Q3 2024 Stellantis NV Earnings Call

October 31, 2024

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Operator: Ladies and gentlemen, welcome to the Stellantis Q3 2024 Shipments and Revenues Call. I will now hand you over to your host, Mr. Ed Ditmire, Head of Investor Relations at Stellantis. Mr. Ditmire, please go ahead.

Speaker Change: Ladies and gentlemen, welcome to this talentist, third quarter 2024 shipments and revenues call. We'll now hand you over to your host, Mr. Ed Ditmire, head of Investor Relations at Stelantis.

Speaker Change: Mr. Ditmire, please go ahead.

Ed Ditmire: Thank you. Hello, everyone, and thank you for joining us as we review Stellantis' Q3 2024 shipments and revenues. Earlier today, the presentation, along with the press release, was posted under the investor section of the Stellantis group website. Today, our call is hosted by Doug Ostermann, the company's Chief Financial Officer. After his presentation, Mr. Ostermann will be available to answer questions from the analysts. Before we begin, I want to point out that any forward-looking statements we might make during today's call are subject to the risks and uncertainties mentioned in the safe harbor statement included on page 2 of today's presentation. As customary, the call will be governed by that language. Now, I would like to hand over the call to Doug Ostermann, CFO of Stellantis.

Ed Ditmire: Thank you, hello, everyone. And thank you for joining us as we review Stylitis's Q3 2020 for Shipman Semrovenus.

Speaker Change: Earlier today, the presentation, along with the press release, we're posted under the investor section of the Solana Group website. Today, our call is hosted by Dog Osterman, the company's Chief Financial Officer.

Speaker Change: After his presentation, Mr. Osterman will be available to answer questions from the analyst.

Ed Ditmire: Before we begin, I want to point out that any forward-looking statements we might make during today's call are subject to the risks and uncertainties mentioned in the safe harbor statement included on page 2 of today's presentation. As customary, the call will be governed by that language. Now, I would like to hand over the call to Doug Ostermann, CFO of Stellantis.

Speaker Change: Before we begin, I want to point out that any forward-looking statements we might make during the today's call are subject to the risks and uncertainties mentioned in the safe harbor statement included on page two of today's presentation.

Speaker Change: As customary the call will be governed by that language. Now I would like to hand over the call to Doug Osterman, CFO of Stoantis.

Doug Ostermann: Thank you, Ed. Hello, everyone. Thank you for joining. I'm excited to be talking with the investment community today. I'd like to take a quick moment to thank our CEO, Carlos Tavares, our chairman, John Elkann, and the board of directors for the opportunity to partner with the company's leadership team in addressing tough challenges and to accelerate our progress along our strategic roadmap. I also wanna take a moment to thank my predecessor, Stellantis CFOs, Natalie Knight and Richard Palmer, both of whom I worked with closely, and I'd like to thank them for the many things I learned from them. I'll look forward to engaging with many of you in the near future as well, hearing your perspectives on Stellantis, and discussing ways to unlock value. For today, though, let's focus on our shipment and revenue figures for the third quarter of 2024.

Doug Osterman: Thank you, Edward. Hello everyone. Thank you for joining. I'm excited to be talking with the investment community today.

Doug Osterman: I'd like to take a quick moment to thank our CEO Carlos Tavares, our Chairman John Elkin, and the Board of Directors for the Opportunity to partner with the company's leadership team in addressing tough challenges and to accelerate our progress along our strategic roadmap.

Doug Osterman: I also want to take a moment to thank my predecessor Stolantus CFOs, Natalie Knight and Richard Palmer. Both of whom I worked with closely and I'd like to thank them for the many things I learned from them.

Doug Ostermann: I'll look forward to engaging with many of you in the near future as well, hearing your perspectives on Stellantis, and discussing ways to unlock value. For today, though, let's focus on our shipment and revenue figures for the third quarter of 2024. The theme at the top of the page is clearing the path for 2025, and there's three important elements to the period I wanna cover in detail today.

Doug Osterman: All look forward to engaging with many of you in the near future as well, hearing your perspectives on Stalantus and discussing ways to unlock value.

