The sales competition in Europe may come down to how fast two new suppliers of common-rail diesel systems can increase production.
Delphi Automotive Systems Corp. and Siemens Automotive Corp. have begun shipping common-rail systems to carmakers. They are the first challengers to Robert Bosch, which has been the sole supplier of Europe's hottest engine technology.
Delphi is supplying Renault and Ford and has development contracts with two other carmakers. Siemens is supplying PSA/Peugeot-Citroen, but expects to announce a second customer soon.
The speed of the suppliers' production should determine, for example, whether Ford Motor Co. can regain market share in Europe and whether Peugeot will continue to benefit from strong diesel demand.
Asked about sales prospects this year, a top Ford executive at the Geneva auto show put it bluntly: 'It depends on how many common-rail diesel injectors we get from Delphi.'
Ford, General Motors and most Japanese brands have seen their market shares fall in part because they do not have the quiet and clean common-rail diesels offered by others.
'Capacity to supply the new-technology diesel engines has become as important a competitive weapon as new product flow,' according to a report by equity analysts at Schroeder Salomon Smith Barney.
The report said diesel cars are achieving full or near full margin as other vehicles are being discounted heavily. Rising fuel prices have boosted demand because diesel fuel is cheaper than gasoline in most European countries. But Schroeder Salomon says the rise in diesel share 'is predominantly technology driven.'
Diesel's image makeover
Common-rail technology has revolutionized the image of diesels as noisy, dirty, underpowered engines. The advances in power, economy and refinement have helped push the diesel share of Europe's new-car market from 22 percent in 1997 to 32 percent last year. Most analysts expect penetration to rise to 34 percent this year and soon to 40 percent.
Delphi makes the diesel injectors for Ford's first two common-rail diesel engines. A shortage of injectors has dictated the rollout schedule for the diesels, company officials say.
Ford's 1.8-liter, 115-hp Duratorq TDCi diesel engine will appear first in the Focus this summer because Ford is assured by Delphi it will have enough injectors to meet demand.
The Mondeo 130-hp Duratorq TDCi will be delayed until fall, when Ford feels it will have sufficient injectors to satisfy demand. Ford is using the Duratorq TDCi name for all its common-rail diesels.
'There is a shortage of common-rail technology from Delphi,' said Don Hume, spokesman for Ford of Europe. 'It's affecting everybody, including us.'
Earl Hesterberg, Ford's European marketing chief, expects 50 percent of all Focus sales to be diesel once the engine is in full production. Of those, about half should be common-rail and the other half the direct-injection, 1.8-liter, 90-hp Endura Di diesel offered in the Focus since its launch in 1999. Ford will charge a premium for the common-rail engine, which offers higher horsepower.
Ford is planning for 55 percent of Mondeos to be sold with diesels, but only 25 percent will be common-rail, Hesterberg said. Mondeo was introduced with Ford's most advanced pre-common-rail diesel, a 2.0-liter, 115-hp turbocharged pilot-injection engine.
Ford should achieve those percentages in diesel sales with the Focus and Mondeo late this year and in early 2002, Hesterberg said.
When Ford begins production of the new Fiesta late this year in Cologne, Germany, it will have sufficient capacity to meet demand for diesels in the supermini segment, Hesterberg said. Fiesta will receive the first diesel engine developed by Ford in its joint venture with PSA/Peugeot-Citroen.
Delphi will meet demand
Delphi spokeswoman Frederique Le Greves said Delphi has no problem meeting the diesel needs of Renault and Ford.
'There were some problems at the very start with the (1.5-liter) Renault K9, because it was a new engine, but they have been solved,' she said.
The K9 will be fitted in the Clio supermini by summer and in the Kangoo later in the year.
Le Greves said she was unaware of any bottlenecks. 'We are meeting our clients' needs,' she said.
Delphi started delivering its systems to Renault and Ford in January.
'For the time being, we have no supply problem from Delphi,' said Renault spokesman Bruno Hernandez. 'It's still the very early stage, as the car to be equipped with Delphi's system is not out yet.'
Siemens invested $68.8 million to develop its Piezo-hydraulic injector and produce it at a plant in Chemnitz, Germany. Production began in December.
Siemens' systems are fitted on PSA's DW10 TD 2.0-liter, 90-hp engine. The engine will be installed in the Peugeot 307, 406 and Partner, and Citroen's C5, Picasso and Berlingo. 'We have absolutely no delivery problem with Siemens,' said PSA spokesman Marc Bocque.
Siemens expects to produce 2 million common-rail diesel systems this year.