"It is an engine alternative we take seriously," said Bernd Bohr, Bosch's managing director.
Bosch's advanced product engineering for hybrid motors has been running at full speed for the last three years now.
"We are ready for possible series production contracts," said Bohr.
"Asian companies are keeping the hybrid business to themselves," he added. "But we expect to be considered provided German companies are given a chance to win new contracts."
Bohr believes hybrid vehicles will remain a niche product, mainly used within transport such as for buses, delivery vans and taxis.
Bosch, which has a diesel injection market share of more than 50 percent, hopes to further strengthen its position through attracting new customers in North America and by developing improved diesel technologies.
These technologies include common rail with piezo-inline injector, vario-nozzle injectors and more effective emission purification methods besides particle filters.
The passenger car diesel engine will have reached its peak in western Europe by 2006, said Bohr. By then every second car in Europe will be powered by diesel.
The worldwide diesel market share will be only 24 percent by 2006. However, Bosch forecasts an increase to 28 percent by 2013.
This would represent a 79 percent increase in the size of the market since 2000 taking into account the expected increase in car production.
The growth in diesels is attracting rival companies into the market.
Bosch recently lost a Volkswagen diesel engine project to the German electronics giant Siemens.
"VW wanted a second supplier," said Bohr. He added that the contract would have meant Bosch having close financial ties with VW.
"Bosch does not usually have any financial unions with customers. Our independence is worth a lot to us."
But Bosch runs joint ventures with several suppliers such as ZF Friedrichshafen and Denso in Japan.
Bosch is now pushing its business in North America, where only 3 percent of all cars are diesel powered.
Bohr expects that within the next ten years the US market share for new cars with diesel engines will increase to up to 20 percent despite competition from new hybrid engines developed by Japan automakers.
Bohr said diesel engines are more cost effective for long-distance journeys than hybrid engines so they would probably continue to outsell hybrid motors in the North American market.
Bohr, a mechanical engineer, has been managing director at Bosch since the middle of 2003.