Q3 2024 Volkswagen AG Earnings Call - Q&A and Media Call

With us today is <unk> CFO and C O O of Volkswagen Group, Let me provide a few remarks before we start by now you should have received all materials, including the press release.

From financial report and the presentation all of which were published this morning. If you do not have them yet you can find all the documents on our corporate website in case of an issue give us a call or drop us an email and people send demonstrates to you with that let me now hand over to Ralph for a brief run through of the next one and a half hours.

Thank you Peter and very good morning to everyone on the call also from my side. Thank you very much for joining us today.

Ralph: What's on our agenda and we will have iron are presenting the nine months.

Ralph: Nine months financials, and then the key developments during the quarter and thereafter are providing the full year outlook for 2024.

Ralph: We will continue then as with his presentation and the Q&A session for the Investor and analyst community, which will be moderated by myself and after this session and then we will have a short break as usual before we continue with the media Q&A, which will be hosted by beautiful.

Ralph: As a reminder, and as always to Safe Harbor language and the other cautionary statements on page two of our presentation, which will govern today's presentation. Please read it yourself because I will not read it for you.

Speaker Change: And with that I hand over to Arnaud Arnaud goes. Please go ahead.

Ralph: Okay.

Arnaud Arnaud: Yeah. Thank you Ross and good morning to all of you.

Arnaud Arnaud: Before we go into the details of the presentation allow me to briefly comment on the current situation of <unk> Branco car.

Arnaud Arnaud: The nine month results and particularly the earnings development. It works on brand folks are on commercial vehicles and technology components.

Arnaud Arnaud: The last three quarters demonstrate the urgent need traction in a volatile environment.

Arnaud Arnaud: Elekta raised by intense competition.

Arnaud Arnaud: This is why we are facing important painful decisions that we need to make together and through bear together.

Arnaud Arnaud: I'm well aware that the cuts we are facing a tough for all of us.

Arnaud Arnaud: And that many employees are worried about their future. However, it is our shared responsibility to act for the future of this company and for generations to come.

Arnaud Arnaud: Theres not forgotten how to build great cost, but the cost specifically in our German operations and factories are far from being competitive. This is where things cannot continue as they are now.

Arnaud Arnaud: In view of their confidentiality of the ongoing talks with our tariff partners I ask you for understanding that we do not want to comment specifically on plans on mesh us all speculations in the press.

Arnaud Arnaud: Yeah.

Arnaud Arnaud: With that let me continue the presentation with the highlights of the third quarter.

Starting with a quite a number of exciting product launches in the third quarter. Then you Eighty-seventh Gtx is currently the most powerful electric cars.

Arnaud Arnaud: From the <unk> brand. We have also just marked in your range record of 794 kilometers.

Arnaud Arnaud: With one thing charging load Vista.

Arnaud Arnaud: Pro S version.

Arnaud Arnaud: The famous probably transport is now in its seventh generation with more space and payload.

Arnaud Arnaud: As well as improved towing capacity and economics than U I do Unix E. SUV has been launched the Chinese market. The vehicle, which is tailor made for the demand of Chinese customers is characterized by a particularly progressive design and smart human machine interface with customers.

But the three D avatar.

Arnaud Arnaud: Nucor to Iraq is a brand's first all electric model in the important compact SUV segment. The model is on sale since early October with an enterprise of around 33 solid in Europe, the Audi E.

Arnaud Arnaud: Determine is audi's first purely electric sport back in the one model.

Arnaud Arnaud: It's striking design enables the best EDA genomics in the portfolio and therefore greater efficiency last but not least posh has just launched a new 911 Carava GTS.

Arnaud Arnaud: That's the first wrote league of 911 to be a cryptic, particularly lightweight performance hybrid.

Arnaud Arnaud: These exciting new models will add to the product momentum we see currently in our order intake figures I come to that topic later.

Arnaud Arnaud: Okay.

Arnaud Arnaud: You also made important progress.

Arnaud Arnaud: In the formation of the planned joint venture with driven in the past months, we received all necessary regulatory approvals.

And even more importantly, we were able to approve the full technical feasibility of the Arabian architecture and software in a drive it but demonstrator vehicles.

Arnaud Arnaud: Both are key milestones on our way to set up the joint venture and finally start working.

Arnaud Arnaud: On SA team developing the next generation STV software defined vehicle architecture.

Arnaud Arnaud: The joint venture fits very well into our platform strategy and the roadmap we have set for software architectures.

It enables our brand salons future electric vehicles on the PPE and SSP platform based on a highly competitive and state of the art electrical architecture and vehicle software and significantly reduce cost per vehicle.

And this more efficient use of capital.

Arnaud Arnaud: We also hosted the world premiere of Scout last week in Nashville.

Arnaud Arnaud: Foss Essel Forex Fund group it is more than just another model or a new brand. It's once in a lifetime opportunity to strengthen our position in North America in the long term with scout will be represented in the most important segment of the U S market in the future see pickups and rocket Suvs.

These two highly profitable off road segments have been dominated by American manufacturers for decades the <unk>.

Previously consisted of combustion engine vehicles, and we have neither the brand nor the scale to be able to seriously play in this segment.

Arnaud Arnaud: Now this segment is also gradually turning towards electric and we have all the ingredients we need to be successful the electric technology local batteries from power core and last but not least a great brand with heritage, namely Scout.

Arnaud Arnaud: We are convinced that the future is electric but the transition to electric mobility in the U S is not as fast as originally assumed and one example of how we want to shape. The transition to immobility is the introduction of a range extender for Scott Scott.

Arnaud Arnaud: Scott is a fully electric vehicle per se, but we want to offer a range extender as an option from the beginning on.

With that back to the nine months results starting with group deliveries.

We delivered $6 5 million vehicles to customers about 3% below the prior year level order intake invest in Europe remains robust due to seasonal effects Q3 order intake at 674000 units with some 82 thousands vehicles below the number achieved in Q2 2010.

Arnaud Arnaud: Four but 27% up on the prior year number and it's worth noting that September or the index accelerated again substantially compared to the summer months.

Arnaud Arnaud: And compared to the previous year, driven by a good customer demand for the attractive new product lineup, which is becoming more and more available in the markets.

Arnaud Arnaud: As per end of September the order bank in Europe stood at 870000 units.

The 3% decline in deliveries was in particular driven by lower volumes in China. The volumes were 10% lower year over year in the first nine months and 15% lower than the third quarter.

Arnaud Arnaud: The overall growing Chinese market is still characterized by a significantly declining ice volumes and a shift towards bvs and specifically ph evs.

Arnaud Arnaud: Deliveries in Europe were almost stable in the first nine months, but weakened in Q3.

Arnaud Arnaud: Decline of about 7% not least to the lower B V volumes in the North American South American market the positive trend seen in the first half year continued in the third quarter.

Arnaud Arnaud: Our team in North America delivered a very solid 7% growth reflects strong brand growing even by 24% in the region a significant first step towards a more robust global footprint and an excellent three sides of our team there.

Group delivers in South America grew by 50% year over year.

Arnaud Arnaud: Demand for battery electric vehicles in Europe, and North America continues to be muted.

Arnaud Arnaud: As a result of BV deliveries.

Arnaud Arnaud: 5% lower year on year.

Arnaud Arnaud: Tvs deliveries in Europe, and U S were down by 14% and 26% respectively. This could not be compensated by double digit growth of 27% in China.

Arnaud Arnaud: In total we delivered 507000 Tvs to customers worldwide in the first nine months corresponding to a share of about 8% of group deliveries.

Arnaud Arnaud: During the year, the BV share improved sequentially to a level of around 9% in Q3.

Arnaud Arnaud: BB order intake invest in Europe showed an encouraging trend recently more than doubling compared to year end 2023 supported by recent new model launches.

Arnaud Arnaud: Yeah.

Arnaud Arnaud: Let me now give you a summary of the Q3 financials third quarter was expected to be the weakest quarter of the year 2024 in an overall challenging environment.

Arnaud Arnaud: Not only for seasonal reasons and corresponding lower volumes, but in particular due to the flu.

Restructuring expenses booked that order related to the potential alternative use or closer of the process plant.

In addition supply shortages, where it had been at portion Branco core.

Arnaud Arnaud: Its availability of six and eight cylinder engines at Audi was normalizing in Q3.

Speaker Change: If this general remarks, let's move on to the financials and the operating performance of the Flex one group.

Reagan sales came in at $6 5 million units in the first nine months down year on year at minus 4%, excluding our joint venture operations in China vehicle sales were down by 1% to $4 6 million vehicles year to date.

Speaker Change: The corresponding slight decline of <unk>.

Speaker Change: 1% and automotive sales revenues could be overcompensated by improved sales revenue in the financial services business.

Speaker Change: And as a result group sales revenue improved slightly year over year to 230.

Speaker Change: $37 3 billion Euro this is up 1%.

Speaker Change: Operating beside came in at 12, four 9 billion corresponding to a margin of five 4% one percentage points below the prior year period.

Speaker Change: Profit before tax amounted to $12 5 billion Euro in the first nine months of 2020 for some 29% below prior year period. In addition to the lower operating result, this was due to lower financial result.

Speaker Change: Profit after tax declined by 31% to $8 9 billion Euro.

Speaker Change: And as a result earnings per share, but down by 33% to 50 15 point to Europe.

Speaker Change: All these figures are reported.

Speaker Change: And are not adjusted for any non operating effect.

Speaker Change: Third quarter results were impacted by additional $1 2 billion restructuring charges largely related to ongoing information and consulting process with regards to the prostate side.

Speaker Change: This brings the total impact from various nonoperating items accounted for in the first nine months to $2 5 billion Euro. The remaining 1.3 billion had already been booked in the first half.

Speaker Change: Net of these nonoperating items underlying operating result in the first nine months stood at $15 4 billion Euro and a margin of six 5%. The underlying operating result in the third quarter Standalone amounted to 4 billion Euro and a return of five 2%.

Speaker Change: But to be very clear our reported margin of five 4%. After nine months is by far not satisfactory level.

Speaker Change: And clearly below our ambition and potentially giving the product substance and the global scale of our group.

Speaker Change: We must and we will continue to intensify our efforts across all brand groups and business divisions to bring costs down and improve our competitiveness and our financial performance going forward.

Speaker Change: Net cash flow in the automotive division totaled $3 3 billion in the first nine months about $1 6 billion below prior year levels. This was mainly due to the lower gross cash flow, which was driven by the lower operating result, as well as a buildup of working capital of about 2 billion Euro anti.

Speaker Change: Our investments.

Speaker Change: No working capital higher inventories and the magnitude of 7 billion Euro partially offset in particular by increased provisions and higher payables.

