Robert Bosch GmbH Business Report FY2006

Business Highlights

Financial overview

in million euros *FY2006 *FY2005 Increases
Sales 43,684 41,461 5.4% 1)
Operating Profit 2,416 2,493 (3.1%) 2)
Automotive Technology
Sales 27,220 26,313 3.4% 3)

*Figures for 2005 & 2006 are in accordance with IFRS and apply to continuing operations only.

-The Company met its 2006 growth target for the Group with sales growth of 5.4 % to 43.7 billion euros. Overall exchange-rate movements had practically no effect on sales. Newly consolidated businesses accounted for less than one percentage point of total growth.
-The Company shared in the economic upturn in the Asia Pacific region, where the Company achieved 12% growth. In this region, the Company generated roughly one-third of its total sales growth last year. Year-on-year growth in North and South America dropped to only about 6 %, down from 11 % growth in the previous year, largely due to weaknesses of the U.S. vehicle manufacturers. In Europe, the Company grew by 3.8 % overall, with growth in eastern Europe reaching 14 %.
-The Company recorded exceptionally strong growth over the past year in Consumer Goods and Building Technology, followed by Industrial Technology. These results made up for modest growth in Automotive Technology. Its Consumer Goods and Building Technology business sector increased sales by nearly 11 % to 11 billion euros. As a result, the sector accounts for 25 % of the Group sales.
-The Company's Industrial Technology business sector recorded sales of 5.5 billion euros in 2006. Measured on a like-for- like basis, sales growth was 7.1 %. However, the disclosed growth figure is reduced to 5.1 %, primarily due to the transfer of brake disc activities to Automotive Technology.

-Operating result, at 2.4 billion euros, is down on the prior-year figure of 2.5 billion euros. This figure
reflects not only the earnings drop in Automotive Technology but also tits high level of expenditure on research and development, which further increased in 2006 to 3.3 billion euros or 7.7 % of sales. Improvements in purchasing prices and lower warranty costs did not fully compensate for these effects.
-Result varied substantially among the Company's three business sectors. In Automotive Technology, the Company generated an operating result of 1.1 billion euros. This represents only a 4.0 % return on sales. Severe price pressure resulting in price reductions of roughly 3.5 % and sharp rises in the cost of raw materials had a seriously negative impact. This was compounded by losses in North America due to lower capacity utilization resulting from reduced production levels among major customers.
- In its Energy and Body Systems division, the Company had to recognize 85 million euros in asset impairments. Increased depreciation on plant, property, and equipment, following the high levels of capital expenditure in recent years, further contributed to the drop in result. The Company also set up provisions in connection with supply commitments and with the phasing-out of unit-injector technology. The Company's measures to cut costs, the improvements of productivity, and the reduction in warranty expenditure were not able to make up for these impacts in 2006.
-The Industrial Technology business sector improved its operating result to just under 430 million euros, or 7.8 % of sales.
-The Consumer Goods and Building Technology business sector increased its operating result to 900 million euros, or 8.2 % of sales.

-In Automotive Technology including the result of the brake disc business reassigned from Industrial Technology the Company generated total sales of 27.2 billion euros, an increase of 3.4 % over 2005. While the Company made a good start to 2006, during the second half of the year the Company especially felt the effects of weakness among some European and particularly major American automakers.
- In addition, growth in the European diesel market slowed after a long upturn. This slowdown was compounded by the far-reaching decision of a key customer to switch from unit-injector to common- rail diesel injection technology over the next few years. The Company began to feel the effects of this decision in the course of fiscal 2006, with competition in the market for common-rail systems becoming even fiercer. In the past year, the Company also had to contend with price cuts of roughly 3.5 % in the automotive technology sector.
-In view of the intensifying debate about climate change as well as the need for further lasting cuts in fuel consumption and carbon dioxide emissions, the Company forecasts an even better outlook for its diesel and gasoline direct injection systems in the years to come. This applies equally to Europe, Asia Pacific, and the Americas.
- To complete its diesel business portfolio, the Company established a joint venture for diesel particulate filters with Denso, a Japanese automotive supplier. From 2009, the Company plans to jointly manufacture and separately market high-performance and cost-effective diesel particulate filters made on the basis of Cordierite ceramic.
-The Company successfully defended its position in 2006 as the world's largest automotive supplier. Contributing factors included growth in areas such as gasoline injection, ABS and ESP braking technologies, automotive electronics, and steering systems.

