at the Annual Press Conference, May 8, 2008

The fundamental strategy of the Bosch Group is the right one – something the results for 2007 have once again confirmed. We are on track to reach our strategic objectives. To illustrate this, today's annual press conference, to which I welcome you warmly, has been divided into three sections.

· The first takes you through the 2007 financial statements. Here, the key message is that we achieved our sales and earnings targets in full. Mr. Kümmel will provide details shortly.

· The second looks at the current year, which we expect to be another generally positive year for the Bosch Group. The operating environment may have weakened, but we do not anticipate a serious global downturn this year.

· The third deals with our solid positioning, both internationally and across our business sectors, from which we continue to draw strength. With technology "Invented for life," we help to save energy, to protect the environment – and to make life itself safer. These factors have not only shaped our innovation policy for decades, but will also continue to drive our growth in the future.

However, it is also clear that our long-term strategy stands and falls with the caliber of our people. "We need the best and the brightest." This maxim from the Kennedy era is more fitting – and more urgent – than ever before.

· On the one hand, demographic change in many industrialized countries means that there is less and less young, up-and-coming talent available.

· On the other hand – and this also goes for the emerging markets – competition for qualified people is getting tougher.

Education has hardly ever been as important as it is now, in the age of globalization. It is wrong to believe that increasing global competition makes human labor less important. The opposite is true: competition for the best people is increasing every single day. The good reputation Bosch enjoys may help us in this battle for talent. But it is still a matter of concern that in Germany, for example, for every 100 older engineers there are only 90 younger ones – compared with an average of 190 for the industrialized countries in general. For companies that are engaged in international competition and that pin their hopes on innovations and on Germany as an industrial location, this is a crucial weakness. Without technicians, engineers, and scientists, innovations, also of the kind we need for climate protection, are virtually impossible. And as a matter of general principle, education is the best growth investment in the long run. Sustainability means thinking today about the experts of tomorrow and beyond – and taking appropriate action.

I shall be returning to these issues a little later, but first let us take a look back at 2007. At this point, I'd like to hand you over to Mr. Kümmel.

The business year 2007: sound progress
Ladies and gentlemen, as Mr. Fehrenbach has already said, 2007 was a good year for the Bosch Group.

Our positive development was assisted by the generally favorable economic conditions last year. The global economy fared better than originally expected, growing by four percent – and this despite dramatic rises in energy prices, a further considerable appreciation of the euro, and the onset of a global financial crisis. Regardless of this, however, most emerging markets continued to develop dynamically. In Europe as well – which continues to be our largest market – the upswing continued. These positive developments largely made up for North America's dwindling contributions to growth.

Global automobile production also exceeded expectations, with growth of just under six percent. Nonetheless, developments varied considerably from region to region. Significant growth in Asia Pacific and an improved economic climate in Europe more than compensated for the fall in North America. The global business climate for capital goods remained favorable last year. By contrast, the situation in the consumer goods markets and construction industry varied considerably from region to region.

Another major influencing factor last year was the strong appreciation of the euro against a number of major currencies, particularly the U.S. dollar and the Japanese yen, both of which are key currencies for our business alongside the euro. The U.S. dollar dropped in value against the euro by an average of approximately nine percent over the year, while the value of the Japanese yen fell by more than ten percent. However, thanks to our global purchasing activities and the international distribution of the value added we create in the group, with production locations in all three major economic regions, we were able to limit the impact this had on our competitiveness. However, the appreciation of the euro, which is now picking up again, is having a considerable negative effect on our competitiveness in the dollar area.

The appreciation of the euro knocked roughly two percentage points off the figure for sales growth disclosed for the Bosch Group in 2007. After adjusting for currency effects, our sales grew by roughly eight percent last year. Growth was thus in line with the long-term targets we have set. Expressed in euros, sales rose by six percent to 46.3 billion euros. Of this growth, roughly 1.4 percentage points are due to first-time consolidations. In fact, all three of our business sectors have been boosted by a number of relatively small-scale acquisitions. Let me give you a few examples:

· The Australian-based braking systems supplier Pacifica Group and the workshop equipment company Beissbarth GmbH have been added to the portfolio of our Automotive Technology business sector.