Doug Osterman: For today though, let's focus on our shipment and revenue figures for the third quarter of 2024.

Doug Ostermann: The theme at the top of the page is clearing the path for 2025, and there's three important elements to the period I wanna cover in detail today. First, the top-line performance in terms of revenue and shipments was difficult and certainly not where we wanna be, but we're going to take some time to help you understand the significant impacts that operational actions and developments brought in the period, as well as where we're working on these improvements. Second, we're gonna discuss our strong progress, reducing excess inventories in particular, but certainly not limited to the US dealer stocks, which is key to improving our shipment levels in 2025 and beyond.

Doug Osterman: The theme at the top of the page is clearing the path for 2025. And there's three important elements to the period I want to cover in detail today.

Doug Ostermann: First, the top-line performance in terms of revenue and shipments was difficult and certainly not where we wanna be, but we're going to take some time to help you understand the significant impacts that operational actions and developments brought in the period, as well as where we're working on these improvements. Second, we're gonna discuss our strong progress, reducing excess inventories in particular, but certainly not limited to the US dealer stocks, which is key to improving our shipment levels in 2025 and beyond.

Doug Osterman: First, the top line performance in terms of revenue and shiftments was difficult and certainly not what we want to be.

Doug Osterman: But we're going to take some time to help you understand the significant impacts that operational actions and developments brought in the period, as well as where we're working on these improvements.

Doug Osterman: Second we're going to discuss.

Doug Osterman: Our strong progress, reducing excess inventories in particular, but certainly not limited to the U.S. dealer stocks, which is key to improving our shipment levels in 2025 and beyond.

Doug Ostermann: Third, we're gonna make sure we keep you updated on our progress in launching our generational new product wave, which will reduce our platform complexity, give us the best multi-energy flexibility in the business, and better cover markets' fastest-growing segments. Let's look now on the next page at the top-line results. Shipments of 1.15 million units were down 20% or 279,000 units versus the prior year, and 5 points below the 15% decline in sales to customers. Revenues of EUR 33 billion were down 27%. That's 7 points more than shipments due to a combination of headwinds across mix, pricing actions, mainly in North America, and foreign exchange headwinds. Now, let's break down that 20% shipment decline into really two main drivers. First, we're making strong progress resolving an excess inventory issue.

Doug Osterman: and third, we're going to make sure we keep you updated on our progress in launching our generational new product wave.

Doug Osterman: which will reduce our platform complexity, give us the best multi-energy flexibility in the business and better cover markets, fastest growing segments.

Doug Osterman: Let's look now on the next page at the top line results. So shipments of 1.15 million units were down 20% or 279,000 units for us at the prior year, and 5.0% below the 15% decline in sales to customers.

Doug Osterman: Revenants of 33 billion euros were down 27% at 7. More than shipments due to a combination of headwinds across NICS.

Doug Ostermann: That's 7 points more than shipments due to a combination of headwinds across mix, pricing actions, mainly in North America, and foreign exchange headwinds. Now, let's break down that 20% shipment decline into really two main drivers. First, we're making strong progress resolving an excess inventory issue. In Q3, total group inventories were reduced by 70,000 units, in contrast to a positive 10,000 unit build in the prior year Q3. The delta between the two explains 80,000 of the year-over-year shipment decline.

Doug Osterman: Christy actions, mainly in North America and Fort Exchange Headwinds.

Doug Osterman: Now let's break down that 20% shipment to climb into really two main drugs.

Doug Osterman: First, we're making strong progress resolving an excess inventory issue in the third quarter total group inventories.

Doug Ostermann: In Q3, total group inventories were reduced by 70,000 units, in contrast to a positive 10,000 unit build in the prior year Q3. The delta between the two explains 80,000 of the year-over-year shipment decline. Second, we have a big and exciting product wave, which is enabling platform consolidation and multi-energy flexibility, but this challenging transition has led to temporary gaps in our product portfolio as our factories go through significant retooling, and some innovative new vehicles saw launch delays to ensure they meet strict quality standards. This sapped about 150,000 shipments from our year-over-year comparison, roughly 100,000 in Europe and 50,000 in North America. We expect this headwind to peak in the second half of 2024 and to diminish meaningfully as we advance through 2025.