Speaker Change: In the third quarter stand alone net cash flow came in at solid three $3 4 billion Euro.

Speaker Change: Which brings me to our automotive net liquidity, which recorded a corresponding improvement of $3 1 billion euro compared to end of June.

'twenty 'twenty four.

Speaker Change: Care to the year end 2023, it declined by about 6 billion Euro. This was mainly attributable to the dividend payments as well as the redemption of our hybrid bond, which has already been booked in the second quarter of the year overall at $33 4 billion Euro net liquidity continues to stay on.

A solid level.

Coming to the divisional performance passenger cost recorded an operating result of $7 3 billion about a third below the prior year period, the margin amounted to 4.7% one eight percentage points below the prior year 11.

Commercial vehicles continued their convincing performance strength.

Speaker Change: Besides advanced to $3 1 billion euros and return on sales stood at a strong 91%.

Speaker Change: The financial services Division recorded an operating result of two points 2 billion corresponding to a decline of 27% year over year.

Speaker Change: Let us look at the drivers behind the operating result development in the passenger car segment.

Speaker Change: Volume price mix contributed a negative <unk> 7 billion as already mentioned vehicle sales, including excluding China Jv's were 1% lower.

Speaker Change: The volume other effect on the operating result was positive despite the slightly lower vehicle sales, excluding the China Jv's and this was mainly due to an improved spare part business.

Speaker Change: <unk> over nine months was affected by a week, a model and brand mix with lower sales at Porsche and Audi.

Speaker Change: However, neutral in the third quarter.

Speaker Change: After it had turned negative in the second quarter pricing really stabilized in the third quarter benefiting from last year's price increases, but offset by higher temporary sales promotions, specifically for battery electric vehicles.

Speaker Change: Broadcast where minor headwind year over year and fixed costs and other costs increased considerably as a result of higher R&D cost increased depreciation and amortization.

Well as a continued deflationary trends, including higher wages.

Speaker Change: This bucket also includes the restructuring provisions in a magnitude of 2.2 billion Euro.

Speaker Change: Yeah.

Speaker Change: Our overhead costs in the automotive division continued to show a clearly disappointing trend.

Speaker Change: Both in absolute and relative terms overhead costs increased considerably in the period under revenue and this was mainly driven by the carryover effects of wage increase from 2023, and the lower sales revenue and as a result overall cost ratio stood at 17.4 percentage points in the first nine months of this year.

170 basis points above the prior year 11, given an intensifying competitive environment as well as the ongoing transformation of the industry towards better electric mobility.

Speaker Change: It is clearly a call for action.

Speaker Change: Increased challenges in the market environment, we have to step up our efforts to improve our competitive position and cost structures in particular in our German operations.

Speaker Change: And this is.

Speaker Change: Yeah.

Speaker Change: Moving onto automotive investments into R&D and Capex.

R&D cost increased by 1 billion during the first nine months as a result of the accelerated transformation of the Fox one group's brands towards electrification and digitalization.

Speaker Change: Well as a ramp up of our PPE and PPC platform at Audi and Porsche Capex continues to be at high levels due to a significant upfront investments in your models and battery and software as well ex the execution of our regional strategies relative to automotive sales revenue investment ratio stood at <unk>.

Speaker Change: 36% up on the prior year level due to high investment as well as lower automotive sales revenue in the first nine months.

Speaker Change: We continue to work towards reducing investments in R&D and Capex to 165 billion and next planning around 2025 to 2029 key to achieving this is a consequent utilization of synergies across the groups and the brand groups of course, more efficient R&D processes and structures.

Speaker Change: Gradually lower investments in ice.

Speaker Change: Expected effect from the planned joint venture with Arabian and adjusting our battery capacity built up to the market needs.

Speaker Change: With that let's move onto the performance of our brand groups platforms and financial services business.

Speaker Change: Bryan Koop core recorded stable sales revenues year on year over year supported by increased list prices and positive mix, but held back by higher fixed costs and higher technical specifically for battery electric vehicles.

Speaker Change: The operating result declined by about 10% to 14 5 billion corresponding to a margin of four 4%.

Speaker Change: 50 basis points below the prior year period.

Speaker Change: If adjusted for restructuring expenses, however, the underlying operating margin stood at five 2%.

Speaker Change: Franco Progressive recorded sales revenue significantly below last year's level, mainly due to lower vehicle sales and constraints of the six N V. Eight engines in particular in the first half of the year operating besides came in at $2 1 billion euro corresponding to a margin.

Speaker Change: At four 5%.

Speaker Change: As mentioned before earnings for particularly burdened by the restructuring provisions of one 2 billion in the third quarter related to the potential alternative use.

Speaker Change: Closer of our process side, we expect the positive underlying earnings trend to continue in Q4 with Perenco progressive aiming for double digit margin in Q Shaw.

Speaker Change: Bryan Koop spot luxury recorded an operating margin of 14, 6% in it and its automotive business corresponding to a decline of four three percentage points compared to the prior year figure.

Speaker Change: This was mainly due to lower sales volume in particular in the Chinese market higher ramp up cost you two a record number of new model launches as well as headwinds from supply shortages in Q Oh Boy Q3 should have marked the low point in <unk> plans to reaccelerate into Q4.

Speaker Change: Let us have a more detailed look at the brand group call.

Speaker Change: Two developments stand out here first godaddy read a very consistent performance throughout the year and achieved a solid eight 3% return on sales in the first nine months in a challenging environment.

Speaker Change: This once again underlines that efficient cost structure combined with strong product substance can generate highly competitive margins.

Speaker Change: All other brands and businesses of the brand group recorded a sequential erosion of the operating margin in the course of the first nine months once again, highlighting the urgent need to take decisive action to reduce costs and enhance productivity in particular in the German operations at flex one Grand Forks wagon commercial vehicles.

Speaker Change: And technology.

Speaker Change: Components as mentioned earlier.

Speaker Change: Yeah.

Speaker Change: Carriers continue to rollout software, which resulted in an increase of sales revenue of about 20% year on year operating results continued to be significantly negative at minus $2 1 billion Euro reported net cash flow stood at a negative $1 3 billion euros carat benefited.

Speaker Change: Like last year from a $1 1 billion intra group income tax refund the underlying cash our total to minus $2 4 billion closer to the operating loss.

Speaker Change: Our bedroom business continues to ramp up the organization and advances in the construction of production capacity in particular at the sides criticized leading to an operating loss and cash out of about 400 million year to date.

Speaker Change: Trading.

Speaker Change: Its positive earnings trajectory and delivered another strong performance in the third quarter after already very solid results in the first half of the year.

Speaker Change: Unit sales normalized in a weaker market environment, specifically in Europe and decreased by 2% year to date operating margin came in at a strong 91% up 110 basis points versus the prior year period, driven by increased arpus and improve cost structures.

In the period under review of trade and deliver the net cash flow of $1 1 billion and was able to reduce indebtedness in its industrial business further.

Speaker Change: Well, that's one group mobility saw a slight increase in overall contract volume the credit loss ratio was stable on an overall solid level operating result in the financial services Division in the first nine months 2024 as expected by about a quarter to 2.2 billion Euro.

This reflects the continued normalization of used car prices are more difficult business environment in markets outside Europe and higher risk costs.

Speaker Change: Yeah.

Speaker Change: Moving onto our performance of our China JV is.

Speaker Change: From a volume point of view sales decreased by 11, 5% to $1 9 million vehicles in the first nine months of 2024, we saw strong growth in sales of battery electric vehicles, which could not be compensated for a significant decline in our IC business as the market continues to shift to mtv's.

Speaker Change: The proportion of the different sides of our Chinese JV amounted to $1 2 billion Euro after nine months in 2024 down 37% on the prior year number lower volumes in a highly intense competitive environment. The margin dilutive effect from higher PVC sales and costs related to the realignment of our business enter.

Speaker Change: VC Tc ramp up where our main reasons for this development overall.

Speaker Change: Its year to date are in line with our expectations and we expect to end the year at the proportionate operating result of around $1 6 billion Euro.

Speaker Change: Yeah.

Speaker Change: Finally.

Speaker Change: Moving on to the full year outlook for 'twenty, 'twenty, four which we had to trust it on the 27th of September.

Speaker Change: We expect sales revenue to around three.

Speaker Change: 320 billion Euro operating profit at around 80 billion Euro and automotive investment ratio between 35 and 45%.

Speaker Change: And automotive net cash flow of around 2 billion Euro net liquidity is expected between 36 and 37 billion in Europe.

Speaker Change: The outlook reflects a total of minus $2 6 billion and non recurring earnings effects.

Speaker Change: However, it does not include the potential additional burden from the conclusion of the current ongoing negotiations in Germany.

Speaker Change: That's it.

Speaker Change: We continue to expect a solid fourth quarter. This year in order to deliver on that expectation would be built on a step up of sales and earnings momentum supported by the launch of the new models.

Speaker Change: We are building on our solid order bank invest in Europe, if visibility well into the first quarter of 2025 at the same time you factor in that markets will remain highly competitive.

Speaker Change: And we continue to push ahead with the execution of our performance programs and intense cost book across all brands and divisions as the basis for a successful transformation of the flex one group going forward.

Or is that.

Ill hand, it back to Ralph and thank you for listening.

Ralph: Thank you Arnaud and we will now proceed to the live Q&A session.

Speaker Change: Anyone who wishes to ask a question press star followed by one.

And I can already see first questions coming in.

Speaker Change: We would start the Q&A with wholesales amended from J P. Morgan Jose Please on mute and go ahead.

Speaker Change: Yeah.

Jose: Good morning, I know a few questions. Please the first one I mean without going into that different restructuring actions, you're looking to take I would love to understand a little bit better where do you see the biggest cost competitive.

Jose: Competitive differences.

Jose: Yes.

Jose: And what kind of margin uplift are you looking to achieve.

Speaker Change: Hi Chi Wen.

Speaker Change: When executing these measures specifically.

Speaker Change: Looking at the first slide on Brian.

Speaker Change: Second question, we get this question a lot is seeing all these headlines on potential restructuring.

Speaker Change: Planned shutdowns.

Speaker Change: This impact their ability to pay a dividend in 2025 is these initiatives will be will be taken in any shape or form.

Speaker Change: Thank you I'll leave it there.

Speaker Change: Okay.

Speaker Change: Hello from my side and thank you for your questions. I mean, the margin uplift is Korea, we always communicated that the target for our brand groups.

Speaker Change: Alex among brand is six 5% in 2026 and that sequentially.

Speaker Change: Lead to 8% margin of Branco call.

Speaker Change: In this year.

Speaker Change: And.

Speaker Change: We originally communicated an improvement program of $10 billion.