· The Consumer Goods and Building Technology business sector is expanding our heat-pump activities to the U.S. through the acquisition of Florida Heat Pump Manufacturing.

· There have also been additional acquisitions in the Packaging Technology and Automation Technology divisions of the Industrial Technology business sector, as well as in the Consumer Goods and Building Technology business sector.

Last year, we spent a total of around 800 million euros on acquisitions and on increasing our holdings in existing affiliated companies. This restraint was due, in part, to our belief that some companies had been clearly overvalued.

We were able to improve our result last year. We increased our profit before tax to 3.8 billion euros, compared with 3.1 billion euros in the previous year, and achieved a pre-tax return on sales of 8.2 percent. This improvement was driven by our operating result, which increased from 2.4 billion euros to 3.2 billion euros. Our return on sales from operations improved from 5.5 percent to 6.8 percent. At approximately 630 million euros, our financial result was again high, although slightly below that of the previous year.

We continue to aim for a profit before tax figure of seven to eight percent of sales revenue. We channel any earnings beyond that into additional up-front investments to ensure a positive long-term development. These investments are made to an equal extent in broadening our business activities, expanding our international business, developing innovative products, and training our associates.

Last year alone, we spent a record 3.6 billion euros on research and development. This is equivalent to 7.7 percent of sales. At 2.6 billion euros, our capital expenditure was only some 30 million euros below the previous year's high level, and this year will see it climb to over three billion euros. The new semiconductor factory in Reutlingen – where we will be investing 600 million euros over a period of several years – as well as plans to expand our manufacturing capacities for hydraulics and components for wind power generation will benefit greatly from this increase.

If we look at the individual business sectors, we can see that all three developed well.

· Automotive Technology sales rose in nominal terms by 4.5 percent to 28.4 billion euros. After adjusting for currency effects, they grew by 6.7 percent. This enabled us to successfully defend our position as the world's largest automotive supplier. Growth was driven primarily by demand for advanced diesel and gasoline injection systems, as well as a rise in the share of vehicles equipped with the Electronic Stability Program ESP^®.

· The Industrial Technology business sector enjoyed the strongest growth, with sales climbing by 9.4 percent to six billion euros. After adjusting for currency effects, that amounts to a growth rate of 12 percent. Our automation technology operations benefited from the healthy global business climate for capital goods and the broad scope of our business operations. Our packaging technology activities also fared far better than in previous years, recording encouraging growth rates.

· With a growth rate in euros of 6.5 percent to 11.7 billion euros, the Consumer Goods and Building Technology business sector also performed well. After adjusting for currency effects, sales growth was eight percent. We enjoyed particular success with our power tools, household appliances, and security systems businesses. Although we were able to hold our own against competitors in thermotechnology, we felt the effects of marked purchasing restraint in Germany. This development was the result of uncertainty in the markets about future emissions regulations and government incentives. However, now that there is greater clarity on these matters, we are seeing the market pick up again this year.

If we take a brief look at sales by region, it is clear how much we benefit from our strong international presence:

· Nominally and in real terms, sales in Asia Pacific and South America again grew at a double-digit rate.

· Despite the weak development in the automobile industry in North America, we still succeeded in driving up our sales in U.S. dollars by 6.5 percent. However, when calculated in euros, sales dropped slightly by 1.6 percent.

· In Europe, we also achieved significant growth, with sales up approximately six percent.

This positive development of sales is also reflected in the development of business sectors' results:

· In the Automotive Technology business sector, the return on sales from operations improved from four percent in the previous year to 5.8 percent – and this despite major up-front investments in research and development, which were the equivalent of 10.2 percent of sales in this business sector.

