BMW sacks chief executive, blocks main board rival

The German car manufacturer BMW last night sacked its chief executive, Mr Bernd Pischet srieder, following a stormy supervisory board meeting to discuss huge losses incurred by the firm's British subsidiary, Rover. Mr Pischetsrieder, who became chief executive in 1993, is expected to be replaced within a few weeks by BMW's production chief, Mr Joachim Milberg.

BMW's profits fell in 1998 for the first time in many years, mainly on account of an estimated one billion deutschmarks (€511 million) lost by Rover last year alone. BMW shareholders blamed Mr Pischetsrieder for failing to limit Rover's losses and his departure had been predicted by motor industry insiders.

A move to replace Mr Pischetsrieder with his long-standing rival in the company, Mr Wolfgang Reitzle, was blocked by employees' representatives on the supervisory board. They objected to his proposals to end production of most Rover models, limiting the British company to producing the Land Rover and the Mini and laying off most of Rover's 12,000 employees. Mr Reitzle, who is responsible for product development at BMW, is now expected to leave the company.

The meeting of two dozen supervisory board members was held at BMW's Munich headquarters under the leadership of the company's chairman, Mr Eber hard von Kuenheim, who was chief executive during the 1970s and 1980s. Although the all-day meeting took place behind closed doors, reports of stormy exchanges emerged during the day and it was clear by late afternoon that Mr Pischetsrieder's fate was sealed.

British union leaders expressed relief that Mr Reitzle had failed in his bid for the top job but Rover's future remains uncertain. Britain's Trade and Industry Secretary, Mr Stephen Byers, yesterday promised government subsidies if BMW retained its commitment to the Longbridge factory.

The Bavarian company and its largest shareholders, the Quandt family, are determined to reduce losses from Rover and there is little chance of any major investment in the British subsidiary. Motor industry analysts predicted last night that BMW could be forced to co-operate with a bigger car manufacturer, such as Volkswagen, to build the next generation of Rovers on a joint platform.

The mood of uncertainty in Munich last night was heightened by the fact that, as a result of yesterday's meeting, the company will have new production, development and distribution chiefs as well as a new chief executive.

Mr Milberg, (55), started his professional life as an apprentice mechanic on the factory floor but he has spent most of his career as an academic. He is regarded as one of the world's leading experts in motor manufacturing processes and was responsible for setting up BMW's first factory outside Germany, in Spartanburg, South Carolina.