief Executive Officer Norbert Reithofer’s contract to 2016, leaving him to steer the largest luxury-car maker to its goal of boosting deliveries by half in the next decade.
BMW’s supervisory board approved the new five-year contract at a meeting today, the Munich-based automaker said in an e-mailed statement. Reithofer, 54, would become the longest-serving top executive at BMW since Eberhard von Kuenheim led the carmaker from 1970 to 1993.
Reithofer took over as CEO in September 2006. He trimmed the payroll by 11,000 workers, set a goal of reducing costs by 6 billion euros ($8.2 billion) by 2012 and pushed the development of electric cars. He also guided BMW through the financial crisis and recession without losing money by quickly halting production to conserve cash and prop up car prices.
“BMW is on top right now; the fruits of Reithofer’s efforts over the past few quarters are currently being hauled in,” said Frank Biller, an analyst with Landesbank Baden-Wuerttemberg in Stuttgart, Germany, who has a “hold” rating on BMW shares.
Surging demand in China and a recovery in the U.S. have helped BMW rebound this year. BMW forecasts deliveries will rise about 10 percent to at least 1.4 million vehicles after a 10 percent drop to 1.29 million in 2009. BMW may add a new factory as it expands models to meet its target of selling 2 million cars by 2020, Reithofer said in an interview this month.
“This step will provide continuity over the years ahead and ensure trust and constructive cooperation between the supervisory board and the board of management,” Chairman Joachim Milberg said in the statement.
German supervisory boards typically decide on whether to keep their CEOs a year before their contracts expire. The announcement comes as Reithofer is scheduled to attend the Paris Motor Show this week, where BMW plans to premiere the revamped X3 sport-utility vehicle and show a 6 Series coupe concept.
BMW added 98 cents, or 1.9 percent, to 51.65 euros at 1:37 p.m. on the Frankfurt exchange. The shares have jumped 62 percent this year, giving the carmaker a market value of 32.8 billion euros and making BMW the best performer on Germany’s benchmark DAX 30 Index.
“His biggest challenge over the next few years will be to manage the shift away from a reliance on oil, through electrification and cleaner engines,” Biller said.
BMW signed an agreement today with Saab Automobile to supply the Swedish manufacturer with engines starting in 2012. Saab, owned by Spyker Cars NV, will purchase 4-cylinder, 1.6 liter turbocharged gasoline engines, which will be adapted for Saab’s next-generation vehicles.
Reithofer joined BMW in 1987 after studying machine tools and operating science under Milberg, who was previously a BMW CEO. After starting in maintenance planning, Reithofer managed BMW’s factory in Spartanburg, South Carolina, before being named head of production in 2000.
The executive still lives in Penzberg, the former coal-mining town about 50 kilometers (31 miles) south of Munich. Residing a short distance from the house where he was born, he’s stayed in the area to be close to family and the Alps, where he unwinds by skiing and mountain biking.