Doug Osterman: were reduced by 70,000 years in contrast to a pause at 10,000 unit build in the prior year third quarter. The delving between the two explains 80,000 of the year over year shipment decline.

Doug Ostermann: Second, we have a big and exciting product wave, which is enabling platform consolidation and multi-energy flexibility, but this challenging transition has led to temporary gaps in our product portfolio as our factories go through significant retooling, and some innovative new vehicles saw launch delays to ensure they meet strict quality standards. This sapped about 150,000 shipments from our year-over-year comparison, roughly 100,000 in Europe and 50,000 in North America. We expect this headwind to peak in the second half of 2024 and to diminish meaningfully as we advance through 2025.

Doug Osterman: Second, we have a big and exciting product wave, which is enabling platform consolidation and multi-energy flexibility, but this challenging transition is led to temporary gaps.

Doug Osterman: in our private portfolio as our factories go through significant retooling and some innovative new vehicles saw launched delays to ensure they meet strict quality standards.

Doug Osterman: This stepped about 150,000 shipments from our year over year comparison, roughly 100,000 in Europe and 50,000 in North America. We expect this had to end to peak in the second half of 2024 and to diminish meaningfully.

Doug Osterman: as we advance through 2025.

Doug Ostermann: Let me walk you now on the next page through our headline figures. Before we review and break down these figures, I wanna say that we at Stellantis know the pullback in top-line results in Q3 2024, as well as our guidance for the full year, represent a performance level which is nowhere near our potential. Consolidated shipments decreased by 20% or 279,000 units year-over-year. 150,000 of this was associated with temporary gaps in our model lineup. 80,000 was related to efforts to normalize inventory levels, and the remaining 50,000 was due to the combination of lower sales performance by the company and industry headwinds, particularly in Europe. Combined shipments, which includes volumes associated with joint ventures, decreased 21%.

Doug Osterman: Let me watch you now on the next stage through our headline figures.

Doug Osterman: Before we review and break down these figures, I want to say that we've spent as no the pullback in top line results in Q32024 as well as our guidance for the full year, represent a performance level which is nowhere near our potential.

Doug Osterman: Consolidated shipments decreased by 20% or 279,000 units year over year.

Doug Osterman: 150,000 of this was associated with temporary gaps in our model lineup.

Doug Ostermann: 80,000 was related to efforts to normalize inventory levels, and the remaining 50,000 was due to the combination of lower sales performance by the company and industry headwinds, particularly in Europe. Combined shipments, which includes volumes associated with joint ventures, decreased 21%. Net revenues declined 27%, due not only to the 20% consolidated shipment decline, but also with significant headwinds from changes in mix, pricing, and foreign exchange rates. On the next page, on page six, we'll break that down and talk a little bit more specifically here.

Doug Osterman: 80,000 was related to efforts to normalize inventory levels and the remaining 50,000 was due to the combination of lower sales performance by the company and industry headwoods, particularly in Europe.

Doug Osterman: Combined shipments, which includes volumes associated with current ventures decreased 21%.

Doug Ostermann: Net revenues declined 27%, due not only to the 20% consolidated shipment decline, but also with significant headwinds from changes in mix, pricing, and foreign exchange rates. On the next page, on page six, we'll break that down and talk a little bit more specifically here. Now we look at Q3 year-over-year revenue walk. At the group level, around 22 percentage points of the 27% decline in revenue is explained by volume and mix. Mix saw headwinds from regional shifts. We had softer volumes in high average selling price North America, and more resilient volumes in lower average selling price third engine regions.

Doug Osterman: Revenue is decline 27% do not only to the 20% consolidate ship into climb but also with significant headwinds from changes in mix.

Doug Osterman: Bricing and for an exchange rates. And on the next page on page six, we'll break that down and talk a little bit more specifically here.

Doug Ostermann: Now we look at Q3 year-over-year revenue walk. At the group level, around 22 percentage points of the 27% decline in revenue is explained by volume and mix. Mix saw headwinds from regional shifts. We had softer volumes in high average selling price North America, and more resilient volumes in lower average selling price third engine regions. Net pricing was negative EUR 1.3 billion, with almost all of this driven by North America, a dynamic that is likely to be sustained through the remainder of the year. Foreign exchange translation was a negative EUR 1.1 billion.

