Energy security goes beyond oil reserves
Recently, the news that Bosch has significantly lowered the price of its high-pressure common-rail system has once again stirred up the internal combustion engine industry. This move has caught the attention of many players in the market, especially as emission standards continue to tighten across China.
With the implementation of the national III emission standards, most domestic commercial vehicles and diesel engine manufacturers have opted for high-pressure common rail technology as their preferred solution. However, this advanced technology has long been dominated by multinational companies such as Bosch, Delphi, and Denso. Among them, Bosch has held a dominant position in the market, with high prices that often put pressure on local manufacturers.
Economic Products Bring Significant Price Reductions
A recent report from China Industry News revealed that Bosch is set to launch an affordable high-pressure common rail product tailored for light commercial vehicles under 3.5 tons. The new product is expected to be priced between 5,000 and 6,000 yuan, which is a substantial drop compared to previous models.
Although Bosch hasn’t reduced the price of its existing high-pressure common rail systems, it has introduced a more cost-effective version specifically for the Chinese market. A Bosch representative also mentioned that by the end of the year, the localization rate of its high-pressure common rail systems will reach 70%. As production scales up and more components are locally sourced, the company expects further price reductions over time.
Bosch’s decision to introduce an economical high-pressure common rail system follows its dominance in the heavy-duty diesel engine market. Compared to earlier models, this new system offers a significant price cut. A source from a light-duty diesel engine manufacturer told China Industry News that the previous high-pressure common rail system provided by Bosch was priced around 9,000 yuan per unit.
The question remains: why is this new product so much cheaper? According to experts, the key lies in the design itself. Bosch has simplified some functions and used different electronic control components, fuel injection pumps, and nozzles, which all contribute to lower costs.
Yuchai, a major Chinese engine manufacturer, is currently testing a three-phase diesel engine equipped with Bosch’s economic high-pressure common rail system. Zhong Yuwei, director of Yuchai’s Technology Center, explained that the price range of 5,000 to 6,000 yuan is reasonable. He added that Bosch’s economic products differ significantly from their traditional high-pressure common rail systems, with some features being omitted to reduce overall costs.
It’s worth noting that Bosch has not reduced the prices of its high-pressure common rail systems for heavy-duty diesel engines. A representative from Weichai Power confirmed that their high-power diesel engines still use the original-priced Bosch system, as there has been no price adjustment yet.
Aiming to Capture the Market Fully
This year, on July 1st, the national III emission standards for heavy-duty vehicles were fully implemented, while those for light-duty vehicles under 3.5 tons were rolled out one year later. Many light vehicle manufacturers were unprepared for these changes, and the increased costs associated with compliance have been a major concern.
For example, the cost of adding a high-pressure common rail system can run into millions of yuan, which is a huge burden for small truck manufacturers whose profit margins are already very tight. As a result, these costs are often passed on to consumers, raising questions about whether the market can absorb such increases.
Bosch’s timing couldn’t be better. By launching a low-cost high-pressure common rail system, the company is directly targeting the needs of light truck manufacturers, offering a viable and affordable solution amid rising costs.
Historically, Bosch had a near-monopoly on high-pressure common rail systems in China. However, with the entry of both international and domestic competitors, this dominance has gradually weakened. In recent years, several Chinese companies have made progress in developing their own diesel engine EFI systems. For instance, Chengdu Wang’s electronically controlled combination pump has started pilot production, and FAW has launched its first self-developed high-pressure common rail diesel engine.
In addition, Japanese companies like Denso and American firms like Delphi have also entered the Chinese market. Denso, for example, has started construction of a high-pressure common rail production plant in Changzhou, Jiangsu, which is expected to begin operations in 2009.
Faced with growing competition, Bosch is making a strong move by introducing an economical high-pressure common rail system for light diesel engines. From nearly 10,000 yuan down to 5,000 yuan, this price cut is a powerful blow to the market. With other competitors still catching up, Bosch may soon dominate the light-duty high-pressure common rail segment.
While the price reduction primarily targets the light-duty market, it could eventually affect the heavy-duty sector as well. Although Bosch hasn’t yet announced any price cuts or new products for heavy-duty systems, the trend suggests that further reductions are possible in the future.
Looking back, before 2006, Bosch’s high-pressure common rail systems in China were priced at over 20,000 yuan per unit, with additional calibration fees. Now, the price has dropped below 10,000 yuan, and the company no longer charges for product calibration.
Wei Anli, deputy secretary-general of the China Internal Combustion Engine Industry Association, believes that Bosch’s high-pressure common rail systems still carry high profit margins. If the company chooses to lower prices, it could do so without increasing localization rates, suggesting that future price cuts are likely.
Moreover, Bosch is facing unprecedented competitive pressure. Since July 1st, heavy trucks have been required to meet national III standards, and China National Heavy Duty Truck’s EGR system is priced about 10,000 yuan lower than other high-pressure common rail options. This pricing gap has created an imbalance in the heavy-duty market, sparking discussions about the three main technical routes in diesel engine development.
According to reports, most Chinese heavy-duty truck manufacturers are now focusing on developing EGR-based trucks, which could be launched as early as late this year. This shift could have a major impact on Bosch’s high-pressure common rail business. In response, Bosch may choose to reduce prices or introduce even more affordable options in the heavy-duty segment.
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