But since that the circumstances in the industry and the environment deteriorated, we had to step up these efforts and we made it very clear from from the early beginning on that the target is not delivering on the 10 billion, but the target is really to achieve a margin that that.

Speaker Change: Gifts basically order that leads to our brand group core and specifically brand folks wrong that is highly competitive going forward and is able to.

Speaker Change: Generate the funds to invest into the future product so looking into the car to the.

Speaker Change: Competitive situation and where we see most of the uplift I.

I mean, we.

Speaker Change: We described the program earlier it has all the elements.

Speaker Change: Vivek on the on the revenue side on the margin side, but specifically of course on the cost side and specifically on indirect area and productivity in the plants.

Speaker Change: And also labor related cost and so basically vis vis the dimension topics I think that the.

Speaker Change: Yeah.

Speaker Change: The.

Speaker Change: The biggest disadvantage versus competition is.

Speaker Change: As for myself to the fixed cost side, the overhead cost side and specifically as mentioned several times, our productivity and cost in our German operations and this is where we focus on but that doesn't mean that we don't focus on other topics as well as we focus on material cost improvements and.

Speaker Change: I'd be focused on on the other improvements but these are for.

Speaker Change: From my point of view of the the the.

Speaker Change: Things, we really have to focus on.

And your second question.

Speaker Change: Dividend.

Speaker Change: I mean.

Speaker Change: Our payout ratio is is is set.

Speaker Change: Our strategic payoffs as you said that one of our.

Speaker Change: I have a payout ratio of at least 30% as part of our dividend policy policy.

Of course.

Speaker Change: As you saw.

Speaker Change: The current situation is impacting also or financial result.

Speaker Change: And now operator, if decided in.

And.

Speaker Change: And subsequent to our earnings per share our earnings per share declined currently by a 33%.

Speaker Change: 15.2 euros per share.

Speaker Change: And we cannot rule out.

Speaker Change: Additional burdens from restructuring in the fourth quarter due to the ongoing discussions, but then of course help significant step ups in profitability going forward.

Speaker Change: It's reasonable to assume that the dividend for 2024 will be below the $9 six euros per preferred share of 'twenty 'twenty four but let me restate it.

Speaker Change: Our dividend policy policy of at least 30% of payout.

Speaker Change: Our ratio is still valid.

Speaker Change: Okay. Thank you.

Speaker Change: Thank you I'll close here and we continue with Patrick Hummel from UBS Patrick.

Patrick Hummel: Yeah. Thank you Ross good morning.

Patrick Hummel: I have also two questions.

Patrick Hummel: My first one is regarding <unk>.

Speaker Change: The even tougher stance that you're obviously, taking here and restructuring the German business and I don't expect you to comment in detail and I understand the nature of the negotiations that a few weeks, we talked about up to two plants that could be subject to closure and now we're talking about at least that goes way beyond.

Speaker Change: That also in terms of you know our wage reductions et cetera. So I'm. Just wondering has there been anything happening in the last say month or two that has driven that even tougher stance on restructuring.

Speaker Change: And I wonder that's to be part of that question.

Speaker Change: Is.

Speaker Change: The free cash flow a limiting factor to how you go about restructuring because it sounds like you know if youre going.

Speaker Change: For it for a very comprehensive measures. This cause a trigger one time effects that would basically eliminate the entire free cash flow for a year or two I'm. Just wondering if that plays a role and if you allow me a second one is.

Speaker Change: Is there anything new in terms of your thinking on this year to front because that's obviously a significant earnings risk for next year. There is limited action for now at least from the European Commission is as far as the debate about moving or pushing back the targets is concerned.

Speaker Change: So how does that seem too complex flow into your thinking about the restructuring needs and then thoughts for next year. Thank you.

Speaker Change: Yeah.

Speaker Change: Yeah, Patrick Thanks for your question.

Speaker Change: I mean.

Speaker Change:

Speaker Change: I said earlier, our target plus six 5% for our brand for expiring in 2026 and of course with the deterioration of the market environment over the last I would say quarters.

Speaker Change: It became clear that we had to step up our efforts, but nevertheless, the principle of the need for a restructuring program at Brent Flex bogging him on the on the other fields that I just mentioned.

Speaker Change: Fixed cost productivity overhead cost that that was very clear from from early on so the situation has not fundamentally changed and there was not a single impact or incidents that drove that change. It's just that visit with Wanda and have to deliver on the six 5% in order to make the group.

Speaker Change: And the brand future proof and we had to step up or.

Speaker Change: Ambition.

Speaker Change: In terms of plant closures and the situation, we see and I.

Speaker Change: Right.

Speaker Change: Describe that earlier on in several locations is not new.

The market the total market in Europe, plus as we counted 16 million cost.

Speaker Change: And after before Covid and after Covid, we received 40 million cars and we don't expect that to significantly change over the next years to come.

Speaker Change: So this is like 2 million cost me, saying, we have 25% market share which leads to the overcapacity. We have of about 500000 and this has also not changed and.

Speaker Change: We have to tackle this topic as well.

Speaker Change: In terms of free cash flow.

Speaker Change: I would I would put it like the folio.

Speaker Change: Our focus now.

Speaker Change: In the in the discussion with our partners from the unions and the Labor Representatives.

Speaker Change: It would really be on find measures door to make sure that folks Spartan.

Speaker Change: Has a good future the brand for expiring is able to achieve a six 5% and is also able to earn the.

Speaker Change: The financials, and and and have to the strengths and the earnings and to significantly invest into future product and we should take the measures that are necessary in this situation and wish for my point of view, we should not limit ourselves by potentially consequence on the free.

Speaker Change: Cash flow and you have the possibility for doing so because we have very solid net liquidity and this very solid metric really puts us in a situation that would be the we are able to do that the decisions necessary to lead folks run into a good future.

Speaker Change: And.

Speaker Change: Certainly to your true yes.

Speaker Change: Yeah, 2025 will be a challenging year.

Speaker Change: This is clear.

Speaker Change: We want to achieve our compliance by ourselves while protecting our profitability. This is clearly a tradeoff, you're very well aware of that what.

Speaker Change: What makes me confident is the very positive order intake in Q3, so basically if you compare our order bank in the bvs, it's it almost topic versus end of last year.

Speaker Change: And and very very positive and strong models to come if you have a good order intake on the 87 turo.

Speaker Change: Or is bringing great models cautious, bringing additional models. So that gives me it gives us confidence for a significantly better tier two position in 2025.

Speaker Change: Will it be enough at the end of the day, we have to look and see because as we discussed we also want to protect our margins.

Speaker Change: It's also a might be a.

Speaker Change: Potential.

Speaker Change: Credit pooling chance fast when we will have to look at that but this is really too early for the beginning we said on a really good product momentum I talked about this quarter in Iraq.

Speaker Change: It's something like 33000, a great car coming.

Speaker Change: And Unfortunately, the 82, which is then really the game changer in our business come 2026, but but it doesn't help to model that the significant step up really will come decided to family.

Speaker Change: Really great Great design car for 25000 euros very competitive cost structure built in Spain, NFPA battery entry with from our own powerful so that would be really in terms of volume and so you took the game changer from 'twenty to 'twenty six onwards, and 2025, we have to look.

How the year goes.

Speaker Change: Thank you Donna and good luck with that negotiation.

Speaker Change: Thanks, Patrick and maybe what we can at the I mean, we have also seen a very good reports by not only by you, but also bothers analyzing the two situations coming up within part.

Speaker Change: Quite a drastic headwinds for 2025.

Speaker Change: Set during the road show activities as well, we don't think actually that the worst case scenarios, you're calculating up to 4 billion headwind that this.

Speaker Change: As the reflects the current situation should be much much lower.

Speaker Change: Oh boy I forgot to mention but we could also mentioned is we have an extremely good order intake on the on appear to be so, which which which are extremely competitive in terms of range.

Speaker Change: Prasad, specifically tiguan ph UV and so as you're aware. This helps also in the in situ balance for 2025.

Speaker Change: Thanks again.

Patrick and we continue with timber costs up from Deutsche Bank. Please go ahead.

Speaker Change: Yeah. Thank you very much and Ross I would have two questions. Please the first one is on the very strong order intake, while simultaneously, having surprisingly stable pricing.

Speaker Change: Just to clarify this step the model initiative that we are starting to see bearing fruits or have you done anything else to stabilize pricing and increased order intake and if that is indeed, the case, where do we stand on the rollout and should we expect this both to develop favorable also in Q4 from what you can hardly touch and secondly onward evergreen an hour.

Discussions and you're coming close to your planning round, let's talk about investment needs last time, we spoke you said that theres room to put outside spending given the Libyan and other developments do you still see the investments coming down if so to what and are we now at the peak of the investment spending instead ratio coming down from here. Thank you.

Speaker Change: Yeah, Tim Thanks for mentioning that we are very pleased with them.

Speaker Change: With the price.

Speaker Change: Bucket price versus.

Speaker Change: Incentives in the quarter, Q3, which really stabilized and yes. There is.

Speaker Change: Kind of.

Positive momentum from from the from the new.

Speaker Change:

Speaker Change: From the new models, which are of course young and fresh and we will continue to.

Speaker Change: See it positive.

Speaker Change: Momentum from the from the new model.

On the other hand, we have to step up significantly.

Speaker Change: Significantly the BV site and as you know the Tvs are currently margin dilutive.

Speaker Change: The first really.

Speaker Change: Basically BV.

Speaker Change: If march apparently will be the eye of the Q2.

Speaker Change: I do too.

Speaker Change: And in.

Speaker Change: And to be these are not only margins would be currently the BV as you see in our pricing.

Speaker Change: Carry a higher incentives obviously them so that they are in principle, we expect a more stable.

Speaker Change:

Speaker Change: <unk> on pricing versus raws as incentives and technicals.

Speaker Change: But the B b ramp up well will deteriorate.

Speaker Change: In the coming quarters, obviously.

Speaker Change: Once we go into it.

Speaker Change: <unk> 2025.

Speaker Change: And yeah, but but as said before be rest assured we wanted to make sound and we will make some compromises.

Speaker Change: Pricing pricing that boardroom.

Speaker Change: Yeah on the on the famous.

Speaker Change: <unk> hundred 80 970 965.

Speaker Change: And everything we've said before is still valid.

Speaker Change: From today's perspective, we expect R&D capex combined to peak in 2024, and not only relatively but also in absolute terms and yes.

Speaker Change: Specifically are.

Speaker Change: The joint venture with Arabian will give us a potential to improve specifically on the on the software expenditure. So so nothing new on that.

Speaker Change: If there might be.

Speaker Change: Be unnecessary of stepping up of investments R&D capex for a slightly more capacity on on ph vs or.

Speaker Change: We will then have to compensate that.