Doug Osterman: So now we look at the Q3 year of a year revenue wealth.

Doug Osterman: at the group level.

Doug Osterman: Around 22% of the 27% decline in revenues explained by volume and mix.

Doug Osterman: So, Nick had went from regional shifts

Doug Osterman: We have softer volumes in high average selling price in North America and more resilient volumes in lower average selling price third-engine regions.

Doug Ostermann: Net pricing was negative EUR 1.3 billion, with almost all of this driven by North America, a dynamic that is likely to be sustained through the remainder of the year. Foreign exchange translation was a negative EUR 1.1 billion. Almost two-thirds of this was in the South American region, the vast majority from a weaker Brazilian real, and with additional impact from changes in the Argentine peso, Turkish lira, and the US dollar. Let's briefly then, on the next page, discuss performance by segment. In North America, shipments declined 36% or 170,000 units, with almost 50,000 of the decrease associated with nameplates which are currently on hiatus pending upcoming launches of next-generation successors, and 80,000 associated with the normalization of inventory levels, which is really crucial. Pricing was materially negative due to the impact of temporarily enlarged incentives.

Doug Osterman: Price Inc. was negative 1.3 billion.

Doug Osterman: with almost all of this driven by North America, a dynamic that is likely to be sustained through the main dervigate.

Doug Osterman: and Foreign Exchange Translation was a negative 1.1 billion. Almost two thirds of this was in the South American region, the mass majority from a weaker Brazilian real.

Doug Ostermann: Almost two-thirds of this was in the South American region, the vast majority from a weaker Brazilian real, and with additional impact from changes in the Argentine peso, Turkish lira, and the US dollar. Let's briefly then, on the next page, discuss performance by segment. In North America, shipments declined 36% or 170,000 units, with almost 50,000 of the decrease associated with nameplates which are currently on hiatus pending upcoming launches of next-generation successors, and 80,000 associated with the normalization of inventory levels, which is really crucial.

Doug Osterman: and with additional impact from changes in the Argentine of Peso, Turkish Lera and the U.S. dollar.

Doug Osterman: Let's briefly then on the next page discuss performance by segment.

Doug Osterman: In North America

Doug Osterman: Shipments declined 36% or 170,000 units.

Doug Osterman: with almost 50,000 of the decrease associated with name plates which are currently on hiatus, pending upcoming launches of next generation of processors. And 80,000 associated with the normalization of inventory levels, which is really crucial.

Doug Ostermann: Pricing was materially negative due to the impact of temporarily enlarged incentives. Moving to Europe, where the market saw a 5% industry volume decline, our shipments declined 17% or 103,000 units. This was due mostly to a temporary gap in our B segment lineup, where several high-volume nameplates, including Citroën C3 Aircross, and Opel Frontera, saw prior generation products retired at mid-year, well before new successors were set to launch.

Doug Osterman: Pricing was materially negative due to the impact of temporarily enlarged incentives.

Doug Ostermann: Moving to Europe, where the market saw a 5% industry volume decline, our shipments declined 17% or 103,000 units. This was due mostly to a temporary gap in our B segment lineup, where several high-volume nameplates, including Citroën C3 Aircross, and Opel Frontera, saw prior generation products retired at mid-year, well before new successors were set to launch. On the other hand, we have seen success with the new C segment offers, like the STLA Medium-based Peugeot 308, which launched in Q2 and delivered strongly in Q3. This created a favorable Q3 mix element, which drove much of the difference between shipments and revenue. Shifting now to our third engine. Let me start with Middle East and Africa, which saw a 26% decline in consolidated shipments or 27,000 units.

Doug Osterman: Moving to Europe, where the market saw 5% industry volume decline, our shipments declined 17% or 103,000 years. This was due mostly to a temporary gap in our B segment lineup.

Doug Osterman: for several high volume name flags, including Citron C3, C3 Aircross and Oberfuntera. Saw prior generation products retired at mid-year, well before new successors were set to launch.