-In March 2006, the Company announced it is equipping the new Mercedes-Benz CLS 350 CGI with its new gasoline direct injection for what is known as the spray-guided combustion process. Very fast-switching piezo injectors are the special feature of this new gasoline-saving technology. The fuel which they spray into the combustion chamber is so finely atomized that it can be ignited directly without mixing in the combustion chamber - What the experts call a spray-guided combustion process with stratified charge. The Company said gasoline direct injection with piezo injectors reduces consumption by up to 15 per cent compared with today's port fuel injection. For this application, the Company has developed second generation DI-Motronic which, like the piezo system, delivers injection pressures up to 200 bar but keeps faith with solenoid-controlled injection valves.

-In October 2006, at TechWorld, a 3-day forum where suppliers pitch eye-catching innovations to GM, GM presented the Company with a contract award for a brake corner module. The Company will supply the twin-piston, cast-iron caliper and rotor for a future vehicle from GM's new Midsize Crossover Architecture, which underpins the '07 Saturn Outlook and GMC Acadia.

Joint Ventures
-In October 2006,DENSO Corporation and the Company have agreed to set up a fifty-fifty joint venture in eastern Europe to develop and manufacture diesel particulate filters. The joint venture is planned for establishment in early 2007. From 2009 onward, the joint venture partners plan to manufacture high performance and cost-effective diesel particulate filters (DPF) made of cordierite and to market them separately. As a result of the Euro 5 emission standard for cars, DENSO and the Company expect that particulate filters will become standard equipment for all new diesel-powered cars in Europe. Accordingly, it is also expected that the market for particulate filters will grow strongly. A DPF is an essential diesel system component, and DENSO and the Company plan to develop and market competitive cordierite DPFs by utilizing the two companies' diesel system technologies. Compared to DPFs made of other materials, cordierite DPFs are light and provide lower pressure drop of exhaust gas resulting in high engine performance and efficient purification. DENSO has been producing and supplying its cordierite DPFs since 2003. The technologies and experiences will be used in the joint venture.

-The Company and MANN+HUMMEL announced they acquired the Purolator filter business in North America from ArvinMeritor on April 1st, 2006. The business will be continued as a 50:50 joint venture company from that date. The acquisition covers all Purolator oil, air, fuel and cabin filters. The company has around 1,000 associates. At its site in Fayetteville, North Carolina, it produces filters for both the OE and aftermarket sectors, and at its site in Salt Lake City, Utah, it maintains a small distribution center. Sales are focused on the North American market. In 2005, Purolator recorded sales of 267 million US dollars. The acquisition is subject to approval by the relevant authorities.

-In October 2006, the Company intends to bid for Pacifica Group Ltd., headquartered in Melbourne, Australia. The Company will offer the company's shareholders 1.92 Australian dollars cash per share. The Pacifica Group's shareholders are mainly institutional investors. The offer represents an estimated transaction value of approximately 300 million euros (some 495 million Australian dollars), including assumption of Pacifica's existing net debt. The cash offer of 1.92 Australian dollars per share represents a 22 percent premium to the volume weighted average price of 1.57 Australian dollars since August 29, 2006. The transaction is subject to various conditions including approval by the antitrust authorities. Another condition is that the Company acquires a relevant interest of more than 50 percent of Pacifica's shares on issue. It is envisaged that a Bidder's Statement will be lodged with the Australian Securities and Investment Commission within two weeks.


-On December 26, Toyota Motor Corporation (Toyota), Aisin AW Co., Ltd. (AW) and the Company announced that Toyota and AW will acquire from the Company 30,000 shares (50% of all) in CVTEC Co., Ltd., a 50-50 joint venture company of push belts for Continuously Variable Transmissions (CVT) between the Company and AW. By dissolving the joint venture AW will make CVTEC its subsidiary. AW will hold a 66.6% share in CVTEC while Toyota having the rest 33.4% holding.

Environmental Activities
Cost-effective environmental protection
-The Company repeatedly provides cost-effective solutions to environmental challenges for example with exhaust gas treatment for diesel engines. The second generation of the Company's Denoxtronic metering system cuts emissions and fuel consumption in commercial vehicles, and enables them to meet the limits outlined in the Euro 5 emission standard, which will come into force in 2008. When used together with an SCR (Selective Catalytic Reduction) catalytic converter, Denoxtronic helps cut nitrogen oxide emissions by up to 85 %.
- Denoxtronic also allows engines to be designed that consume 5% less fuel than conventional models. In addition, particulate emissions are reduced by up to 40%. There are sound economic arguments for logistics companies to change over early to modern commercial vehicles complying with the Euro 5 standard. In Germany, these companies will enjoy a discount of 2 cents per kilometer on the normal road toll charges for trucks. This means that a logistics company whose trucks cover 100,000 kilometers per year on the highway can save 2,000 euros per truck and year. On top of that, improved fuel efficiency means further annual cost savings of around 2,300 euros per vehicle.