Speaker Change: On the expenditures on the PV side, so they won't come come on top.

Speaker Change: Okay very clear thank you.

Speaker Change: Thank you Tim then we continued with our most Horst Schneider from Bank of America. Please go ahead.

Horst Schneider: Yeah. Thank you and hope you can hear me.

I have got a two to three questions. The first one maybe more plain vanilla box off Q3.

Speaker Change: Since you pointed out your price mix impact Bose just.

100 million Euro each in Q3 was that kind of sequential improvement in terms of price makes sense. If that was the case why.

Speaker Change: And on product mix, because they can't see any positive raw material price impact.

Speaker Change: So what's driving it the project mix line and is there a chance that this gets any better in Q4 or maybe this just happened to 'twenty to 'twenty five.

Speaker Change: On the on the restructuring I know you cannot say a lot.

Speaker Change: On that because he second negotiation round starts at 10 o'clock today. So is that for you need to be tightly.

Speaker Change: But I think what we that's what the P&L from a capital market perspective is that you run into Cvs strike situations in December and of course, I'll say you cannot call. It out today, but maybe you can tell us.

Speaker Change: What is the daily usual production volume at Fox on a G sort of mass market business in Germany, and what would it mean, if the production won't stop one day in terms of Fedex, just a ballpark range that would be great and last but at least on restructuring.

Speaker Change: And on the government.

I realize that the union say always.

Speaker Change: Just first of all I need to do something also the government needs to do something.

Speaker Change: So anything that the government can talk you said, you're basically stepped back a little bit from your restructuring and patients. Thank you.

Speaker Change: Okay.

Speaker Change: Yeah.

Speaker Change: Yeah, I'll say a separate question on the on the on the on the.

Speaker Change: The price mix side I can only reiterate that we had really a stable third quarter and.

Speaker Change: And on the mix side, specifically, we've oh restricted by by Audi.

This 60 and create and engines, which we basically got the significant release in Q3.

Speaker Change: And also a Porsche had the significant changeover, so and with going forward and a recovery of of Audi and the recovery of Williams at Porsche with moving on to the New models you should also.

Speaker Change: So I expect a significant positive product mix mix going forward.

Speaker Change: Terms of pricing I E.

Speaker Change: Just explained that the mechanism, we see a very good.

Speaker Change: Pricing on the ice, but yeah as you can see them in the market not only with us, but honestly with all of our competitors.

Speaker Change: Did you see a dilutive effect.

Speaker Change:

Speaker Change: Of the of the of the PV ramp up specifically in Q4, and then going into 2025, which is really too early to tell how this situation 2025 will be but because you're aware every competitor wants to achieve the two tumor targets in in this in this yeah.

Speaker Change: Yeah in terms of restructuring I I really don't want to speculate on on strikes and potential calculations it depends on of course.

Speaker Change: Which factory it depends on is it.

Speaker Change: Car and component business don't don't forget we have lots of component business in Germany.

Speaker Change: But also one that can say.

Speaker Change: We need to make sure that the compromise to be fined.

Speaker Change: Will it be significant so that folks want can achieve a six and half is in margin and can go move into a profitable and successful future and really be able to yeah.

Speaker Change: Invest into future projects from from fault for themselves and not dependent on the group.

Speaker Change: And.

Speaker Change: I'm confident that we reach.

Speaker Change: Agreements that so that we will achieve this.

Speaker Change: Target, but of course I cannot rule out the strike that this is clear.

Speaker Change: And but so sorry for not being more specific.

Speaker Change: But I don't really want them to have more on this but just your daily protect your daily production in Germany.

Speaker Change: Yeah.

Speaker Change: In December normally a little bit lower yet because of the as you know there is some holidays also coming in December but ask for your understanding the list that we're not going into details here I mean, if you take some factor is you know the.

Speaker Change: <unk> put off like empty seats, we call was book and did you do and you do do you know the number of working days. So as you can you kind of a rough indication. Okay for 500000 units. So we got 250000 units over the year. So I think you can do it very rough math on that if you cut.

Speaker Change: They're down by by by months weeks, and then days, but really I don't want to give a number I don't want to speculate on that yes sure no problem.

Speaker Change: In terms of covenant.

Speaker Change: My position is we have to look on to ourselves and to do our homework to do what we what we can do.

Speaker Change: And you have to focus on what we have in our hands and we did that and I am confident that we can deliver on that of course, there is a discussion of of.

C O two regulation what about 2025.

Speaker Change: But all that kind of say it in a more general topic I'll be.

Speaker Change: We adhere to the ramp up of electrification.

Speaker Change: We invested accordingly.

Speaker Change: We are convinced that the future will be electric.

Speaker Change: For that we need of course.

Speaker Change: Labor requirements.

Speaker Change:

Speaker Change: Situation and unstable decisions, but also for the current discussion on productivity and competitiveness.

Speaker Change: Competitiveness, we're really looking to ourselves and discuss the measures we can do as a company.

Uh huh.

Speaker Change: Alright. Thank you good luck.

Speaker Change: Thank you we can definitely need the good luck.

Speaker Change: And we continue with the next question, what's kind of which comes from Henning Cosman from Barclays. Henning. Please go ahead.

Speaker Change: Yeah.

Henning Cosman: Thanks for taking the question the first one maybe on the <unk>.

Henning Cosman: Encouraging statements on the Branco progressive double digit in the fourth quarter I'm not.

Henning Cosman: Findings from Mercedes and BMW, so that looks really good is that a sustainable level or is there anything in there that would make you think you can extend that into 2025.

A question and then the second question on Scout.

Speaker Change: Good to hear that you had a technical feasibility done and also the Reagan.

Speaker Change: Approvals.

Speaker Change: Is there anything more that you can say around scale.

Scout in Libya.

Speaker Change: That's a thought.

Speaker Change: Nation the vehicles obviously.

Speaker Change: Fairly similar would appear to go head to head and in terms of competition.

Speaker Change: Our kit.

Speaker Change: You have a via the investment the equity stake already could you just share.

Speaker Change: Uh huh.

Speaker Change: Eating there.

Speaker Change: So far the integration of <unk>.

Speaker Change: Yeah.

Speaker Change: Diana. Thank you on your comment on on Audi and also in Frankfurt call, but let's not forget. There's also two other great brands of three other great brands, It's Bentley and Lamborghini, which really.

Speaker Change: Closely together and all.

Speaker Change: Although the dollar of synergies.

Speaker Change: We always said the Audi has a very strong product momentum no no no a lot of new cars are coming Q six each run and then we have the a five eight.

Speaker Change: 70, 2527, so there's a lot of momentum there.

I don't want to do too much of detail discussion because raws when is that.

Speaker Change: Conference call of 40, I think tomorrow the day after tomorrow, even tomorrow. So I don't want to give you too much detail, but also not forget that with the ramp up of PV is also in our premium brands. Currently the Tvs are margin dilutive and and so that will have an effect, but nevertheless, we are there.

Speaker Change: We are really confident that the product momentum.

Speaker Change: Ali will show over the next 24.

For four months.

Will significantly benefit benefit already but really for more detailed discussion I referred to my colleague.

Speaker Change: Hum you English as backup which gives you is happy to give you more detail tomorrow.

Speaker Change: I bought scout.

Speaker Change: Be careful that I am not too enthusiastic about this project because I have similar or the like.

Speaker Change: The CFO, but.

Speaker Change: In my role of looking to the North American market and the <unk>.

Speaker Change: Key elements I gave you already said it.

Speaker Change: Potentially outside in one of the most profitable and an encouraging segments worldwide.

Speaker Change: We're stable returns, it's it's it's turning electric and.

Speaker Change: And we have the ingredients, we need for that that'd be after the battery technology God, we'll get it from Ontario.

Speaker Change: The batteries from from Canada from powerful this very competitive prices.

Speaker Change: Yes.

Speaker Change: The component, we do although it's a new brand and the new products, we try to.

Speaker Change: Get a lot of synergies within the group one synergies for example, electrical components. It we'll share it with the Audi Q eight E Tron and and it's B call. It okay for us so it will be electrical components.

Speaker Change: From them.

Speaker Change: From a group chat with Audi and although it's not 100% decided on already it's also a possibility that the electrical architecture. We currently develop together with driven in our JV of course, it's in it's clearly an option that this one of the early users of this electrical architecture.

Speaker Change: Oh.

Speaker Change: We'll be scout.

Speaker Change: This is another another synergy.

Speaker Change: In the market.

Speaker Change:

Speaker Change: A lot of amount last week.

Speaker Change: On this great event in Nashville, and I talk to the teams and it's up to the marketing people. So they did a lot of that typically is segmentation and all these kind of things and Scott and driven really in different segments in terms of pricing in terms of our mirrors in terms of customers.

Speaker Change: So I'm not afraid that there will be a too much.

Speaker Change: Competition.

Speaker Change: And but nevertheless, gout as a standalone brand.

Speaker Change: And they will find their customer in the heart of this really American American segment, and last but not least and then I'm done we had a very good response.

On the range Extender I know there was a little bit of skepticism about our volumes going forward how fast is this.

Speaker Change: The segment turning electric bus.

But with the including of the range extended and better if we got the technical feasibility now and there is a lot much more I would say confidence in the ramp up because specifically in the early years, we expect this range extended to significantly add.

Speaker Change: Add to the demand and stabilize the volumes.

Speaker Change: Thank you.

Speaker Change: Things, turning and I have to apologize M D or the conference call on November 5th I should have known this thing school, that's actually for texting me.

Speaker Change: So they need a little bit more time in order to put together the very encouraging outlook, yeah, but then.

Speaker Change: We expect that those are more more tied to protect very convincing.

Speaker Change: Very good so we continue with Tom Narayan from RBC, Tom. Please go ahead.

Tom Narayan: Thanks for taking my question.

Tom Narayan: Wanted to follow up on hanging on.

Tom Narayan: And Randy.

Tom Narayan: I understand right now the.

Speaker Change: There are two very important just vehicles by the way.

Tom Narayan:

Price exactly where Arabian nights with there are one or two I'm, sorry, our one ethanol E D.

Tom Narayan: I guess I'm thinking that when Randy does come out one or two or three that starts to compete head on.

Tom Narayan: With where scatter so.

Speaker Change: Is the strategy going forward to be eating pulse complementary where you're not where that you are not competing on price and that demographic.

Speaker Change: First question.

Speaker Change: Second one is that you had made a comment.

Speaker Change: No I think earlier about premium.

Speaker Change: Pre pandemic.

Speaker Change: Europe was down $16 million $14 million.

What would you say is driving or is it just a <unk>.

Speaker Change: Pricing issue is it because of bass and.

Speaker Change: Why would this structurally continue we saw one of your German peers last week reported down 10% revenue per unit ex China suggests price mix came down significantly in Europe.