Doug Ostermann: On the other hand, we have seen success with the new C segment offers, like the STLA Medium-based Peugeot 308, which launched in Q2 and delivered strongly in Q3. This created a favorable Q3 mix element, which drove much of the difference between shipments and revenue. Shifting now to our third engine. Let me start with Middle East and Africa, which saw a 26% decline in consolidated shipments or 27,000 units. The majority of this was in Algeria, where a temporary import restriction has kept us from selling several imported Fiat models. It also slowed the ramp of Algerian-produced Fiat 500 and Doblò.

Doug Osterman: On the other hand, we have seen success.

Doug Osterman: with a new C segment offers, like the Stoantes Medium-based.

Doug Osterman: Puzhou 308, which launched in the second quarter and delivered strongly in the third quarter.

Doug Osterman: This creates a favorable Q3 mix element which drove much of the difference between shipments and revenue.

Doug Osterman: Shifting down to our third engine. Let me start with Middle Eastern Africa which saw a 26% decline in consolidate shipments or 27,000 units.

Doug Ostermann: The majority of this was in Algeria, where a temporary import restriction has kept us from selling several imported Fiat models. It also slowed the ramp of Algerian-produced Fiat 500 and Doblò. Revenues fell more steeply at 37%, due mainly to FX-related headwinds. First, about 8 points of translation impact, but separately, around EUR 500 million of revenue reduction triggered by easing inflation pressures in Turkey in a year-over-year comparison. Now let's turn to the remaining segments. On the next page, you can see, in South America, where Stellantis enjoys the number one share position, revenues were down 2%, as a 14% increase in shipments and increases in parts, and services revenue was offset by foreign exchange translation impacts. This was primarily in the Brazilian real, but secondarily in the Argentine peso, each of which weakened versus the euro.

Doug Osterman: The majority of this was in Algeria, where a temporary import restriction is kept as from selling several imported theot models. And it also slowed the ramp of Algerian produced the 510 Doblo.

Doug Ostermann: Revenues fell more steeply at 37%, due mainly to FX-related headwinds. First, about 8 points of translation impact, but separately, around EUR 500 million of revenue reduction triggered by easing inflation pressures in Turkey in a year-over-year comparison. Now let's turn to the remaining segments. On the next page, you can see, in South America, where Stellantis enjoys the number one share position, revenues were down 2%, as a 14% increase in shipments and increases in parts, and services revenue was offset by foreign exchange translation impacts.

Doug Osterman: Revenants fell more steeply at 37% due mainly to FX related headwinds.

Doug Osterman: First about eight points of translation impact, but separately around 500 million euros of revenue reduction triggered by easing inflation pressures in Turkey in a year over year comparison.

Doug Osterman: Now let's return to the remaining segments.

Doug Osterman: On the next page you can see in South America where St. John's enjoys the number one share position revenues were down 2% as a 14% increase in shipments.

Doug Osterman: and increases in parts and services revenue was offset by foreign exchange translation impacts. This was primarily in the Brazilian Reo, but secondly, in the Argentine peso, each of which weakened versus the euro.

Doug Ostermann: This was primarily in the Brazilian real, but secondarily in the Argentine peso, each of which weakened versus the euro. China and IAP and Maserati are a very small part of the financial picture, but represent significant long-term opportunity. Let's talk about where we are right now on each. In China, India, and Asia Pacific, consolidated shipments were down 30% against a context of higher competitive pressures, particularly from Chinese OEM expansion throughout the regions, but also reflecting the progressively tighter focus on our asset-light strategy.

Doug Ostermann: China and IAP and Maserati are a very small part of the financial picture, but represent significant long-term opportunity. Let's talk about where we are right now on each. In China, India, and Asia Pacific, consolidated shipments were down 30% against a context of higher competitive pressures, particularly from Chinese OEM expansion throughout the regions, but also reflecting the progressively tighter focus on our asset-light strategy. At Maserati, the 3,200 unit decline in shipments reflects lower volumes of the Grecale SUV, as well as declines elsewhere in the portfolio, including the retirement of three products at the end of 2023. Now, Maserati welcomed new leadership in October, and I can tell you they're hard at work to return the brand to profitability. Now turning, let's take a look at inventories, where things are clearly moving in the right direction.