Product recycling to conserve resources
-Remanufactured automotive components are playing an increasingly important role in today's vehicle-repair market. For drivers, they keep repair costs in line with the current value of the vehicle, and are a less expensive alternative to buying new spare parts. At the same time, these parts make an important contribution to protecting the environment and conserving resources. Globally, material consumption can be cut by 14 million metric tons, and 35 billion kilowatt-hours of power can be saved. The Company is one of the world's leading suppliers in this market, remanufacturing a total of around 1.6 million automotive parts at ten different locations around the world in 2006. The program, called ?スgBosch Exchange,?スh covers gasoline and diesel injection products as well as brake components, starters, and alternators.

Environmental protection at suppliers
-The Company sets strict standards for its suppliers, placing great value on both quality and eco-friendly solutions in its purchasing guidelines. When selecting the suppliers, the Company pays particular attention to ensuring that they use resources efficiently and respect minimum social standards. The Company does not work with companies that fail to comply with the core labor standards of the International Labor Organization (ILO). These principles are part and parcel of the new framework contracts which the Company has recently concluded with its suppliers, and the audits it performs during the supplier and process evaluation procedure are designed to ensure that its partners also adhere to these principles. The Company assesses and document occupational safety and environmental protection in its suppliers' plants. The Company also expects its roughly 200 preferred suppliers to have a certified environmental management system in place by 2008 at the latest.

Award for the commitment to the environment
-Protecting the environment and conserving resources have a long tradition at the Company. In recognition of this, the German chapter of the World Wildlife Fund together with the business magazine Capital presented the Company with the ?スgEco-Manager of the Year 2006?スh award at a ceremony in Berlin in November 2006. President of the WWF in Germany, said that the panel of judges had been impressed by the Group's outstanding and innovative commitment to environmental protection. This was the first time that an automotive company has received this award, and it highlights the environmental commitment of the automotive industry in general and of the Company in particular.

-After the unexpectedly positive trend in the past year, the Company anticipates that global growth will lose some of its momentum in 2007. This applies to all regions, although the Asian emerging economies will continue to grow faster than others. Despite the first corrective price adjustments on the world's stock markets, the Company believes there is little danger of a major slowdown. Raw materials prices have stabilized on a high level, globalization continues to sustain the worldwide propensity to invest at a high level, and employment has been increasing in many countries for some time.
-Risks are posed by major discrepancies in regional balances of payments and international financial flows, and by the fact that key Asian currencies are clearly undervalued. However, the Company believes these risks can be limited through even more intensive inter- national coordination.
-Growth in global automotive production is also likely to remain relatively high, at 3 % in 2007, with emerging economies continuing to provide the greatest impetus. Under pressure largely from Asian manufacturers, further production cutbacks and capacity adjustments are expected among the major North American automotive manufacturers.
- European vehicle output, by contrast, could gain as in 2006 by 2 to 3 %, with the main focus of growth in central and eastern Europe. There are risks, however, due to the announced tightening of carbon dioxide emission limits for passenger cars. This could have an effect on the mix of vehicles sold.
-Against this backdrop, the Company's target for 2007 is that total sales by the Group as a result of organic growth should increase by a similar increment as in the previous year, provided there is no further substantial appreciation of the euro. The Company thinks the conditions for achieving this growth are good considering the sustained positive trend, particularly in consumer goods and industrial technology, in the first months of this year. Later in the year, the Company also expects the automotive technology sector to return to stronger growth, especially as key customers in Europe begin to recover. Not least in view of the CO2 debate, the Company also expects that diesel's share of the passenger car market will continue to rise and not just in Europe.
-Pressure on prices is set to persist unabated, however, and will thus inevitably act as a brake on sales growth. To absorb the impact on result, the Company shall continue to work consistently to reduce its costs across all operating units. The Company is confident that it can keep the Group's earnings in 2007 on the same level as in the previous year, and can improve them further in the years that follow. This will enable the Company to invest in further growth in all major world markets, to secure its innovative strength in sustainable fashion, and to provide stable levels of employment worldwide.


