In response to a shortage of diesel engines in Europe, Delphi is planning to invest more than $300 million in expanding its diesel systems capacity, according to The Financial Times. The US-based auto components group is planning a four-fold increase in the production of components for “common rail” diesel engines to 2m units a year. It is reported that the investment will be concentrated at three of Delphi’s European production bases: La Rochelle and Blois in France, and Barcelona in Spain

Delphi’s decision to invest in diesel engine systems in Europe follows an increase to diesel demand that has taken some manufacturers by surprise. Last year for example, GM’s European operating subsidiary Opel, had difficulty in meeting demand for its diesel-engined cars. The increase in demand for diesel engines reflects generally higher gasoline costs in Europe and a shift in the market in favour of more economic diesel engine options, as well as the arrival of better performing common rail technology.

Schroder Salomon Smith Barney, the US investment bank, has reported that sales of diesel cars rose 11 per cent last year, while the overall market was flat. The firm also forecasts that diesel car sales, accounting for 32 per cent of the market last year, could reach 40 per cent by 2004.

This investment by Delphi should consolidate the company’s position as the second largest supplier of diesel components globally. The market leader is Robert Bosch, the German components group.

To view related research reports, please follow the links below:-

Global Car Forecasts to 2005

IMS Corporate Profile – Delphi Automotive Systems

Diesel Engines & Parts to 2003