Loss of credibility in auto industry, says Bosch CEO

Volkmar Denner was candid enough to admit during a recent visit to India that the global auto industry was going through a loss-of-credibility crisis right now. The CEO of Robert Bosch was meeting the press here barely some days after the Audi CEO had been arrested back home in Germany. It was a grim reminder that ‘dieselgate’ was back to haunt the auto sector.

What began with the Volkswagen fudging scandal in 2015 was still refusing to go away with top executives either being grilled by investigators or put behind bars. Diesel is a big part of the Bosch business but now faces severe headwinds globally thanks largely to the aftermath of the VW scandal.

Some car-makers have already made known their intent to stop producing diesel models with the green lobby quite determined to prohibit its use in large European cities. “I am a scientist by heart and there is a lot of emotion in this subject. There is a loss of credibility in the auto sector and we need to regain it,” said Denner.

It is, of course, a moot point if governments are willing to listen as there is a sense of indignation on the turn of events, which have taken the sheen off some top auto brands.

According to the Bosch CEO, it was important to focus on proper use of technology to ensure lower nitrogen oxide emissions in diesel. “As I already said, it is an emotional issue,” he added. Clearly, there is a lot of work ahead in rebuilding the case for diesel even while scientists like Denner, who also wear the CEO’s hat, have no doubts about its relevance.

A breakthrough

It was only recently when Bosch announced a significant breakthrough in diesel technology. Its engineers succeeded in bringing NOx emissions down to just 13 milligrams of nitrogen oxide per km in road tests according to the new European RDE standard.

“Even in particularly challenging conditions, including stop-and-go traffic, cold weather, and steep gradients, our technology can keep NOx emissions well below future limits,” said Denner.

The new solutions, he added, would not cause diesel engines to become more expensive. Everything that had been fitted to Bosch’s test vehicles to reduce emissions was close to entering production with no additional hardware components needed.

“We are pushing the boundaries of what is technically feasible, but by refining existing technology. For customers, this means diesel will become a low-emissions technology, but will still be affordable,” said a confident Denner.

For now, the mood is distinctly in favour of electric even while he cautioned that there should be a gradual transition so that jobs are in place. After all, a rapid makeover could cause disruption in the skills space, which could see people being shown the door simply because they are no longer suitable.

As Denner explained, the auto industry is high tech and important with lots of jobs at stake. Even today, the powertrain of the future is a big unknown. “The Bosch strategy is not to substitute people but make people more valuable,” he reiterated.

Global volatility

Denner’s concern is understandable given the present state of volatility across the world. And while he did not get into any specifics, it is quite obvious that beyond the paranoia about diesel and cleaner options, there are bigger headaches in terms of trade wars.

These have already started between the US and Europe as well as the US and China. Brexit has also brought in its own share of worries and each of these geopolitical shakeouts has the potential to upset auto-makers’ business models. Whilst on the subject of electric, Denner was also of the view that a lot needed to be done on the ground level in India before it becomes a reality. This largely pertains to creation of charging infrastructure, which is not the easiest of tasks in a vast and diverse landscape. The ambitious vision of achieving 100 per cent electric by 2030 has been shelved for now.

“Electrification in India is expected to gain momentum via fleet operators, for which the prerequisite is shared and connected mobility. We believe it will take off much more rapidly in small-vehicle segments,” said Denner, a clear hint that two- and three-wheelers are better suited to kick off the effort.

According to him, the internal combustion engine would continue to be the mainstream solution for cargo and passenger vehicles. At the same time, hybrid technology would be a vital stepping stone towards electrification in India.

“Ultimately, we believe that the co-existence of combustion engines and electrification with hybridisation is an interim solution on the road to an electric future,” declared Denner.

The writer was in Bengaluru on an invitation from Bosch

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