R&D Expenditure

(in million euros) *FY2006 *FY2005 *FY2004 FY2003 FY2002
R&D Expenditure 3,348 3,073 2,715 2,650 2,487
% of Sales 7.7 7.4 7.0 7.3 7.1
*Figures for 2004, 2005 and 2006 are in accordance with IFRS, while those for 2003 and before are in accordance with German commercial code.

-In 2006, the Company spent some 3.3 billion euros, or 7.7 % of sales, on research and development. The Company also registered over 3,000 patents worldwide.
-In 2006, research and development in Automotive Technology was 2,7 billion Euro or 10.1% of sales in this sector, compared with 2,5 billion Euro or 9.6% in 2005.

R&D Structure
-Around the world, the Company has more than 25,000 research and development associates
whose task is to drive forward technological advances. 1,300 of them are employed in the Company's Corporate Research and Advance Engineering sector.
-The Company has set itself the goal of identifying global technology trends earlier than ever before. To this end, the Company conducts technology scouting not just in Europe, but also in the U.S., Japan, and China. With 16,200 researchers and developers, Germany continues to be a key research and development location.

-In October 2006, the Company announced that it would establish Bosch Engineering Services Japan K.K. (BEG) on November 1, 2006 in order to strengthen engineering support for the Japanese automotive industry. The new company will offer various engineering services, especially in the area of electronic systems, to Japanese automakers that are further increasing overseas business, launching derived models, and stepping up research activities. The Company believes that these activities will also contribute to boosting its auto parts sales. To be capitalized at 100 million yen, BEG would be fully owned by the Company. It will initially hire 16 employees to provide engineering services such as development and application of auto parts. Sales are expected to reach 600 million yen in fiscal 2007, and 1.2 billion yen in fiscal 2009.

New Product Development
<A growing diversity of drive concepts>
-Diesel cars continue to be in great demand. In Europe, half of all new cars registered now have diesel engines, which customers are choosing for their high torque and low fuel consumption. This success is attributable to the high-pressure direct injection technology the Company pioneered, and which the Company shall continue to refine in the years to come. In 2006, for example, the Company increased the maximum injection pressure in its common-rail systems for cars from 1600 to 1800 bar, and the Company plans to move to 2000 bar in 2007. An increasing number of commercial vehicle manufacturers are also adopting common-rail technology.
-The Company continues to see great market potential for diesel injection systems in the United States and Asia. Over the next few years, all automotive manufacturers in North America will be offering a growing number of diesel models, and the Company is sure that American drivers will appreciate the advantages that diesel engines offer. In 2006, three times more light vehicles were equipped with diesel engines than with hybrid engines in the U.S. In India, the Company commenced production of injection pumps and injectors for common-rail systems, and a great deal more capital expenditure is planned.

<A new generation of powerful gasoline engines>
-The Company sees the gasoline engine remaining an alternative to diesel in Europe over the next few years. With turbocharging and direct injection, gasoline engines now employ the same technologies that make diesel so efficient. Several automakers have already begun series production of such engines, for which the Company supplies the injection technology. Compared with engines used to date, which require greater engine displacement to deliver the same power, these new models will reduce fuel consumption and carbon dioxide emissions by around 15%. Together with one automaker, the Company has also pioneered a system that will make a spray-guided and therefore highly efficient lean-burn combustion system possible for the first time. Key to this system are the Company's injection valves which employ piezo elements, an innovation in gasoline engines.
-With crude oil prices continuing to rise over the long term, the automotive industry is focusing more and more on alternative fuels. We already offer injection systems which allow vehicles to run on gasoline and natural gas or gasoline and ethanol, either alternatively or as a mixture. Admixing synthetic fuels or biofuels to conventional fuels also opens up interesting options, and the Company is developing solutions for them.

<Hybrid drive goes into series production>
-A third drive concept alongside gasoline and diesel engines is the hybrid system, in which an electric motor supplements the internal-combustion engine. The Company's dedicated project unit has around 250 associates working solely on this technology. In 2006, the Company was awarded the contract for the development and production of key components for several hybrid vehicles. In the New European Driving Cycle, this drive concept can reduce fuel consumption by up to 25 % as compared to gasoline engines with the same performance. The Company expects to see start of production in 2008.