In many areas, the improved result is the result of better capacity utilization, but also of many measures to reduce costs and increase productivity at all our locations worldwide. This also applies to North America, where we were able to reduce the scale of losses despite the continuing sales difficulties experienced by major customers. However, the phase-out of our unit-injector technology continued to have a dampening effect on our operations in 2007, and we were forced to recognize 86 million euros in asset impairments in the Diesel Systems division. In the Chassis Systems Brakes division, too, we had to record extraordinary impairments of 136 million euros. This was due to the unsatisfactory development of business, caused both by general strong pressure on prices and negative market trends in North America.

· The return on sales from operations in the Industrial Technology business sector improved from 7.8 percent to 8.4 percent. Thanks to the favorable worldwide business climate for capital goods, our automation technology operations benefited from excellent capacity utilization. Moreover, following the implementation of restructuring measures, the earnings situation in our Packaging Technology division is once again positive.

· The operating result in the Consumer Goods and Building Technology business sector again reached a high level. The return on sales amounted to 7.5 percent, after 8.2 percent in the previous year. As I explained earlier, the main cause of this decrease was the marked purchasing restraint felt at times in the heating market in Germany, which pushed down our result in thermotechnology. In other areas such as power tools, security systems, and household appliances, we again recorded positive results.

Last year's positive result has enabled us to further bolster our financial strength, as a condition for future growth. In very great measure, this is in accord with our corporate constitution, in which the Robert Bosch Stiftung is our majority shareholder. The constitution obliges us to safeguard our financial independence over the long term.

I would now like to use three charts to explain our financial situation – the development of liquidity as reported on the cash flow statement, our net financial position, and our equity on the balance sheet:

· The cash flow statement shows that cash flow increased to 5.1 billion euros or 10.9 percent of sales, compared with 4.5 billion euros or 10.3 percent of sales in the previous year. Cash flows from operating activities come to just under 4.1 billion euros. They therefore significantly exceeded the roughly 3.5 billion euros in cash flows from investing activities. After subtracting cash flows from financing activities, this resulted in liquidity of 2.8 billion euros at the end of 2007. Liquidity as reported on the cash flow statement was thus nearly as high as in the previous year. I should however point out that a change in the reporting rules meant that securities with a term of less than 90 days are no longer included in liquidity. If we were to ignore this exclusion, our liquidity would exceed that of the previous year by 120 million euros.

· Total cash and cash equivalents, or liquidity as per the balance sheet, which is made up of cash and cash equivalents plus all securities and bank balances with a term of more than 90 days, rose by 800 million euros in 2007 to 12 billion euros. After subtracting financial liabilities and pension provisions, our net financial position improved from 2.2 billion euros in the previous year to 3.9 billion euros. It should be noted here that there was a reduction in pension provisions due to higher discount rates in response to the development of the capital markets.

· If we briefly take a look at the balance-sheet structure, we can see that the equity ratio increased to 51 percent last year, compared with 48 percent in the previous year. A key reason for this was the good result we achieved. On the assets side, the balance-sheet structure changed only slightly. On the equity and liabilities side, however, there were significant shifts. Due to operational factors, current liabilities increased, in particular with regard to trade payables. Non-current liabilities, by contrast, dropped – mainly also due to the reduction in pension provisions.

All in all, therefore, we are well equipped financially – in addition to our technological and marketing strengths – to further expand our business and achieve our long-term objectives.

I would now like to hand back to Mr. Fehrenbach, who will look at our business prospects for the current year, and above all provide an outline of our strategy.

Outlook for 2008: we are cautious, but confident
Thank you, Mr. Kümmel. Let us now turn our attention to the current fiscal year. As I said at the beginning, ladies and gentlemen, despite all the worries about the economy, we have good reason to be confident about 2008. The operating environment may have weakened, but we do not foresee a global downturn. In light of that, we expect the Bosch Group to continue to perform well on the whole.