Speaker Change: Why wouldn't pricing come down and that then lead to volumes.

Speaker Change: Returning maybe not back to $16 million or at least somewhat closer.

Speaker Change: Yeah Tom.

Speaker Change: One.

Tom Narayan: One thing.

Speaker Change: Very clear.

Speaker Change: Scott This is a group brand its newly found it's 100% group Brandon we focus really with scout we focus on the segments on all competitors not competitors in terms of focus, but we are aware of all the competitors.

Speaker Change: And and and Scott just doing that the positioning of the pricing.

Speaker Change: Really.

Speaker Change: For themselves that the joint venture with roofing and is really focused on software.

Speaker Change: And it.

Speaker Change: It would be we don't discuss and CS revenue, specifically from a from a product side and we're Ravens precision b, we see the whole market and all the competitors and this is what Scott takes into account and it's called team takes into account when they do the pricing whether it's in the segmentation minutes with the design and.

Speaker Change: I said before ribbon has focused our convention a difference really focused on.

Speaker Change: Creating the next generation electrical architecture and state of the art architecture and further proof architecture in the JV.

Speaker Change: We shouldn't mix up these these two discussions.

Speaker Change: And.

Speaker Change: If I understand you right you asked.

Speaker Change: Me and US why do we expect a.

Speaker Change: The 40 million Euro 40 million cost continued in Europe I mean.

If you look at that all the trends in terms of growth in terms of household income.

Speaker Change: And we don't we don't expect the market to grow significantly in Europe next year, we expect a 1% to 2% increase.

And and so.

Speaker Change: Yeah might it be like 41, 42, or 45, it might grow slightly but from our perspective, we won't see elaborate itself of pre COVID-19 call. It before.

Speaker Change: And so they are inflation trends they are.

Speaker Change: Economic factors.

Speaker Change: Customers and end and people have to spend more for energy.

Speaker Change: And the other topics. So this is this is all a yeah.

Speaker Change: Our costs going forward and I think it is safe and robust tau to nuts.

Speaker Change: Based our assumptions on a growing market and and then that will eventually not not come. So it's I think it's absolutely hum.

Speaker Change: The best assumption, we can taking the company.

Speaker Change: Ross can you I mean, youre doing a lot of like this economic.

Speaker Change: Because it kind of.

Speaker Change: I want to add on that.

Speaker Change: Tom you are right I mean price is that decides effect when we look pre COVID-19 or since the pandemic, obviously prices have risen in an average by more than 20% cut prices on the other hand side you have trends like home office alternative mobility solutions. So therefore that the structural on the demand.

Speaker Change: Whether it will persist now at 40 million remains to be seen but.

Speaker Change: It's not only US who are seeing this trend. That's also a third party, who clearly sees that at least for the foreseeable future. There is no recovery above this 14 million level and.

Speaker Change: Forecast can be wrong, but for the time being and looking at the arguments it looks reasonable to assume that the demand stays at this 40 million level for the foreseeable future.

Speaker Change: Okay.

Speaker Change: Thank you.

Speaker Change: Thank you and we continue with Stephen Reitman from Bernstein, Steven. Please go ahead.

Stephen Reitman: Yes, good morning, everybody two.

Stephen Reitman: Two questions. Please I'm looking at your back and looking at slide five looking at the plan JP with Arabian not comparing it to slide 23 with the carrier results.

Stephen Reitman: And obviously congratulations on prudent second visibility out of the concept already in doesn't break like time. So that's pretty good what is that telling you about how fast Arabian moves and how fast you can move Arabian compared to the.

And the relative slow speed of Carryout and the fact that carrying it looks like you've lost another 900 million euros in the third quarter and how do you see carry outs.

Stephen Reitman: Extra carry as a result going forward on that basis, and secondly on the on the EV sales in Germany you.

Stephen Reitman: Do you have enough unless at the end of the year, which basically means that you're sending the E. Three for just under 29800 euros in Germany.

Stephen Reitman: Do you think that's actually going to be the sort of pricing levels against that to maintain through 2025 to make sure. So thank you all C O two emissions targets.

And what I say about the profitability.

Stephen Reitman: Thank you very much.

Speaker Change: Yeah, Stephen Thanks.

Speaker Change: Thanks for very crisp very valid question in terms of carrier then.

Speaker Change: We already communicated that we will basically be in the in the JV are brief Caribbean we will.

Speaker Change: Develop the next generation software stick be call. It 2.0.

Speaker Change: But don't forget that the carrier is currently I'm deeply involved in the ramp up and and improvement of the stake one point towards the.

Speaker Change: Software from the peak of the PPE platform for Audi and Porsche.

It will be also very competitive.

Speaker Change: Front of the customer.

There's a lot of features and also with the 1.1 software for all our M. A base and also there will be other functions that will be responsible for example at us driving assistant functions. So the.

Speaker Change: The current bill.

Speaker Change: Play an important role going forward.

Speaker Change: In terms of AV Av business case of course.

Speaker Change: Character significantly improve in terms of MPV and cash flow why first and foremost.

Speaker Change: It's depending on the business model as you know call it and at basically all the upfront investments on their books.

Speaker Change: And then that the.

Speaker Change: The sales basically or license fees that are paid by the brand car by car. So it since the 1.2, the first one point to cause our ramping up just now.

Speaker Change: P. P E on the PPE platform Cusick eater on ethics, and EMA Con. So eventually the the sales side basically on character and significantly improve going format or starting this next year and also with the ramp up of Miami, because the license income will significantly improve and at the same time.

Speaker Change: We expect that the expenditure should go down.

Speaker Change: Since we have the improvement of the one point to 1.1 software in our books and not us but the expenditures.

For the 2.0.

Speaker Change: We'll we'll basically.

Speaker Change: Basically move.

Speaker Change: 222 to the yeah.

Speaker Change: The joint venture So you will see an insignificant increase.

The ability on an improvement in the current profitability situation going forward.

Speaker Change: For carrier than the current.

Speaker Change: I would say an increase in losses encourage has also to do that in anticipation of the sulfur situation going forward.

Speaker Change: Hum.

Speaker Change:

Speaker Change: Yeah.

Speaker Change: The capitalization rate off of the carrier software went down in the in the third quarter. So that was basically driving.

Speaker Change: Yeah.

Speaker Change: The profitability situation encouraging in.

Speaker Change: In Q3.

Speaker Change: In.

Speaker Change: In terms of and which was also a basically a consequence of the surface energy going forward.

Speaker Change: And in terms of PV cigarettes, I mean, you're aware.

Speaker Change:

Speaker Change: Uh huh.

Speaker Change: Okay.

Speaker Change: Yeah, you're all aware B b.

Speaker Change: The repositioning of our I D three models.

Speaker Change: But you're also and in your models are coming for example, like the Iraq with basically 33000 euros in Germany.

Speaker Change: But you also obviously aware of them.

For example, I do for an 87.

Speaker Change: And I did pass and other models and premium waters are very stable.

Speaker Change: In pricing so it's it's more like.

Speaker Change: I would say a contribution.

Speaker Change: The PV ramp up in.

Speaker Change: In the fourth quarter, and then sequentially into into 2025.

Speaker Change: And as said before the I D. Two will be then really the game changer with 25000 euros and at very attractive model in the market coming only 2026. So we think the strategy is like the I D. Three should somehow breech.

Speaker Change: The time between them between now and until like Samba School to Iraq, and the 82 is coming and.

Speaker Change: It's a I wouldn't let's look on the profitability on the specific I D. Three model.

Speaker Change: That it's repositioned, but rather on the on the greater profitability of them their family and our electric cars and in that I.

Speaker Change: I would say greater.

Speaker Change: View the repositioning.

Speaker Change: Of the I D. Three plays a major and minor road.

Speaker Change: In terms of margins.

Stephen Reitman: Thank you Steven.

Speaker Change: And we are moving on to the next question, which comes from Mike Tyndall from HSBC.

Mike Tyndall: Good morning, Gents. Thanks for taking my question two questions. If I can just one and I know you're focused quite a lot on the six 5% and if I'm not wrong. When you first announced the plan you need at roundabout 10 billion of savings to get to that.

Mike Tyndall: That 10 billion number still a valid number or has the world changed and actually you need more now to get to the six 5% and then just a follow up on the dividend and I don't know how much you can help me here, but given the ongoing negotiations.

How do the optics of paying the capital side.

She's the work aside influence that payout or is it a hard greater than 30% and what's going on in the rest of the business is separate.

Mike Tyndall: Due to that particular calculation. Thanks.

Speaker Change: Yeah. Thanks for the question.

Speaker Change: I think I mentioned earlier already.

Speaker Change: Originally we.

Speaker Change: Let's put it other way.

Speaker Change: The target is clear we need to do to achieve a six 5% in 2026. So we originally started with 10 billion and and so what happened was like.

Speaker Change: Some of the 10 billion had like negative we saw negative effects for example.

Speaker Change: Had some assumptions on pricing and on positive effect on the on the pricing side, so that didn't materialize due to higher competition, much intensified competition, and and and and so we had to I would say step up the the 10 billion so the $10 billion.

Speaker Change: <unk> now slightly higher.

Speaker Change: Grid that we don't really want to give a specific number on that.

Yes that the 10 billion.

Speaker Change: Not significant but they are higher from today's perspective, because we had to factor in the negative effect the headwind specifically.

Speaker Change: From the market as you see and how the competitive environment is it tends to find out.

Speaker Change: This was.

Speaker Change: This was specifically.

Speaker Change: George since the situation look we came from a chip crisis and they were basically.

Speaker Change: From my perspective.

Speaker Change: Two phases first and foremost.

Speaker Change: And in the past due to the.

Speaker Change: Supporters of the charges of chips and nobody could.

Speaker Change: Build and deliver as much cause if there was demand and so they were like.

Speaker Change: The first step and everybody could could could build as much caused us.

Speaker Change: Everybody needs at every competitor neat, but there was still in high order bank and with the ramp down of the order bank not only this enforcement, but in the whole industry there.

Speaker Change: Competition intensified significantly and we had to compensate for that and additionally in order to restate.

Speaker Change: Restate that in order to achieve the six and 12%.

Speaker Change: The $10 billion cross, but the real the real targets of six 5%.

Speaker Change: Okay.

Speaker Change: And on the dividend.

Speaker Change: Dividend do we had already answered that before.

Speaker Change: But please repeat the question I missed it as well.

I'm just.

Speaker Change: I know that the calculation is 30% or greater.

Speaker Change: But I'm wondering about the optics of that given what's going on I know you probably will struggle to answer this but.

Speaker Change: Just how difficult will it be.

Speaker Change: Capital.

