It was contained in one of the several presentations made at the Bosch Group’s 58th annual international automotive Press briefing.
President of the Gasoline Systems Division, Robert Bosch, Wolf-Henning Schneider said it as matter-of-fact.’ Our latest success is an order to supply alternators, brakes, and gasoline and diesel management systems for the one lakh car from Tata.’
Later, speaking with Auto Monitor, Chairman of the Automotive Group of the Bosch Group, Dr Bernd Bohr said, ‘We made the right offer for product as well as engineering services. As a group, we have said that is strategically important for us to be in the low-cost vehicle market and there are two reasons for this: Firstly, you cannot just transfer technology X from Europe to a low-cost vehicle. You need new engineering, the intelligence to make things simple and adapt it to low cost markets. Secondly, this is valuable for our engineers who could down the line bring these ideas back to the low-end of the European market. I would not be surprised if this happened.To be in this market, address it and do things throughintelligentsimplicity , which is the aim. In his keynote address, delivered to journalists from several countries around the world including China, Serbia, Poland, Japan and India, Dr Bohr said, ‘Our common-rail sales in India and China will increase significantly from an estimated 100,000 systems per country to 1.3 million by 2010. ‘
The clear driver of this growth is the need to comply with tougher emission norms. Just a year ago, Bohr who was in India to inaugurate the assembly line at Mico’s Bangalore from which an indigenous fuel pump would roll out - had estimated the numbers in the region of a million or so diesel cars to which Bosch would cater to about 60 percent or so. The Bosch group has now revised this estimate significantly.
With this announcement, Bosch has struck paydirt. It took the Bosch team of engineers just four months to develop variable technical concepts and solutions that led to its successfully concluding the contract, said Schneider
Defining low-cost
Clearly, this development, from an engineering point of view is a huge achievement and also in terms of the sheer numbers.In its annual report for 2007-08, Tata Motors has gone on record to say that production will be 225,000 units. Moreover, Tata Motors has said its manufacturing systems for the one lakh car project involved a disaggregated model with a mother plant that produces the core, and modules and aggregates being brought in by other tier-2 suppliers. It remains to be seen how Mico caters to this from its existing facilities which include two units at Bangalore, and one each at Nashik and Jaipur.
In his address on the potential markets that Bosch sees in low-cost vehicles, Schneider, said themarket for low price vehicles, defined as those whose net price is under 7,000 euros, will account for 13 percent of the world market by 2010. Bosch estimates that at five percent, the average growth of this market segment alone is more than twice the whole of the rest of the market which is expected to be about 2.3 percent.
Apart from Tata Motors, Schneider referred to other low-cost vehicles such as the Logan, from Renault’s Dacia stable and the plans of Volkswagen to bring inmodel that outprices the Fox. With Toyota also throwing its hat into the ring with its plans to introduce a model prices below the Logan, this is clearly exciting times for suppliers like Bosch.
What is, however, significant is that China and India will be the real focus for low cost vehicle as earning capacities in these countries continues to go up.
Cost optimisation
Schneider also dwelt on Bosch’s approach to cost optimisation which he described as working in three ways: The top-down approach which focuses on simplifying standard products, the bottom-up approach that takes, for example, a motorcycle engine management system as the starting point, and expands that to meet the needs of a passenger carand finally, the radical approach-introducing completely new products that are specifically designed for low cost vehicles. Examples include the value Motronic, a new control unit for platform for petrol enginesand for new component, symbolizing the ‘radical approach” the ZSk 2x2 value ignition coil. For this, despite obtaining a 40 percent reduction in installation space, Bosch’s developers were able to generate various ignition energies in a single housing. For simple engines, the phase sensor which determines the firing sequence, can be dispended with.