Nonetheless, it is plain to see that economic storm clouds have been gathering for some time:

· First, there was the housing crisis in the U.S., and then the banking crisis that followed in its wake. The latter was in its turn made worse by impenetrable, uncontrolled finance practices. Its effects are being felt far beyond the U.S, and now negatively impact the entire global economy.

· This financial crisis sparked a drastic depreciation of the U.S. dollar, mainly impacting the euro. This development has massively distorted international competition.

· Finally, we have what is in part an irrational price explosion for many raw materials and foodstuffs. The cause of this is only partly to be found in real market conditions. We are witnessing a frenzy of speculation, one which is clearly attempting to see how far it can go. This has nothing to do with our understanding of business. Having said that, some political decisions -or the lack of them – are not entirely innocent in this scenario: For example, valuable agricultural land is being taken up for biofuel production, and there is no convincing energy policy that responds to the huge increase in the oil price.

Taken together, these problems are hitting the North American economy hardest. The question is to what extent the rest of the world economy will suffer as a result. Certainly, one alleviating factor is that today the U.S. economy is no longer anywhere near as dominant as it was in previous decades. However, it will not be possible to avoid the negative effects altogether. There are real fears that the global economic slowdown will worsen in 2009.

We still expect the world economy to grow this year by around three percent. We continue to forecast two percent growth for Germany. As before, the greatest momentum for the world economy comes from the emerging countries, which are increasingly generating their own growth. We do not see any major risk of the growth process in China being significantly disrupted by the unrest in Tibet.

Against this backdrop, we expect sales of the Bosch Group to again grow by around five percent this year, despite the continuing negative effects of the appreciation of the euro. Our performance in the first four months of this year, showing a nominal increase in sales of around four percent (or roughly seven percent after adjusting for currency effects), confirms this expectation. We are also confident of again reaching our target return of seven to eight percent of sales.

Yet there is no guarantee of stability in the current circumstances. This makes it all the more important that we make all our business fields competitive and continue to resolutely pursue our medium and long-term growth opportunities. And this brings us to the subject of strategy.

Our vision of the future: the three key trends
No strategy is possible without a crystal-clear understanding of the present and a vision of the future. So what are the key global trends that can drive the growth of Bosch? Three main trends are emerging.

· First, the acceleration of world economic integration. The Asian emerging markets in particular are catching up rapidly. There are two developments related to this: the opening up of new sales markets on the one hand and the huge increase in worldwide supply potential on the other. We are experiencing both developments simultaneously.

· Second, the increasing importance of environmental protection and conservation of resources throughout the world. As a result, emission standards are being tightened not only in Europe but also in Asia and the Americas. Regardless of the arguments about climate change and its causes, climate policy has become a reality. No matter how overambitious some political targets may be, the course is set: it offers opportunities for companies to set themselves apart with new technical solutions.

· The third main trend is the scarcity and increasing cost of energy resources. Although energy efficiency has increased, demand for energy in the emerging countries, above all in China and India, is rising sharply. Despite all the new finds, fossil energy reserves are finite. This fact, coupled with the worldwide climate goals, is a clarion call for a new dimension in energy efficiency.

Our strategy: the three main objectives
The three trends I have outlined have one thing in common: not only our product world but also the face of our industries will change radically in the longer term. We are meeting these changes head on, and we formulate our three main strategic objectives in order to focus our efforts accordingly:

· Our first objective is to move with the markets. The Bosch Group has been globalized for over 100 years, but we continue to develop our international operations at a high level. By 2015, we aim to generate over half of our sales outside Europe. Europe itself will remain a key market for our innovations. And despite all the current problems, we continue to place our bets on the long-term strength of the U.S. economy. Nonetheless, our strongest growth region will be Asia. We aim to triple our sales in Asia by 2015, and will be investing nearly 1.9 billion euros there between 2008 and 2010 – half a billion more than in the three previous years. Even by the beginning of 2009, we shall have more associates in two Asian countries – some 23,000 in China and nearly 20,000 in India – than in any other country apart from Germany.