Doug Osterman: China and IAP and Mazurati are very small part of the financial picture but represents significant long-term opportunity. And so let's talk about where we are right now on each.

Doug Osterman: In China, India and Asia Pacific, and saw the shipments were down 30% against the context of higher competitive pressures, particularly from Chinese OEM expansion throughout the region.

Doug Osterman: but also reflecting the progressively tighter focus on our asset fight strategy.

Doug Ostermann: At Maserati, the 3,200 unit decline in shipments reflects lower volumes of the Grecale SUV, as well as declines elsewhere in the portfolio, including the retirement of three products at the end of 2023. Now, Maserati welcomed new leadership in October, and I can tell you they're hard at work to return the brand to profitability. Now turning, let's take a look at inventories, where things are clearly moving in the right direction. Group inventories were reduced by 9% compared to the beginning of the year, and 6% in the last quarter alone.

Doug Osterman: At Mazurai, the 3200 unit decline in shipments reflects lower volumes of the Great Cali SUV, as well as declined elsewhere in the portfolio, including the retirement of three products at the end of 2023.

Doug Osterman: Now I'm Alzorati, welcome new leadership in October. And I can tell you, they're hard at work to return the brand to profitability.

Doug Osterman: Out-turning, let's take a look at inventories where things are clearly moving in the right direction.

Doug Ostermann: Group inventories were reduced by 9% compared to the beginning of the year, and 6% in the last quarter alone. In the first six months of 2024, you can see 50,000 units of progress achieved primarily in Europe. In the third quarter of 2024, almost 80,000 units of additional progress mostly achieved in North America, which frankly was a big focus for us in the quarter. Let's turn and look on the next page at the US inventories, which continues to be a special focus. We're making consistent progress reducing the stock levels in the US dealers, helping to make them more profitable partners and better able to support the launch of exciting new products. US dealer stock at mid-year was approximately 430,000 units.

Doug Osterman: Grouped in the notorious reduced by 9% compared to the beginning of the year and 6% in last quarter alone.

Doug Ostermann: In the first six months of 2024, you can see 50,000 units of progress achieved primarily in Europe. In the third quarter of 2024, almost 80,000 units of additional progress mostly achieved in North America, which frankly was a big focus for us in the quarter. Let's turn and look on the next page at the US inventories, which continues to be a special focus. We're making consistent progress reducing the stock levels in the US dealers, helping to make them more profitable partners and better able to support the launch of exciting new products. US dealer stock at mid-year was approximately 430,000 units.

Doug Osterman: In the first six months of 2024, you can see 50,000 units of progress achieved primarily in Europe.

Doug Osterman: and then in the third quarter of 2024, almost 80,000 units of additional progress, mostly achieved in North America, which frankly was a big focus for us in the quarter. So let's turn and look on the next page at the US in mid-Tories.

Doug Osterman: which continues to be a special focus.

Doug Osterman: We're making consistent progress reducing the stock levels in the US dealers.

Doug Osterman: Helping to make them more profitable partners and better able to support the launch of exciting new products.

Doug Osterman: U.S. dealers' socket mid-year was approximately 430,000 units, we're targeting a reduction to 330,000 and have progressively pulled forward the timeline.

Doug Ostermann: We're targeting a reduction to 330,000 and have progressively pulled forward the timeline. We now have a line of sight to achieve the 100,000 second half reduction sometime actually in November. We can return to stronger plant utilization in December and throughout 2025. In combination with some moderate improvements in sales volume, which I'll cover in a bit more detail, day supply is improving from around 94 days at the end of June to a projected 85 days at the end of October. We have more work to get things done where we want to be, but we're excited about what that can mean for our 2025 performance. Okay, on the next page, let's look at other important elements of improvement in North America, specifically sales effectiveness.

Doug Osterman: We now have a line of sight to achieve the 100,000 second half reduction, sometimes actually in November. So we can return to stronger plant utilization in December and throughout 2025.

Doug Osterman: In combination with some modern improvements in sales volume, which I'll cover in a bit more detail, a supplies improving from around 94 days at the end of June to a projected 85 days at the end of October.

