Joachim Milberg, the man credited with extricating BMW from its Rover fiasco, today announced that he will step down as chief executive next May.

The German luxury car maker said that Mr Milberg will resign for personal reasons at next year's annual general meeting ahead of his scheduled departure in 2003.

He is to be succeeded by chief financial officer, Helmut Panke, 55. The surprise move will see the 58-year-old Mr Milberg hand over the post almost a year before he reaches BMW's traditional retirement age of 60.

"Now that BMW is in a very strong position, it is the best time to initiate this change," a BMW official said. "This way, we can avoid all the speculation about his successor. This can put a lot of uncertainty on a company."

Mr Milberg took over BMW at a difficult time as the company struggled with its disastrous purchase of Rover. BMW sank some $4.1bn (£2.9bn) into Rover over six years in a futile attempt to return it to profit. BMW sold Rover, dubbed "the English Patient", for a nominal £10 in May last year to a consortium led by an ex-Rover executive, John Towers.

BMW's joyride with Rover cost Bernd Pischetsrieder his job. He was replaced by Mr Milberg in February 1999.

Volker Doppelfeld, chairman of the company's supervisory board, said the move was "a personal decision" by Milberg, adding that under him the company had enjoyed "the most successful period in its history".

The low-key Mr Milberg followed a "premium brand strategy" by taking the company back to its roots and concentrating on luxury cars. BMW shares are now seen as a safe bet in a shaky sector.