Speaker Change: When you're in the midst of restructuring.

Speaker Change: Yeah, but I mean, I I tried to give the answer before you see the earnings per share going down so.

Speaker Change: You shouldn't expect the same dividend we paid last year.

Speaker Change: Of course, there might be even more restructuring, which puts more pressure on the earnings per share and estimate the medics books in the in the P&L, but on the other hand also set our dividend policy stands at payout ratio of 30% and this is what I can say currently.

Speaker Change: Okay. Thank you.

Speaker Change: Thank you, Mike So we're coming closer to the finish line, but there's still three to go we continue with Daniel Schwartz from Stifel.

Speaker Change: Yeah.

Daniel Schwartz: Yes. Thank you for taking my question.

Daniel Schwartz: One more technical on the restructuring.

Daniel Schwartz: You mean, if you had an agreement with unions to cut rates by X percent.

Speaker Change: Employees need to agree on that.

Speaker Change: As you may have individual contracts or can unions negotiate this and the outcome simply apply to everyone.

Speaker Change: Within the collective agreement and outside.

Speaker Change: Agreement.

Speaker Change: And then on China's a proportionate.

Speaker Change: Operating profit was $1 2 billion in nine months, that's down 37%.

Speaker Change: The dividend you received mm is one seven.

Speaker Change: Actually even slightly up year over year could you explain why and how the JV is a paying that much.

Speaker Change: Dividends and lost just technical question why is the net cash position expected to increase in Q4 was the free cash flow guidance is negative for Q4.

Speaker Change: Thank you.

Speaker Change: And.

Speaker Change: For your first question I must admit I'm not an expert we will find out I'll give you an answer later on but I can't.

Speaker Change: Answer the technicalities of how that really technically books.

Speaker Change: So I can kind of comment on that.

Speaker Change:

Speaker Change: Sorry for that and China, I mean look they did.

There the $1 6 billion and we expect this year and the dividends paid is is in the magnitude that the.

Speaker Change: The one 6 billion this year will be relevant for the dividends paid next year. So the Chinese are currently paying a slightly higher dividends because that's basically related to the reside we earned last year in an exhibit we test it.

Speaker Change: Distributed none last year, we had the $2 6 billion.

Speaker Change: Billion, a proportionate opposite result in the <unk>.

Speaker Change: Dividends to be.

It achieve or get this year are based on the $2 6 billion, but as a mathematics works.

Speaker Change: Unfortunately, the $1 6 billion will be relevant for next year, and we have to compensate for that on as well in our cash flow and yeah in terms of their of the cash flow and net liquidity them. This has something to do with how we treat them.

Speaker Change: And that the investment in our in the Arabian JV and also the convertible that technically they will convert basically.

Speaker Change: In the third and the fourth quarter, and then the cash flow, but the mythic religious already.

Speaker Change: Hum.

Speaker Change: Yeah.

Speaker Change: Let's see a relief.

Speaker Change: Oh.

Speaker Change: Thank you.

Speaker Change: So the improvement in fourth quarter.

Speaker Change: And the net liquidity has to come from cash flow from financing.

Speaker Change: And not all of it of the operating are.

Speaker Change: Which is basically but is the reclassification of the convertible note.

Speaker Change: And into M&A.

Speaker Change: Yeah.

And it's included in the M&A focus already.

Speaker Change: Thank you okay. Thank you Danielle and we move onto microphone set Michael from <unk> Bank. Please go ahead.

Speaker Change: Yes.

Speaker Change: I have two questions first one is what are the other bank investment group can you give us a number for the overall other bank and also in addition.

Speaker Change: The numbers was the best for the bank.

Speaker Change: My question is supposed to be got to the ongoing negotiations in Germany. According to some press articles the cancellation of some nature Caribbean really too Mitch increase of up to 10% can you confirm that and if so when business is a kitchen in P&L.

Speaker Change: Okay.

Speaker Change: Uh huh.

Speaker Change: No doubt the order bank is M M.

Speaker Change: 870000, it's basically two to give you a basically a.

Speaker Change: Rough comparison.

Speaker Change: 800000 is what's a typical order bank, we had pre COVID-19.

Speaker Change: It's it's really.

Speaker Change: And in an order bank debt that was typically for 2018 2019, so yes, it's down but it's it's not significantly down compared to a more normal situation pre COVID-19.

Speaker Change: And the order the order bank for Bbs is.

Speaker Change: 170.

Speaker Change: 870 <unk> number.

Speaker Change: 870, okay.

Speaker Change: Yeah.

Speaker Change: Yeah.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: And <unk> and the other question. The what you have read Michael in the press is that if we don't come to an agreement with the unions on the new tariff then obviously the altera from 1984 would come into force and that this might then lead.

Speaker Change: Due to a technical increase of wages et cetera et cetera.

Speaker Change: Again speculation that it's rather difficult to say, whether it's really the old regime would then come into play or not and ask for your understanding that we don't want to comment here on the speculation currently in the press.

Speaker Change: Okay. Thank you.

Speaker Change: Thank you Michael.

Speaker Change: So we.

Speaker Change: Continue our best for lost George towards careers from Goldman Sachs. Please go ahead.

George: Thank you Ralph and thank you for taking my questions. The first one I wanted to focus on was personnel costs in light of the negotiations that are taking place if I look at your reported personnel costs as a percentage of wrapping gate.

George: Divest 15% last year, if I look at the majority of your peers in Europe.

George: Ratio sits at 9% to 11%.

George: As part of these negotiations and also as part of the six 5% margin target for VW brand.

George: Looking to get down to.

George: With your peers or are you simply looking to place some of that.

George: Material gap.

Speaker Change: Second question I had was with respect to the range extended technology.

Speaker Change: Have unveiled with scouts.

Is that the technology that you have developed at.

Speaker Change: At Volkswagen or is it something you will develop in conjunction with the Libyan.

Speaker Change: And do you plan to or site.

Speaker Change: Examine using range extender technology in both Europe, and China going forward. Thank you.

Speaker Change: Okay.

Speaker Change: Yeah, Thanks for catching that I'm looking at personnel cost of course, we have a target for the personnel cost.

Speaker Change: We don't.

Speaker Change: Really calculated basics specific like for like with our competitors because that has heavily to do something with the value added depth and N as you're aware.

Speaker Change: We ran also a lot of component businesses in Germany.

Speaker Change: Branch like for example, <unk>.

Speaker Change: Katharine forgive boxes and electric engines.

Speaker Change: It's good for engines, so and and also in boss book. So I would expect that are very adaptive is higher.

Speaker Change: Then from the competitor so.

Speaker Change: Even with a 100% competitive position you should expect a slightly higher percentage of personnel costs, because that would compare to other competitors.

Speaker Change: Less value added depth.

Speaker Change: It should be then material costs by them, so rather on comparing on that cost proportionately, we look on what needs to be done in order to be 100% competitive poles in terms of our margin, but in terms of factory cost and we have a clear factory cost target fault for all factors obviously.

But we specifically have to bring a factory costs down in our German operations.

Speaker Change: And factories to be able to bear the personnel costs from the factory cost over proportionately high.

Speaker Change: Of course, we have targets, there and not only in terms of.

Speaker Change: Cost.

Speaker Change: Cost power, but specifically also in terms of productivity and the implementation of the National theatre to become competitive authentic chairman plus the personnel cost as a percentage point sure. Obviously, it's a completely go down.

Speaker Change:

Speaker Change: Yeah. Your second topic on the range extended the range Extender was really developed by Pascal together with Volkswagen.

Speaker Change: And.

Speaker Change: And as you're aware the range extend this concept as a specific concept.

Speaker Change: Where you have a battery and and and it's and it's yep it stays at 100%.

Speaker Change: Electrical concept that you either have a big battery for the scout or you have a smaller battery and in the package that you're free you implement the the the engine end and in the gas tank and and so on and this concept is a concept that is specifically suitable for bigger cost with it.

Bigger footprint it.

Speaker Change: The concept is more difficult to integrate into smaller cost. So this is why we start with Scott of course, we look on the different options, but for the time being the range Extender concept is really a concept we will be reporting to bring firstly.

Speaker Change: Hum at Scout and as said before the it it seems an all electric car in the range of 10 as you know.

Charges basically the bedroom.

Speaker Change: Alright very good.

Speaker Change: That concludes the Q&A session for today. Thank you very much for the very vivid discussion we had.

Speaker Change: D. If if of course, if there is anything left unanswered.

Speaker Change: Please contact the the team you invoice per class myself or any of the other I R. I remember.

Speaker Change: Next time to meet US is at all a virtue virtual and physical.

Speaker Change: Physical road shows in London, and the U S and in Paris, and the fiscal year results will be released on March 11th.

Speaker Change: And now we go for a short break before we return in about five seven minutes and then we'll continue with the with the media session again, thanks, very much stay healthy and looking very much forward to catch up in person or virtually over the next couple of weeks. Thank you.

Okay.

Speaker Change: Yeah.

Speaker Change: Yeah.

Speaker Change: Yeah.

Speaker Change: Yeah.

Speaker Change: Yeah.

Speaker Change: Yeah.

Speaker Change: Yeah.

Yeah.

Speaker Change: [music].

Speaker Change: Yeah.

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Speaker Change: Yeah.

Speaker Change: Yeah.

Speaker Change: Yeah.

Speaker Change: Yeah.

Speaker Change: Yeah.

Speaker Change: [music].

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Speaker Change: Yeah.

Speaker Change: Yeah.

Speaker Change: Yeah.

Speaker Change: Yeah.

Speaker Change: Yeah.

Speaker Change: Yeah.

Speaker Change: Yeah.

Speaker Change: Yeah.

Speaker Change: Yeah.

Speaker Change: Okay.

Speaker Change: George.

Speaker Change: Ladies and gentlemen, please hold your lines of coverage will continue shock.

Speaker Change: Okay.

So hello, everyone.

Speaker Change: We would be ready for the media Q&A now of 30 missed us.

Speaker Change: Carl I just wanted to remind you that if you want to ask a question. Please press star followed by one and then we will take your questions. One by one so if you want to ask a question. Please press star followed by one thank you.

Speaker Change: So okay and I now turn it over first to Arnaud analysts as he wanted to give a short introduction before we start the Q&A.

Speaker Change: Yeah.

Arnaud Arnaud: Yes, Thank you I would like to do them.

Arnaud Arnaud: Introductory remarks, then first of all thank you for joining our Q&A session for media.

Speaker Change: No talks with employee Representatives are currently ongoing.

Speaker Change: Which include the restructuring of our German business of brand folks on including the component business and folks among light commercial vehicles and empower.

Speaker Change: The second round of collective bargaining negotiation started today.

Speaker Change: As always we have agreed on confidentiality. If you gave me Italian <unk> coincident.

