Iconic German car manufacturer Bayerische Motoren Werke AG (ETR:BMW) announced on Tuesday, December 9th that its CEO Norbert Reithofer, who led the company to great success over the last eight years, will resign in May 2015. The new chief executive will be Harald Krueger, BMW’s current production manager. Reithofer is expected to succeed Joachim Milberg as supervisory chairman of the board at BMW’s annual meeting next May.

BMW and Volkswagen Announce Management Changes

Volkswagen AG (ADR) (OTCMKTS:VLKAY) (ETR:VOW) also announced on Tuesday that it is hiring Herbert Diess, currently a senior manager at BMW, as overall head of the VW car brand. Analysts speculate the hiring will rekindle speculation about leadership succession Volkswagen as Diess could be considered a contender to succeed Martin Winterkorn as the CEO of VW.

Reithofer resignation at BMW a surprise

News of Reithofer’s resignation was a surprise to auto industry analysts as his contract stretches to 2016, the year of BMW’s centenary. Moreover, the firm just recently ended the requirement for senior executives to retire at age 60. That development even led some to speculate that Reithofer, 58, might receive a contract extension.

Bayerische Motoren Werke AG (ETR:BMW) continued to maintain its lead in the premium auto segment ahead of Mercedes-Benz and Audi during Reithofer’s tenure, growing its sales and production operations in both the U.S. and China, as well as introducing an innovative new electric brand.

“The BMW group plans to maintain its leading role in the premium segment,” BMW board chair Joachim Milberg noted. “To achieve this, we have to hand over responsibility to the next generation at an appropriate time.”

More on Diess moving to Volkswagen

Diess, who is board member at BMW, is set to join Volkswagen AG (ADR) (OTCMKTS:VLKAY) (ETR:VOW) as the chief exec in October 2015.

Winterkorn is still the VW group chief executive, but he is giving up his second job as CEO of the VW brand, a dual role that some investors have criticized.

The incoming BMW executive was “one of the most capable minds in the automotive industry”, Winterkorn noted.

Some analysts had suggested Diess as a possible successor to Reithofer at BMW, but Diess clearly felt he had a brighter future at Volkswagen,

Chief executive succession is a key concern for VW investors. Winterkorn’s contract expires in December 2016, but analysts and the German media have speculated he will receive a contract extension.

Industry analysts believe Diess will join Rupert Stadler, Audi chief executive, Winfried Vahland, Skoda chief executive and Matthias Mueller, Porsche chief executive, as future contenders for the Volkswagen AG (ADR) (OTCMKTS:VLKAY) (ETR:VOW) CEO position.