Mercedes-Benz has proposed the boss of chemical group BASF as the next chairman of its supervisory board, choosing an executive widely considered a pragmatist from China.
The German automaker highlighted Martin Brudermüller, the former head of BASF’s Chinese operations who warned last year against “China bashing”. He is expected to take up his new role when he steps down as head of the chemicals group next year.
Brudermüller is familiar with the automotive industry, the chemical group being a major supplier of paints and plastics. He should succeed Bernd Pischetsrieder, who previously held the same position at Volkswagen, and who is not renewing his mandate.
In the German system, there are two boards: the management board, which runs the company on a day-to-day basis, and the supervisory board, which supervises the work of the former and advises on strategy.
Brudermüller has come under fire from some investors for his decision to build a €10 billion chemical plant in China amid growing geopolitical tension. mercedesThe decision to hire Brudermüller comes days after its chief executive Ola Källenius said it would be “unthinkable for almost all of German industry” to cut ties with China. The company sells more than a third of its cars in the country.
About a fifth of the company is owned by Chinese automakers Geely and state-owned BAIC, which have acquired stakes in German automakers in recent years.
“Brudermüller’s appointment could be a compromise, it could be a chair that [the Chinese shareholders] support because he knows China very well,” said Daniel Schwarz, an analyst at Stifel.
He said that China was strategically important for the Car manufacturers as the “transition to electric and self-driving cars is clearly faster in China than in other regions”, adding that US and European industry may very well find themselves forced to follow Chinese technological advances.
The announcement comes as Berlin grows increasingly concerned about German industry’s dependence on China, amid growing tensions in Beijing with the West.
Germany is still reeling from having to cut ties with Russia after the war in Ukraine, with companies canceling their country-related investments. BASF is among the companies that have suffered the most from the big bets on Russia and announced a few months ago a 6.5 billion euro write-down of its Russian assets.
Mercedes’ German rivals Volkswagen and BMW announced their first-quarter results on Thursday, beating analysts’ expectations with strong sales.
Schwarz said Germany’s Big Three automakers have been hoarding inventory since supply chain issues left many cars unfinished, which would make them more vulnerable to price pressures in the second half.
In China, prices came under pressure as leaders in the electric segment, such as BYD and Tesla, lowered prices to increase market share.
Since 2019, Mercedes has been betting on the high end of the market, which Schwarz says has distanced the German group from rivalry with Tesla and BYD. “It doesn’t make them immune [to price pressure] but leaves them less at risk,” he said.
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