· Our second objective is to focus the diversification of the Bosch Group. We shall continue to balance out our sectoral sales structure. That means taking full advantage of our opportunities for growth in automotive technology, but at the same time growing by an above-average rate in consumer goods, building technology, and industrial technology. To achieve this, we shall continue to make acquisitions wherever they fit in with our core competencies and our corporate culture. This is what we mean by 'focusing' diversification: we are not interested in expansion for its own sake, but want to expand in areas in which we can bundle our competence. We have recently made a number of smaller acquisitions. As Mr. Kümmel mentioned, in 2007 we spent more than 800 million euros on acquisitions and increasing our shareholdings. This year, and in the years that follow, we have sufficient funds to further strengthen our business – funds that will also allow us to spend significantly higher amounts than last year.

· Our third objective is to focus our innovative strength on technology "Invented for life." As Mr. Kümmel has already said, our research and development budget came to some 3.6 billion euros in 2007, or 7.7 percent of sales. In Automotive Technology alone, the share was 10.2 percent: a new record. More than 40 percent of the entire R&D budget went into products that protect the environment and conserve resources. In 2007 alone, this was a good 1.5 billion euros. Going beyond energy efficiency, we aim to harness and utilize renewable energies to an increasing extent. Our sales generated with such systems will grow at a double-digit rate to more than 750 million euros this year – and exceed 1.2 billion euros in 2010. In other words, we see significant economic opportunities in ecological issues – because they require not less but instead more technology.

Moving with the markets: to Asia and back

In practice, these strategic approaches complement and reinforce each other. The Bosch products which are sold throughout the world are the resource-saving ones. They are the main drivers of our international success – also in the Asian emerging markets. At the same time, this calls for cost-effective solutions. And again, we can generate these solutions thanks to a global development and manufacturing network. One example is the Tata Nano, the Indian ultra low-price vehicle for which the high-tech company Bosch is a key supplier. Among the systems on board are our engine management and injection systems. This shows how much we benefit from our engineers on the spot. Some one in four of our research and development staff now work in the Asia Pacific region – and 65 of our 292 manufacturing sites worldwide are located there. We shall further strengthen this local presence, in terms of both associates and value added. To name just a few examples:

· In India, we are significantly expanding our production capacities for gasoline and diesel systems. In addition, new production operations are coming on stream: packaging machinery has been coming from Goa since late 2007, antilock braking systems will be coming from Chakan as from the end of 2008, and control units from Naganathapura as from 2009.

· Further major investment is planned in China up to 2010: for our Chinese headquarters in Shanghai, for a logistics center in Changsha, and for a winter test track in Inner Mongolia. In addition, our security systems operations have moved to a new plant in Zhuhai. We are extending the range of products we manufacture there, as well as the range of control units and diesel systems we manufacture in Suzhou and Wuxi respectively.

· In Korea, we completed a new engineering center last fall. In Vietnam, where we have just acquired the land for a first plant, a regional subsidiary was set up this spring – and another one will follow shortly in Indonesia.

· Last but not least, with our 1,200 engineers in Japan we have built up a strong development team which will enable us to grow with Japanese auto manufacturers both locally and across the globe. Our aim is to gain even greater entrepreneurial flexibility here. For this reason, we intend to acquire the remaining shares in Bosch Corporation, our Japanese subsidiary.

All this illustrates our growing presence in Asia. We are also opening up new markets with new production operations in Brazil and Russia – whether with antilock braking systems from Campinas or household appliances from St. Petersburg. In 2007 alone, 22 sites were added to our worldwide manufacturing network.