In his keynote address, Bohrspoke about the fast pace at which Bosch’s automotive business has gone international. To illustrate this, he said that as of end-2006, the automotive technology business employed 160,000 associates of which close to 100,000 were employed outside Germany. A decade ago, Bohr said, the automotive technology business sector achieved a good 66 percent of its sales from outside Germany and that figure has increased to 74 percent. Sales from outside Europe have gone up from 30 to just under 40 percent, reiterating the increasing importance of markets
In particular, Bohr mentioned that Bosch’s business in China and India grew 30 percent in calendar 2006, indicating the Asia-wards shift. He reiterated Bosch’scommitment to ‘gear our activities more than ever before to the structural changes in the international automotive industry’.
Bohr also focused on the need to have to have local developmental facilities benefit from the parent company’s international network and are also close to the market they operate in, and are thus familiar with customer requirements.
Safety, emissions
For 2007, Bohr said that after adjusting for currency effects, the Bosch group anticipates a good four percent growth in the automotive technology sector. He also dwelt on major challenges going forward which he cited as reducing the number of fatal accidents and lowering exhaust emission gases.
While the European Union has said it plans to halve all accidents by half by 2010, the US plans to mandate the ESP for all new cars from 2011, as a result of whichBosch anticipates a trebling of its annual ESP sales to three million by 2010. In the context of the huge numbers of road fatalities, he said the challenge is to make safety equipment affordable for low-price vehicles. Clearly, engineers in India may have already been pressed into working on this.
With the numbers of cars on India’s roads increasing and as average speeds on the highways goes up, the need for safety technology will come.
The second aim is to make vehicles as emission-free as possible. Tough standards have already increased demand for electronically regulated fuel injection systems in India and China, and are mainly why Bosch has raised its demand forecast for India by a third.
In the Indian context, given the tougher emissions norms that on the anvil, how does Bosch in Indian plan to tackle two and three wheelers? To whichDr Bohr said,” We are also addressing the two-wheeler market upwards. Firstly, what we are doing for the low end of the vehicle may be suited for light commercial vehicles in this range as well as three-wheelers. We are also working on injection systems for thee wheelers. We have conducted trails and are talking to companies but we have to protect our customers identity. Typically, we have to wait till they themselves we go to media.
Meanwhile, in order markets where Bosch is gearing up to play a key role, Bohr said that in order to market its innovations, the company wasn’t just banking on market conditions to swing in its favour. It has already kicked offan initiative called Diesel Days in the US and Asia; for ESP, the company has launched the ESPerience programme which aims at a wider audience that includes the media and politicians.
Diesel Days
And while the car safety prorgamme remains a significant focus in the US, both there and in Asia, Bosch’s diesel projects are top priority. Worldwide, the company says that the proportion of diesel-driven vehicles will rise from 23 percent to 28 during the same period. To cater to that, the company will up production of its high-pressure diesel injection systems to over 10 million in this year. Europe too, will see more diesel sales thanks to tighter carbon dioxide standards
Bohr ended his keynote address by focusing on what he termed as an appeal for innovation partnerships. When broached on this issue, he told Auto Monitor ‘We are investing highly in R&D. We have invested about 10 percent of our sales last year and a similar figure is planned for this year. Firstly, intellectual property needs to be protected not only in the developing markets but in big OEM customers who are putting in their terms and sales purchasing conditions in the agreements. That’s does not, in our view fully protect those who invest in R&D’.
‘We are seeing longer and longer payback period. In a market driven by financial investors, we see that the pace of innovation is slowing, that it is no longer financiable. Yet OEMs and suppliers have to come together for innovation and is our message for global, European and German OEMs. In Germany, we have differentiated ourselves
through innovation. I do believe that we need to make this issue to discuss going forward. There is a cliff over there and we should not go overboard.’
Bosch has had a considerable presence in India having first set up shop in the 1950s. So branding is a key. When asked about this, Bohr’s said, ‘We have established Bosch as a second brand with Mico coming under the brand of The power of We’. We have brought in acampaign that has shown us in good light. Our ‘Invented for life’ gives us our product portfolio- it tells you that not only that we offer good product that are durable and long-lasting but that they are good for the environment. Safetyand comfort issues in the car are important to us at Bosch.’
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