<Assistance systems boost safety and comfort>
-The Company's active night-vision system went into series production in late 2005. Invisibly for the human eye, it uses infrared headlights to illuminate the road. In combination with these headlights, an infrared camera can identify obstacles at a distance of over 150 meters and can display them on a screen on the dashboard. The system is currently available as an option in premium vehicles, and is proving to be very popular. In the future, this systems will also help drivers to park their cars once they reach their destination. For example, at the end of 2006, the Company took a parking space measurement system into series production. In the near future, the Company will begin series production of enhanced versions of this system, which will be able to automatically steer the vehicle. The Company is also making ongoing refinements to its Parkpilot ultrasonic parking assistant, which is already widely in use. By networking the electronic systems in the vehicle, the Company is creating the basis for new functions in order to maximize road safety. The Company's development work focuses on the Combined Active & Passive Safety (CAPS) modular safety system, which links the vehicle's environment recognition systems with its active and passive safety systems and on-board communication systems.
- Building on this work, the second generation of the Company's predictive safety systems went into series production in 2006. If the radar-based Adaptive Cruise Control (ACC) device identifies a potentially critical traffic situation and the driver fails to react within a reasonable amount of time, the system alerts the driver to the hazard by briefly jerking the brakes. Studies show that this technology can prevent a large number of accidents. Another example of a CAPS function is an improved rollover detection system, which also went into series production in 2006. This technology provides earlier and more reliable deployment of airbags and triggering of seat-belt pretensioners in the event of an accident in which the vehicle overturns.

-In June 2006, the Company announced its connecting plunger design produces an 84 % cost reduction. Additionally, rather than adding a steel part weighing 33g, the connecting plunger made of Ryton PPS reduced the part's weight by 78 %, weighing only 7g. When the Company's engineers worked designing an active vacuum brake booster connecting plunger for use in sport utility vehicle braking systems, they quickly realized the part needed to be molded out of plastic. A precision cast steel part would have required extensive post machining, adding significant cost. They modified the connecting plunger to reduce weight and cost through the use of Chevron Phillips Chemical Company LP's (Chevron Phillips Chemical) Ryton polyphenylene sulfide (PPS), a highly engineered plastic. The Company's connecting plunger in the vacuum booster works in conjunction with the hydraulic braking system to amplify the manual input to the brake. As a result, drivers are able to safely stop with minimal pedal pressure.

-In July 2006, the Group will embark on development drive to expand its offering of electronic stability control (ESC) and other braking control systems. By the end of 2006, it will introduce a new ESC unit-its top grade system with higher hydraulic performance and responsiveness as well as a broader range of control applications-and a new anti lock brake system (ABS) unit, which is a reduced cost version for small cars. By 2009, the Group will also add new types of ESCs, such as a system dedicated exclusively to hybrid vehicles and another that will enhance performance to the maximum level by combination with other drive control mechanisms. By segmentalizing specifications, the Company will offer products with the optimal balance between performance and cost to meet requirements for each model with a bid to expand its ESC business.

-Rapid preparation for mass production of exhaust-gas aftertreatment devices is under way to achieve cleaner diesel-engine emission (October 2006). Diesel-powered vehicles are highly expected to achieve in the near future the same emission level as gasoline-powered vehicles, which makes evolution of exhaust-gas aftertreatment devices significant. The Group will launch a "urea SCR (Selective Catalyst Reduction) system" which reduces NOx by urea additive for passenger cars in2007. Denso Corp. and the Group will cooperate in the business of diesel particulate filters, which purify particulate matters. The two companies will establish a fifty-fifty joint venture to develop and manufacture diesel particulate filters in early 2007 to start production in 2009. The two leading suppliers of fuel injection systems will share their know-how to respond to the "Euro 5" emission standard, expected to be effective in Europe in 2008.

Technological Alliance
-In January 2006, the Company and Knorr Bremse announced they have entered into an alliance in the sector of driver assistance systems. In a first phase, the Company will provide Knorr Bremse with its components and software for the Adaptive Cruise Control system (ACC), as well as the respective know-how. Knorr Bremse will adapt and develop the system for application in commercial vehicles with pneumatic brakes, and market it worldwide under the Bendix and Knorr Bremse brands for original equipment and retrofitting, and as spare parts. ACC by the Company has been in use in passenger cars since 2000. Knorr Bremse is planning to use the Company's know-how and components to develop, manufacture, and market the the Company's Predictive Safety System (PSS) for commercial vehicles.