Speaker Change: Here to this agreement however, let me comment on the situation in China.

Speaker Change:

Speaker Change: So you have to Becca and let me throw this in chairman to make sure that everyone is able to follow your supposed.

Speaker Change: I have received an English translation.

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Speaker Change: Do you think your spread and get us all on the upfront over a cup of tea.

Speaker Change: Vacs listen when in Deutschland parallel also started hard to that's why Dr. Rhonda <unk>.

Speaker Change: It is proposed that the I understand it to deanna folks on our game and almost in Hudson.

Speaker Change: Does he feel emitter by Delano made up by the sorghum here too.

Speaker Change: Christine for Lytton once your maths often in China.

Speaker Change: I'll just take a mine some of Atwater Forex one in a quarter and so you hit it took them a few of them.

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Speaker Change: That's enough.

Thank you Anil we will now switch back to English and proceed with the live Q&A session again anyone who wishes to ask a question May Press Star followed by one first one airline is Christian from FSA, It's Christian the line is yours.

Speaker Change: Okay.

Christian: Yeah, Hello, Good morning, and you hear me.

Christian: Perfect loud and clear.

Christian: Okay.

Christian: So first a question on the timeline.

Christian: So to finish the negotiations on the whole package, including.

Christian: Everything you're dealing with.

Christian: In this year.

Christian: Expect us to go into the next year. So what's your timeline and then looking on China.

Speaker Change #100: Thanks, Jason for the next yeah.

Christian: Hello.

Christian: Operating with died.

Speaker Change #101: Is there any danger that you could go into the red numbers in China.

Christian: Thank you.

Christian: Okay.

Speaker Change #102: Yeah Christian thank.

Christian: Think of it for you to Christian I think we continue in English right.

Christian: Yeah look it's difficult to give a expectation of attachment on the timeline.

Christian: I think what is important that we reach a result that is really.

Christian: Sufficient for folks find moving successful and profitable into the future and we need to take the time. It takes you know this is my position.

Christian: And it's up to the parties negotiating how fast we can reach a good result, and it was tied to that.

Christian: Just with the possibility of moving successfully into the future and.

Christian: Hopefully it will not take too long time, but we should negotiate as long as possible to reach a good result for folks on and its employees going forward.

Christian: My President position.

Speaker Change #103: Yeah in terms of China, It's obviously too early to give an outlook on 2025 in terms of average result. This is what we typically do.

Speaker Change #103: In India.

Speaker Change #103: And the next March when we communicate the final year 2024 results.

Speaker Change #103: But what I can reiterate on as are we.

Speaker Change #103: Have a very convincing comeback plan in China.

Speaker Change #103: And we communicated that before but let me, let me take a minute or two to remind you on that.

Speaker Change #103: We significantly invested in several areas to improve.

Speaker Change #103: Specifically on the software side Vivek together, Michelle paying on the on the cost software stick.

Speaker Change #103: We worked together with horizon robotics to.

Speaker Change #103: To improve driving assistant functions.

Speaker Change #103: So called at US we will indeed integrate.

Hum.

Speaker Change #103: MFA battery.

Speaker Change #103: Together with Scotia Envy, you already bring other tests into the in car infotainment auto together with Sandoz off then over the time and we always communicated until 'twenty 'twenty six we will come up with a very competitive platform in China, and very competitive costs again, and basically re regain we expect to regain growth and from 2027.

Speaker Change #103: Onwards, and in between we invest in our own locally.

Speaker Change #103: R&D Center, and we also bring to very competitive costs on their shopping platform to fill gaps.

Speaker Change #103: Gaps in our in our in all our segments and so with these measures. We are the team up for a bunch of US implementing currently we are convinced that we have.

Very good.

Speaker Change #103: Come back plan and we will basically gained regained market share 2026, 2000, twenty's abnormal and from today until 2026, we always said, we don't sound compromise between finding the more volume we don't compromise on our margins and we might even give up some market share. This year next year, we always communicate.

Speaker Change #103: That and this is where we stand.

Speaker Change #103: But I ask for some understanding that we can't give a specific number for the year 2025 now.

Speaker Change #103: Okay.

Speaker Change #104: Okay. So next in line would be kinda from financial times. Please kind of can you hear us.

Speaker Change #103: Yeah.

Speaker Change #103: Okay.

Speaker Change #105: I'd like to ask and I wanted to ask a bit of a broader question.

Speaker Change #105: That that Volkswagen is RBC, considering geese tougher restructuring measures.

Speaker Change #105: I wanted to ask about the impact on more broadly on the I guess, Germany.

You know the economic and social model, that's really turned the corner.

Gross I mean.

Speaker Change #105: Volkswagen has been such a symbolic the company I know the country's success as well and so I mean do you think that the challenges that the you know the comp.

Speaker Change #105: He is now facing will pose a threat to that traditional model, where obviously shareholders and keno workers have had.

Speaker Change #105: Sort of an equal relationship in terms of the priority.

Speaker Change #105: Could you comment on that.

Speaker Change #106: Mm one point and then my second question is on North pole.

Speaker Change #106: Is there any risk of that.

Speaker Change #106: Write downs going forward in terms of your investment in ourselves and.

Speaker Change #106: And whether and also whether you are willing to invest further in Nashville as well. Thank you.

Speaker Change #107: Yeah. Thank you for these two questions.

Speaker Change #108: I give you my personal view on that.

Speaker Change #108: We.

Speaker Change #108: We have very very.

Speaker Change #108: Competitive products and with very good quality, but as said before.

Speaker Change #109: What makes folks run strong in the future well so far.

Speaker Change #109: Forward prices and what.

Speaker Change #109: What we are embarking on that on that process is that we regain the strength in these three dimension because it made.

Speaker Change #109: The big folks wrong over the past years two of the most successful car company in Europe.

Speaker Change #109: There's a lot of strengths.

Speaker Change #109: The industrial strength with the competence to innovate with the competence Tau Tau to produce great cost with quality.

Speaker Change #109: We improve our our competence in software.

Speaker Change #109: And and.

Speaker Change #109: Also bring very successful and from our punishes successful and competitive.

Speaker Change #109: Costs growing growing growing further.

Speaker Change #109: But.

Speaker Change #109: You need also good cost base for that unit competitive costs.

Speaker Change #109: As always a part of their of the equation and this is what we work for and this is what we would be would be fine for in this.

Speaker Change #109: This brings folks rushing back to its old strengths. This I'm deeply convinced.

Speaker Change #109: Convinced.

And.

Speaker Change #109: I can't make the comparison, but perhaps that might be also true for the fall.

Speaker Change #109: Yeah.

Speaker Change #109: For expiring determinism economies stand, but I can only speak to folks why NSA.

Speaker Change #109: It's not a threat.

Speaker Change #109: Of the current model, it's basically the prerequisite to move successfully into the future. It's actually the other way around this is my deep conviction.

Speaker Change #109: And and and in terms of North Ward. Please understand we don't want and can communicate publicly on a on a on a on a.

Speaker Change #109: On a on a partner in.

Speaker Change #109: On that on that topic.

Speaker Change #109: Thank you.

Speaker Change #110: Okay. Thank you very much so a lesser bucket, which one hundreds but law you would be next on the list go ahead. Please.

Speaker Change #111: I Hope you can hear me.

Speaker Change #112: Yes perfect.

Speaker Change #111: Ed.

Speaker Change #113: Thank you Arnaud for taking the questions.

Speaker Change #113: Let's take a circulating saying that it will take us.

Speaker Change #113: You achieved the majority of your savings plan.

Speaker Change #113: So do you see any possibilities to bring down the costs at Volkswagen without closing down one or X.

Speaker Change #113: Okay.

Speaker Change #113: That will be my first question on the second half.

If you see a possibility that also the management meeting the questions will accept pay cuts to the same amount that everybody else in the company would.

Speaker Change #113: And if you're maybe also see the possibility to significantly lower the dividends next year.

Speaker Change #113: This will be my two questions.

Speaker Change #113: Okay.

Speaker Change #114: No. Thanks for the cigarettes into outlook and on the on the topic of.

Speaker Change #114: Planned clauses potential plan causes I.

Speaker Change #114: The figures are clear and you're at the.

Speaker Change #114: The medics that clear, but you had 6 million cars.

Speaker Change #114: Pre COVID-19 and in Europe, we expect for the next five to six years 14, that's basically 2 million cost, Missouri, we have 25% market share. This is a martha publicly several times and that leaves us with there.

Speaker Change #114: Lack of 500000 cars and this is a mechanism to victory this is where we stand.

Speaker Change #114: And.

Speaker Change #114: But please.

Speaker Change #114: Have understanding we promised confidentiality on on the nationals on on there.

Speaker Change #114: On the discussions we have currently and and this is also.

Speaker Change #114: Unfortunately, the answer to my second question management pay cut yes, or no. Please have understanding we will communicate all the measures.

Speaker Change #114: As soon as we agreed on and this is where we stand today and this is what I can say in more content and they don't want to say, because we agreed confidentiality sorry, sorry.

Speaker Change #114: And the lower dividend.

Speaker Change #114: This is.

Speaker Change #114: The mazo tried to talk to to explain it.

We will see lower dividends, because we said we.

Speaker Change #114: Hum.

Speaker Change #114: Our policy is 30% payout and to pay or just based on earnings per share basically a throughput tend to put them to the to the flex long shareholder then since there.

Speaker Change #114: Already down 33%, so you should expect.

Speaker Change #114: A significant lower dividend next year, although of course as you know that.

Speaker Change #114: <unk> is taken by the board and the supervisory board and basically it all for them though.

Speaker Change #114: But I also mentioned earlier, we stick to our policy of 30% payout and this has also not changed thank you Arnaud.

Speaker Change #115: Okay. So as I can see analyst Pantheon E C N N London would be next.

Speaker Change #116: Can you hear us.

Speaker Change #116: Yes.

Speaker Change #117: Yes, perfect go ahead, great. Thanks.

Speaker Change #118: Good morning, Thanks for taking my question.

Speaker Change #118: Okay.

Speaker Change #119: Do you have any comment on to what it was.

Speaker Change #120: The question is with the German government and to what extent it is in discussions with the government is it shrinking.

Speaker Change #120: Relief from the government subsidy.

Speaker Change #120: Is it pricing pressure from the government.

Speaker Change #120: Okay.

Speaker Change #120: <unk>.

Speaker Change #120: Wages.

Speaker Change #120: Okay.

Any kind of detail on discussions with the government on the one hand and then.

Speaker Change #120: A little bit a slightly broader question on what.

Speaker Change #120: Do you think on a.

Speaker Change #120: Germany needs.

Speaker Change #120: Just sort of turn the ship around kidney lots has been written.