But for all our success, especially in Asia, internationalization is not a one-way street. The emerging countries are a source of increasing competitive pressure – and we are feeling this pressure, also in our established markets. This makes the success we have achieved in the extremely competitive power tools sector all the more remarkable. The fact that sales of no-name products decreased by a third in Germany in 2007 is also due to the industrial clout of our Power Tools division. We are launching new products at a breathtaking rate – 100 in the past year alone. The average time from initial product idea to market launch is only 12 to 18 months. What's more, we are creating new markets – laser measuring tools for do-it-yourselfers are one example. To further expand this growth area, we acquired the specialist company Robotoolz in Hong Kong at the beginning of 2008. Whether in Asia or Europe, we are on the offensive, facing up to increased competition from the emerging markets.

Focused diversification: greater breadth based on a clear platform

The diversification of the Bosch Group has many facets. It not only aims to create a balance among our business sectors, but also focuses on the balance of business within the individual business sectors. In automotive technology, for example, we are making progress toward alternative drives for the car. Our expertise in hybrid drive systems is in ever greater demand. Nearly 400 engineers are already active for Bosch in this field. We are working on series production projects for both gasoline and diesel hybrids – and have a range of further orders for engineering work. Our Hybrid Systems project unit has proven its worth, encouraging us to set up a second project unit for battery systems. It will focus our efforts on the further development of the core competence we need for the increased use of electrical motors in drive systems. Our development efforts are directed at bringing lithium-ion batteries – which we ourselves pioneered in power tools – onto the road. We shall be doing this together with partners: we have already entered into a number of alliances, while still others are being examined. The electric car is a long-term challenge. To make it a reality, we are already positioning ourselves in a whole range of activities.

We are similarly expanding our activities in our other business sectors. Take Security Systems – which in 2000 was still mainly concentrated on the facilities business in Germany. Since then, we have come a long way – both organically and through eleven acquisitions. Today, we are among the major suppliers in the international product business, above all in the industry's fastest-growing segment, video surveillance. One key factor here is software-supported analysis of image content. This analysis helps to identify risks, such as abandoned suitcases at airports or train stations. For this purpose, our researchers have developed basic algorithms – incidentally not just for video surveillance in the security field, but also for video sensors in driver assistance systems. This shows just how versatile our know-how is.

Two divisions which we have strengthened significantly through major acquisitions since the beginning of the decade continue to progress dynamically:

· Bosch Thermotechnik is gearing itself up for the consolidation of markets and technologies. To this end, we are broadening our competencies. Our thermotechnology business is still mainly heating systems but, in the future, the combination of heating, ventilation, cooling, and air-conditioning will be increasingly in demand. This combination has already been brought about, for instance, in the Solar Decathlon house – a Bosch-sponsored energy project by the Technical University of Darmstadt currently on view here at Schillerhöhe. This house draws all its energy from the sun. You can take a look for yourselves after this press conference.

· Bosch Rexroth is also expanding its range of solutions for energy efficiency. Next year, the Mobile Hydraulics unit will launch the HRB hydrostatic regenerative brake system. This will allow vehicles such as garbage trucks or forklifts – which have to stop and start again frequently – to save up to 25 percent of their fuel. The principle is to store braking energy hydraulically and to release it again on starting in order to provide additional thrust. This is only possible through interplay with vehicle electronics systems – one of our core competencies. Here we have another example of versatility creating added value: even though our businesses are focused on different markets, they repeatedly cross-germinate each other on a technological plane.

Invented for life: our strategic focus
The example of the hydraulic hybrid system shows that, at our company, many technological means lead to the ecological end. In this sense, "Invented for life" is more than just a slogan. It is what guides our research and development, indeed our entire strategic approach. One example of this is the contribution our large subsidiaries make to the harnessing of renewable energies:

· Bosch Rexroth is one of the world's largest suppliers to the wind power industry. Its capacities are to be significantly expanded through investment of more than 300 million euros in the coming years. This year, Bosch Rexroth will more than double its sales of wind turbine hydraulic systems and gear units to 330 million euros, and looks set to surpass the 600 million euro mark by 2010.

