Bosch earns extra profits in China High pressure common rail system

From 30,000 yuan/set to 25,000 yuan/set, to 20,000 yuan/set, to 15,000 yuan/set, this is a price trend of Bosch diesel engine high pressure common rail system provided to the reporter by the industry. The price of domestically produced EFI systems is only a few thousand yuan/set. Although the prices of Bosch's high-pressure common rail systems purchased by the manufacturers are extremely high, earning excess profits is a unified summary of Bosch's profitability in China.

â– Bosch refrained from talking about earning high profits

According to the requirements of the State Environmental Protection Administration, starting from July 1 this year, China will completely stop the sales and registration of light vehicles that meet the National II emission standards. The newly-sold motor vehicles must fully meet the national III emission standards. One of the key technologies that affect engine emissions is electronically controlled fuel injection systems.

A person in charge of an independent domestic brand EFI system told the reporter: “In the diesel EFI system, multinational companies have absolute control over the right to speak. The price of Bosch's EFI systems to Chinese companies before 2006 was close to 25,000 yuan. In the past few years, due to the participation of independent brand companies, this price has shown signs of loosening."

It is understood that Bosch's market share in the EFI market has reached 60%, and it has an absolute advantage in the domestic EFI market.

According to industry experts, the sales price of Bosch's high pressure common rail system is only 500-600 euros in foreign countries, while the sales price in China is as high as 1,300 euros. It can be seen that Bosch's product profit rate is surprisingly high.

At present, Bosch has established Bosch Automotive Diesel Systems Co., Ltd. in China to produce high pressure common rail systems. If the national III emission standard is fully implemented in China, the company's revenue and profits will further increase.

How much excess profit does Bosch earn? Where are these excess profits flowing?

The reporter tried to understand the situation through Bosch Automotive Diesel Systems Co., Ltd., but the defendant involved company secrets. The reporter’s interview request was rejected.

â–  62% of the value is transferred abroad

A person in charge of a domestic company who declined to be named told reporters that because Bosch is a competitor, many companies have conducted in-depth research on Bosch.

The person said: "Most of the components of Bosch's high-pressure common rail system need to be imported from abroad. Many of the import companies of these parts and components are Bosch subsidiaries and the profits have been transferred. For Bosch, However, income has shifted from one pocket to another, but for the host country, it has lost a lot of revenue."

Take a four-cylinder high-pressure common-rail system as an example. Each system needs a high-pressure common-rail track, and the price of each track is about 400 euros. According to the exchange rate on March 31, one euro against 11.08 yuan, 400 euros is equivalent to 4432 yuan. In addition, each cylinder needs to be equipped with an injector. The price of each injector is between RMB 1,000 and RMB 1,700. The four-cylinder machine requires four injectors, and the price of the injector is 1,200 yuan. Only the price of fuel injectors and rails reached 9232 yuan. The market price of a 4-cylinder machine is around 15,000 yuan, and the price of injectors and rails accounts for 62% of the entire system. Since the two key components are purchased abroad, in this way, at least 62% of the value of a system is transferred abroad.

An expert familiar with the research of the electronic spray system told the reporter that in the high pressure common rail system produced by Bosch, only the ECU is produced by a wholly owned company established by Bosch, which accounts for about 20% of the total system cost. Other insignificant small parts are sourced from local companies including Wuxi Weifu.

The person in charge of a domestic company told reporters that Bosch’s products sold to domestic companies are at least twice as expensive as EFI products in other markets. According to his calculations, since emission standards will be implemented in phases throughout the country, Bosch will sell 150,000 to 200,000 sets of high pressure common rail systems in 2008, and will continue to increase in the future. If 200,000 sets of four-cylinder machines with a price of 15,000 yuan each are to be calculated, 62% of the value will be transferred. Bosch will have transferred 1.86 billion yuan to foreign countries in 2008. This is only a conservative estimate.

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