Speaker Change #120: Yeah about the challenges the economy faces and.

Speaker Change #120: The government is trying to take steps to bolster investment.

Speaker Change #120: Just kind of improve the fortune for Germany.

Speaker Change #121: The outlook is not great. So what what would you like to see from government what do you think Samuel.

Speaker Change #121: Okay.

Speaker Change #121: Thank you.

Speaker Change #122: Yeah no. Thank you for your question and look let me also.

Speaker Change #122: Make the statement, we first and foremost Lugano ourselves we we.

Speaker Change #122: From my perspective, very good few of the things and the weaknesses, we discussed the weaknesses the weakness on the on the on the productivity side weakness on the cost side and we have to address the topics. We can we can address this is our responsibility.

Speaker Change #122: And this is what we what we are currently doing.

So to bring folks walking into a grid.

Speaker Change #122: Successful for future and in terms of profitability.

Speaker Change #122: Profitability in doing business in China of course, the the framework conditions also matter.

Speaker Change #122: And there are some topics that I mentioned already several times.

Most of it.

Speaker Change #122: Of electricity for example, in Germany and other topics.

Speaker Change #122: If you talk about.

Speaker Change #122: The BV ramp up there are also some some perquisite there what about charging infrastructure what about other framework conditions are stable. They are so this is something we could address.

Speaker Change #122: But we really for the time being we address the topics we can influence.

Speaker Change #122: And and how we can bring folks VR and AR.

Speaker Change #122: Very.

Speaker Change #122: We had a much stronger competitive situations.

Speaker Change #122: Situation going forward and if you want yes, we also addressed.

Speaker Change #122: Yeah.

Speaker Change #122: The cost situation, our plans and all these kinds of things, but this is basically something that we can do.

Speaker Change #122: Hum and folks want.

Speaker Change #123: Thanks can you can you say anything about them.

Speaker Change #123: With the government.

Speaker Change #124: The restructuring.

Speaker Change #124: Yeah.

Speaker Change #124: Okay.

Speaker Change #124: Okay.

Speaker Change #124: As I said before to be considered a video on our topic says what I would like to publicly state here.

Speaker Change #124: We address really the levers we can address.

Speaker Change #124: To become successful.

Speaker Change #124: Okay.

Speaker Change #124: Okay. So next would be back in Germany, Michelle Gass of home automobile Doha.

Speaker Change #125: Yeah I underline.

Speaker Change #126: Yes can you hear me.

Ahead.

Speaker Change #127: Yes Hello.

Speaker Change #128: Just one one more questions.

A question concerning the negotiations I know Liam ongoing to details.

Speaker Change #128: I mean the system of.

Speaker Change #128: Austin powers within within the.

Speaker Change #128: The flex logging company Hasnt changed.

Speaker Change #128: So.

Speaker Change #128: And I would say like.

Speaker Change #128: A lot of Ceos over the past decades. After they have tried to tackle the problem of costs within the company.

Speaker Change #129: What makes you confident that you will be that you will be the one.

That's successful right now in this and negotiations.

Speaker Change #129: Okay.

Speaker Change #130: Uh huh.

Speaker Change #130:

Speaker Change #130: Look.

Speaker Change #130: Personally I am a states my responsibility of our responsibility at speak for myself, but I'm sure. It's because of all of another.

Speaker Change #130: My responsibility.

To guide folks wrong brand folks walking into a successful future and this is what it needs.

To improve competitiveness I said before we have great cost.

Speaker Change #130: And it also.

Speaker Change #130: Things have changed.

Speaker Change #130: First one.

Speaker Change #130: Never a really high margins over the course of time, but the two are different times first and foremost competitors also had back then.

Third in 2015 and also on a great March and so the competition was different.

Speaker Change #130: And and and and.

Speaker Change #130: And also we had a very strong business in China, and then as I said before.

Speaker Change #130: At least for the time being China cannot compensate.

Speaker Change #130: 444.

Speaker Change #130: A situation where folks want is not earning the money they need to spend for the new.

Speaker Change #130: For all the new product.

Speaker Change #130: So I'm I'm I'm convinced that everybody is aware that the things have changed circumstances have changed.

Speaker Change #130: And Forswearing has to take the necessary steps in order to move successfully into the future. This is.

Speaker Change #130: This is what I can say.

Speaker Change #130: So you'll also see an understanding.

Speaker Change #130: On the side of the unit.

Speaker Change #130: Okay.

Speaker Change #130:

Speaker Change #130: I mean.

Speaker Change #131: And in Germany, you have had a saying that says Peter Bailey, Luke Nick Debtors and soccer and if you're I don't know if English, but find if you look at our cash flow at brand focuses on the cash flow front folks on is minus 1 billion.

Speaker Change #131: After nine months so.

Speaker Change #131: Hopefully this leads to an understanding of all the participants.

Speaker Change #131: And the logic is as I explained to you we have very strong product.

Speaker Change #131: But.

Speaker Change #131: The amount we of funds, we generate with some folks wrong, it's not enough to invest into the future significantly and this is I think a situation everybody is aware of.

Speaker Change #131: And I'm confident that we reach a conclusion and the situations where the significantly change going forward and that leads then folks run into them.

So a good and safe future.

Speaker Change #132: Okay. Thank you.

Speaker Change #132: Okay.

Speaker Change #133: So last but definitely not least there is andrew from Reuters and the underlying Andrew can you hear us.

Speaker Change #133: Andrew can you hear us.

Andrew Reuters: Can you hear me.

Andrew Reuters: Yes, yes, we can hear you go ahead.

Andrew Reuters: I have a question.

Andrew Reuters: Alright.

Andrew Reuters: <unk>.

Andrew Reuters: As you know.

Yes.

Okay.

Andrew Reuters: I'd like to ask do you have any new.

Andrew Reuters:

Speaker Change #135: Andrew Sorry, sorry, Andrew Andrew can you repeat the question, we have really a hard time understanding you hear sort of.

Andrew: Yes, sure now is better.

Speaker Change #136: Yes, maybe go ahead, yeah. So my question is on <unk>.

Andrew: Hugh.

Andrew: Okay.

Andrew: As you know the tariff.

Andrew: It really came into pharma yesterday and I'd like to ask if you have any can you comment on that.

Andrew: And.

Andrew: Any proactive measures in line.

Andrew: Yes.

Speaker Change #138: James Please.

Speaker Change #138: Okay.

Speaker Change #138: No.

Speaker Change #139: We really don't Devin your comments on and your suggestion that in proactive measures.

Speaker Change #139: B B.

Speaker Change #140: This is as we stand at my position on tariffs of Europe is also clear, but I can't give you my personal view and this is basically besides that I can say and I have to say that we are a global company N V V B based on free and open markets and in order to achieve.

Speaker Change #140: Global scale, but my personal view is also.

Speaker Change #140: Under a tariff regime in industry only lose this time yeah.

Speaker Change #140: Because it's a it's a ferric citrate familiar feel safe, but if you look at the Chinese competitors, there already embarked on a strategy to.

Speaker Change #140: Tour to set up factories in Europe, and then they will.

Speaker Change #140: Basically sell cars from within Europe, and there were no tariffs so we really need.

Speaker Change #140: And and should use the time the next one or two years to improve significantly.

Speaker Change #140: Our competitiveness for this compared to competition coming to Europe and this is basically specifically on the hard on what we are just discussing improve competitiveness in the German plants, we have some very competitive.

Speaker Change #140: Lance in southern and Eastern Europe in terms of factory costs.

Speaker Change #140: In terms of product, we launched some very very attractive new models, the IV, two and others and now we improve our competitiveness and and basically prepare for this competition.

Speaker Change #140: From inside Europe now.

So I hope that that the answer question and literally on the finish line, but not too late still in time Monica Raymund from Bloom Lake moniker.

You hear us.

I can hear you mean, yes, absolutely go ahead.

Speaker Change #140: Oh.

Speaker Change #140:

Speaker Change #141: Arnold you basically talked about your efforts in China and sort of what.

Speaker Change #140: Average Volkswagen is taken there in order to improve.

Speaker Change #140: It's the lineup in its offering and you mentioned working with caution on MSP batteries. I was wondering if you could speak about the outlook for L. A P batteries, specifically, how Volkswagen is planning to utilize them in Europe, and the United States in order to bring the margins up on the Evs.

Speaker Change #140: Its home market.

Speaker Change #140: And where you see the commscope for batteries.

Speaker Change #140: Rich.

Speaker Change #140: In the coming years.

Speaker Change #140: Okay.

Speaker Change #142: Hello moniker that thinks this is a very valid question. Yeah. We definitely look on on building up an LLP I would say value chain for the bedroom also in Europe, and and as specific first.

Speaker Change #142: Model that uses for my first model. It uses the Lf pay battery will be the ITT family in in Spain that are built in.

Speaker Change #142: At I'd say at all at this our third plant in Spain, and so did the entry model for 25000 euros, we'll have we'll get in early February there will be also on NMC battery for for a higher range and this is.

Speaker Change #142: We see the basically that our product offering going forward. So we use elliff pay bedroom and views and if.

Speaker Change #142: If batteries.

Speaker Change #142: And I would say better is the the one is focus on costs and the other one is focused on range and entered the advantage why we can't do so it's a unified so yeah as you know the powerful.

Speaker Change #142: Pillar is basically there are three pillars for the power cost strategy. One is the ramp up production. The second one is is securing raw materials, but the third one is really the unified.

Speaker Change #142: This unified cell concept gives us advantage that we can integrate the LSP battery and NMC battery within one one product offering.

Speaker Change #143: So just to clarify you anticipate that power co will be producing NMC and LSP batteries in time for the start of production for the ITT machineries.

Speaker Change #144: There'll be look into that.

Speaker Change #144: Outdoor to ramp up the Lf P M.

Speaker Change #145: So supply in Europe, but what I can confirm is that Oh.

Speaker Change #145: And that the the idea to really get nail if paypal right from the start of production, we're looking into that.

Speaker Change #145: How we manage the ramp up of.

L F P M within a powerful because they can't do it everything at the same time, there might be an offer at the very beginning not from powerful but we definitely look at that time.

Speaker Change #146: Thank you.

Speaker Change #147: Hello. Thank you Monica. Thank you for your question I gather that we are now at the end of our media car.

Speaker Change #148: You say very good questions and if anything whats left unanswered. Please reach out to the team of all spoke as usual leads to me just to say thank you very much for your numerous participation take care and stay safe.

Speaker Change #147: Okay.

Speaker Change #147: Okay.

Speaker Change #149: Ladies and gentlemen, thank all price is now over thank you for choosing chorus call and thank you for participating in the conference you May now disconnect your lines Goodbye.