-In June 2006, the Company and Getrag have agreed to work together on hybrid systems. The cooperation agreement covers the development and marketing of parallel hybrid systems in conjunction with dual-clutch transmissions and electrical final-drive units.

-In June 2006, the Group announced that it has agreed with the Getrag Corporate Group, a German supplier of transmissions, to work together on development of a new hybrid system. It combines the next-generation dual-clutch transmission as efficient or more efficient than a manual gear system with electrical final drives including motors. The system is a parallel type, combining an internal-combustion engine with an electric drive. The two companies will work together to develop an integrated control system by synergy of two energy saving devices. Toyota Motor Corporation is already adopting the parallel type, hybrid torque control mechanism for the Prius by use of planetary gears. It is noted whether the new system by the Company and Getrag will prevail as a new hybrid mechanism.

-In October 2006, Denso Corp. announced on that it has agreed with the Company to set up a fifty-fifty joint venture in eastern Europe to develop and manufacture diesel particulate filters (DPFs), which is, exhaust-gas aftertreatment devices for diesel-powered vehicles. The joint venture is planned for establishment in early 2007 to start production of cordierite DPFs in 2009. As a result of the "Euro 5" emission standard, expected to be effective in 2008, DPFs, which clean up particulate matter (PM), are presumed to become standard equipment for all new diesel-powered cars in Europe. DENSO and the Company, both leading global suppliers of diesel engine components, particularly fuel injection devices, will form an alliance and utilize the two companies' technologies and production know-how in order to manufacture high performance and cost-effective diesel particulate filters at an early date.

Investment Activities

in million euros *FY2006 *FY2005 *FY2004 FY2003
(in property, plant and equipment)
2,670 2,923 2,377 2,028

*Figures for 2004, 2005 and 2006 are in accordance with IFRS, while those for 2003 and before are in accordance with German commercial code.

-The Company invested some 2.7 billion euros in property, plant, and equipment in 2006, or 6.1 % of sales. Capital expenditure thus significantly exceeded depreciation of property, plant, and equipment, which came to 2.3 billion euros.
- Of this capital expenditure, some three-quarters were again accounted for by the Automotive Technology business sector. The main focus of investment was on expanding capacity for common-rail diesel injection systems, semiconductors and sensors, and gasoline injection systems, and for hydraulics manufacturing at Bosch Rexroth.
- To expand its business in the major global growth regions, the Company invested some 450 million euros in Asia and some 400 million euros in eastern Europe. Its locations in Germany still accounted for approximately 40% or roughly one billion euros of total capital expenditure.
-The Company plans capital expenditure on a similar scale in 2007 and 2008. One major item will be the construction of an eight-inch semiconductor manufacturing facility at Reutlingen, where the Company shall be investing a total of 550 million euros.
- The main focus of capital expenditure in 2007 and 2008 will remain the Automotive Technology business sector. There will also be no major change in the distribution of capital expenditure among the three global regions.

Domestic Investments
-In June 2006, the Group is investing some 550 million euros in the construction of a new manufacturing facility for 200 millimeter (eight-inch) semiconductors at its site in Reutlingen, near Stuttgart. Construction of the facility is to begin in the autumn of 2007. Rollout of production is planned for mid-2009. The plant will have a total capacity of up to 1,000 silicon wafers per day, equivalent to a daily production volume of up to one million microchips. The Company has been manufacturing 150-millimeter (six-inch) semiconductors in Reutlingen for ten years now. The location can therefore draw on a wealth of expertise and has a good infrastructure. Semiconductor and micromachined chips from Reutlingen are used above all in the automobile industry as components in control units for a number of functions; for example for electronic safety systems such as ABS, ESP, or airbags, for fuel-efficient engines with electronic engine management, or for driver assistance systems.

Overseas Investments
-In June 20006, the Group announced that it was further expanding its presence in India. At its Bangalore location, the Company opened its first manufacturing facility for common-rail high-pressure pumps in the country. The new manufacturing facility is part of a comprehensive program of investment: between 2005 and 2008, the Company intends to spend some 325 million euros on capital expenditures in India. Some 100 million euros have been earmarked for the establishment and expansion of diesel production alone. The new production line is capable of producing up to 1,000 common-rail diesel pumps per day. the Company has been manufacturing injector components for diesel systems at its Nashik location since end of 2005. In 2007, it is planned to start production of common-rail injectors in Nashik.

-In 2006, the Company's production capacity for starters and alternators in China was also expanded.