· Bosch Thermotechnik is the world market leader in heat pumps and has recently expanded its capacities for solar technology to a substantial degree. Our aim is to increase the share of sales from its renewable energy systems from 12 percent in 2007 to 30 percent in 2015. Already long overdue, further clarification of the legal framework is a must if we are to break the current logjam in heating system modernization. At the same time, however, we are doing our bit to improve education: in 2007 alone, we trained 75,000 heating installers at our training centers. They are the people who can convince homeowners of the advantages of our cutting-edge technologies.

Clean and economical systems – this has long been the focus of our business in the automotive field, and one which is being continued with ever new solutions. One example is Denoxtronic, our urea metering system for the nitrogen oxide catalytic converter in diesel engines. We shall sell around 400,000 of these units this year, and expect this figure to rise to around 2.6 million in 2012. Of these, about a million will be sold in America – a clear sign that "clean diesel" will also make its mark in the United States. To this end, we are working on development projects with U.S. as well as with European and Asian manufacturers. Series production launches based on the strict U.S. standard will begin in 2008 and increase from 2010, not just in the light commercial and sport utility vehicle segments but also in passenger cars. The increasing share of diesel in the U.S. is already reflected in our development projects with customers.

Whether for reasons of energy or climate policy, legislators in North America and Europe are pursuing increasingly ambitious goals to reduce fuel consumption and carbon dioxide emissions in new vehicles. In both regions, this is serving to boost sales of our economical direct injection systems, for both diesel and gasoline engines. At the same time, additional measures such as automatic start-stop systems are helping to reduce fuel consumption – by eight percent in urban traffic. We shall sell around 500,000 of these units this year, and as many as 1.5 million next year. Even greater savings potential can be exploited by future generations of smaller yet equally powerful engines. Such downsizing requires turbo charging – precisely the focus of our joint venture with Mahle in Germany. However, downsized engines will only come in big numbers once the legal framework is clear. For this, the European Union needs to adopt its targets for fuel consumption reduction before the European parliamentary elections in 2009. By then, Germany should also have introduced its CO2-based vehicle tax – in order to give new car buyers a climate-protection incentive. But perhaps even more urgent is the need to harmonize this tax across Europe. At present, there are 14 different national regulations in place, a costly patchwork for the automotive industry. Surely this is not what is meant by a common market, let alone a common ecological objective.

But technology "invented for life" is about more than environmental protection. Where cars are concerned, it is also about accident protection. The long-term trend shows that fatal accidents are decreasing thanks to more technology. However, the curve has flattened somewhat recently. For us, the bottom line is that we need even more sophisticated technology. In 2008, only one in three new cars worldwide will be fitted with the electronic stability program (ESP^®), rising to one in two by 2011. And the next phase of expansion for our Predictive Safety Systems (PSS) will come in 2009 with the automatic emergency braking system. If all cars in Germany were fitted with these predictive safety systems, some 20 percent of all traffic accidents could be prevented. However, government action is also needed to expand our infrastructure – not just the roads themselves but telematics systems as well. Our common objective is accident-free road traffic.

Prerequisite for everything: highly qualified associates

Ladies and gentlemen, as I said at the beginning, whatever our strategic intentions, our objectives can only be achieved with highly qualified associates. Our global growth calls for local expertise in each individual country. And although the topic of climate protection is currently dominating the public debate, in the 21st century we shall only be able to meet our ambitious targets for carbon dioxide reduction if we have enough specialists. Not enough thought is devoted to this subject, let alone action. We find it frankly embarrassing that Germany spends only 5.3 percent of GDP on education – compared with an OECD average of almost six percent. Germany has to be among the leading nations in this area. We call on the government to make this happen. At the same time, we support private initiatives – for example, the Acatech academy of engineering and technology in Germany. We were also co-founders of the Wissensfabrik knowledge factory, the aim of which is to kindle an interest in technology, from the kindergarten up.

