BMW ousts top two bosses
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February 5, 1999: 2:13 p.m. ET
Chairman and heir apparent step down in battle over Rover unit's future
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LONDON (CNNfn) - German luxury carmaker BMW ousted its management board chairman, Bernd Pischetsrieder, and his heir apparent, Wolfgang Reitzle Friday in a shake-up aimed at improving results at its Rover unit.
The BMW board installed former production boss Joachim Milberg as the new chief.
BMW told CNNfn that Pischetsrieder and Reitzle have asked to be released from their positions, and it was purely a personal decision, nothing to do with Rover.
Pischetsrieder was reported to have been against wholesale job reductions at the subsidiary's main plant, Longbridge. Some reports suggested board members were pressing for the facility to be closed altogether, shutting down Rover's mid-range car products, and concentrating on the group's niche brands.
"Pischetsrieder is well-regarded," said Greg Melich, analyst at Morgan Stanley Dean Witter, "his departure shows the board has realized it's crucial to attack the Rover issue."
Rover has been causing problems for BMW since the Bavarian group acquired it in 1994 from British Aerospace (BA.). The U.K. unit has been beset by production problems and inefficiencies.
"Rover's been losing money, it continues to lose money, and it will lose money again this year," said Melich.
Rover does contain some prized assets, such as Range Rover sport utilities, MG sports cars and the Mini small cars. "The problem is Rover cars," said Philip Rosengarten, auto analyst at consultancy DRI.
Rosengarten points out that BMW had to negotiate a political minefield when it bought Rover, as the U.K.'s last volume carmaker slipped into overseas hands. "It's easy to bash them (BMW) now," according to Rosengarten, "but they've done an excellent job. They handled the takeover well, they couldn't have taken these (restructuring) steps then."
Signs of BMW's discontent with the U.K. unit have become increasingly apparent as the subsidiary continued to bleed cash, and became embroiled in an embarrassing labor dispute. A row with the government developed over whether the company would get state subsidies to modernize the ageing Longbridge plant. In December BMW replaced Walter Hasselkus as Rover's head.
The problems at Rover haven't dimmed BMW's interest in other U.K. car marques, however. The group last year fought a bitter battle with German rival Volkswagen (FVOW) over the car brands belonging to U.K. engineer Vickers. BMW ended up with the Rolls Royce cars brand, and VW got the Bentley marque.
The Quandt family have controlled BMW since 1959, when the family bought it in to prevent a financial crisis at the then-struggling group.
-- by staff writer Rod Cant.
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