Bad air days Bosch had nothing to do with diesel-inhaling monkeys, CEO says

The latest chapter in the diesel scandal involves biased scientific research commissioned by the carmakers. The head of Bosch, the world’s largest car-parts supplier, says his company was gone long before the simian guinea pigs arrived.
I hope he's not taking me to the VW lab.

Auto-parts supplier Bosch belonged to the organization in the middle of a new diesel-related scandal, but let its membership lapse in June 2013, Bosch CEO Volkmar Denner said.

The European Research Association on Environment and Health in the Transport Sector, or EUGT for short, was supposed to study the effects of traffic fumes on humans and the environment. But as was recently revealed, its real objective was to produce research that showed modern diesel cars were no longer as harmful as their predecessors. Along the way, animals were involved in the testing, including numerous monkeys, and then later humans.

Bosch let its membership in the EUGT lapse because of “a difference between expectations about the organization’s direction and the internal positions of the membership,” Mr. Denner said.

An odd remark considering Bosch was one of the founders of the EUGT in 2007, along with leading German car makers, Volkswagen, BMW and Daimler. The EUGT was disbanded by the remaining members last year.

But as Mr. Denner is quick to point out, the animal experiments currently at the center of the controversy were carried out after Bosch had already left the organization. The heavily criticized EUGT activities are not consistent with the values and principles that Bosch espouses, the company chief stressed.

Quelle: Bloomberg
Bosch CEO Volkmar Denner: Who me?

Mr. Denner did however concede that the diesel scandal – including the current episode featuring the EUGT – led to a massive loss of public trust in the local auto industry. The only way to regain that trust would be to institute a new set of measures ensuring transparency, he suggested, which would allow the discussion to be based on indisputable facts once again.

This could include independent certification of vehicles and better cooperation with environmental protection organizations and related NGOs.

As the world’s biggest supplier of diesel automotive parts, Bosch has a lot riding on diesel-powered vehicles. This year the company remained relatively insulated from the diesel scandal that rocked other giants like VW and Daimler. Analysts say that any reduction in demand for diesel car parts was compensated by an increase in demand from China, although nobody knows how long that will last.

Bosch has had a sterling year, with 6.7 percent growth in sales, adding up to €78 billion (US$ 96.6 billion), and earnings before interest and taxes, or EBIT, improving by a €1 billion to €5.23 billion.

Despite all that good news, and despite the latest diesel scandal, Mr. Denner said Bosch probably won't get into the vehicular battery market. Economics, not technology, is the problem, he said. To get an edge on the current market leaders would require an investment of at least €20 billion, said Mr. Denner, who has said in the past that making batteries doesn’t make good business sense.

Additionally, most of the value of the product lies in the actual materials. “There is only a small area in which one could generate any competitive advantage,” he said. There is pressure on Bosch from elsewhere though. German politicians and car makers would love to see a German battery maker start work on a homegrown product – the Top 5 global car battery makers are all from Asia. Europe would clearly benefit from a domestica battery maker, instead of importing them. There is also government funding available to those companies who get involved in the battery business such as German start-up, TerraE, for example.

The current controversy over diesel-breathing monkeys aside, Bosch will be making a decision on whether to get into the battery business in several weeks, Mr. Denner said.

Martin-Werner Buchenau is a correspondent for Handelsblatt in Stuttgart. This story was adapted in English for Handelsblatt Global. To contact the author: [email protected]