This is the most sustainable way to strengthen Germany as an industrial location, and as a place to do business. Germany is also the center of our research and development operations, and will continue to be in the future. This is shown by a 60 million euro plus investment project beginning next month to expand our engineering center in Abstatt by 2010, opening the way for the creation of 900 additional jobs. We benefit here from proximity to major customers and research institutes. But we shall only be able to maintain such know-how clusters in the long run if we have enough engineers in this country. And it is also clear that there can be no premium vehicles without highly qualified engineers. This is the key problem of the future.

Bosch itself currently has over 2,500 vacancies for university graduates in Europe, including 3,810.00 cm Germany. At present, we can still fill them with qualified people, but we too are stepping up our recruitment efforts. For example, we have had a high tech meeting in Schwieberdingen, Germany, and a recruiting event at our winter test center in northern Sweden.

We are also doing a great deal to raise our profile in the emerging countries. In March, for instance, around 750 selected students from 30 Indian universities were invited to try out our automotive technology on a test track. Last year, we hired around 5,500 university graduates worldwide, including over 800 in China and more than 1,500 in India.

What is particularly important in these countries is to hold on to young talent – particularly in the first four years when associate turnover is twice as high as afterwards. We are countering this with a number of measures. The two keywords here are learning and career prospects.

· Firstly, we are boosting our training efforts. In 2007, we spent more than 225 million euros on training our associates worldwide. The establishment of the Bosch China Training Institute in 2007 is one example of our these efforts. It organizes seminars for specialists and executives from throughout the country. This year, its program already includes more than 50 different courses and workshops, with the focus on management and leadership topics.

· Secondly, we are opening up prospects for career advancement at an earlier stage than ever before. In the fall of 2007, for instance, we established a manager development scheme specifically for the Asia-Pacific region, which talented junior executives can join after only two years with the company. This year, we shall be rolling out the Junior Management Development Program, known for short as JUMP, in 13 countries. This is an international graduate management trainee development program designed to recruit more young management talent, especially from the growth regions.

We are thinking far beyond this year. In the long term, the aim is for 80 percent of our managers in the emerging countries to be of local origin. This will mean more than 2,500 local managers in these countries by 2014. With their knowledge of market conditions, they will help us leverage local growth potential. At the same time, they will be required to gain global experience. The number of our associates on international postings is rising all the time – in early 2008 it was 2,300. Germany is in first place among the host countries, but China is already second, ahead of the United States. Personnel policy at Bosch is international human resource management.

Basis of our business: an integrative corporate culture

But what is it that motivates our associates most throughout the world? I would like to close by looking at this question. The answer lies not only in our strategic objectives and operational tasks, even though these are clearly formulated. Even more motivating is our cultural consensus – ultimately a shared global understanding of what we work for, and how we work, at Bosch. Business success is certainly one of the things we work for. But there are other motivating factors, such as global social and ecological responsibility. And finally, there is uncompromising compliance with the law – attitude which unfortunately cannot be taken for granted but is nonetheless indispensable when it comes to lasting business success.

Precisely because we see ourselves as an international company, we also know that we do not operate everywhere in democracies based on the rule of law. Our associates appreciate, however, that in all our operating units we place special importance on our values. This is part of the tradition established by our company founder. What we refer to today as our corporate culture, which we have defined for all our associates in our "House of Orientation," is the modern interpretation of the convictions of Robert Bosch. It is this continuity that gives us credibility – also and in particular among our associates outside Germany. And only with the trust and the confidence of our team across the globe can we achieve our strategic objectives. In this sense, motivation is the basis of our success. And, in no small measure, a culture that is lived and breathed has an integrative effect. For us, this is not an idea that is alien to business. On the contrary, it is good for business.

Thank you for your attention.

Click here for presentations and further information.

Curriculum Vitae Franz Fehrenbach

Curriculum Vitae Gerhard Kümmel

RF00001 - May 08, 2008