Doug Ostermann: We have more work to get things done where we want to be, but we're excited about what that can mean for our 2025 performance. Okay, on the next page, let's look at other important elements of improvement in North America, specifically sales effectiveness. We've engaged in a very fundamental review of the entire go-to-market approach and identified ways to improve our performance at the top of what we refer to as the purchase funnel in terms of ensuring we have healthy share of voice.

Doug Osterman: We have more work to get things done where we want to be, but we're excited about what that can mean for our 2025 performance.

Doug Osterman: We'll have the next page, let's look at other important elements of improvement in North America, specifically sales effectiveness.

Doug Ostermann: We've engaged in a very fundamental review of the entire go-to-market approach and identified ways to improve our performance at the top of what we refer to as the purchase funnel in terms of ensuring we have healthy share of voice. At the middle of the funnel, where we identify and progress qualified leads with our dealers, and at the bottom of the funnel, where the right pricing and incentives maximize conversion to sales. In Q3, we enhanced incentives on 2024 and older model year vehicles, both in terms of increasing the amount, but also importantly, making them more customer-facing. Meanwhile, on some model year 2025 vehicles, we're adjusting MSRPs to be lower in a way that increases the transparency for and consideration by consumers. This also reduces the need for incentives.

Doug Osterman: We've engaged in a very fundamental review of the entire Go-to-Market approach, and I identified ways to improve our performance at the top of what we've heard you had, the purchase funnel in terms of ensuring we have a healthy share of voice.

Doug Ostermann: At the middle of the funnel, where we identify and progress qualified leads with our dealers, and at the bottom of the funnel, where the right pricing and incentives maximize conversion to sales. In Q3, we enhanced incentives on 2024 and older model year vehicles, both in terms of increasing the amount, but also importantly, making them more customer-facing.

Doug Osterman: At the middle of the funnel, where we identify and progress qualified leads with our dealers, and at the bottom of the funnel, where the right pricing and incentives maximize conversion to sales.

Doug Osterman: In Q3, we enhance incentives on 2024 and older model-year vehicles, both in terms of increasing the amount, but also importantly, making them more customer-facing.

Doug Ostermann: Meanwhile, on some model year 2025 vehicles, we're adjusting MSRPs to be lower in a way that increases the transparency for and consideration by consumers. This also reduces the need for incentives. I'm pleased to report that we're seeing encouraging early indications, not only improving market share in August and September, but with improvements in qualified leads for our dealers. October is shaping up nicely. We don't have the final figures yet, but we project an approximate 10% increase in unit sales versus September.

Doug Osterman: Meanwhile on some Molly or 25 vehicles were adjusting MSRP to be lower in a way that increases the transparency form and consideration by consumers. And this also reduces the need for incentives.

Doug Ostermann: I'm pleased to report that we're seeing encouraging early indications, not only improving market share in August and September, but with improvements in qualified leads for our dealers. October is shaping up nicely. We don't have the final figures yet, but we project an approximate 10% increase in unit sales versus September. Now, the next page, let's turn to the big multi-year portfolio transition we're launching in 2024. We've been clear on the ways that this product wave puts us in a strong place, not only in terms of having incredibly appealing products, but critically from a business perspective, giving us more products in faster-growing segments of the market, standout multi-energy flexibility, and putting us in a position to reduce our platform complexity.

Doug Osterman: I'm pleased to report that we're seeing encouraging early indications, not only improving market share in August and September but with improvements in qualified leads for our dealers.

Doug Osterman: October is shaping up nicely. We don't have the final figures yet, but we project an approximate 10% increase in unit sales versus September.

Doug Ostermann: Now, the next page, let's turn to the big multi-year portfolio transition we're launching in 2024. We've been clear on the ways that this product wave puts us in a strong place, not only in terms of having incredibly appealing products, but critically from a business perspective, giving us more products in faster-growing segments of the market, standout multi-energy flexibility, and putting us in a position to reduce our platform complexity.

Doug Osterman: and

Doug Osterman: Now the next slide just lets turn to the big multi-year portfolio transition we're launching in 2024.

Doug Osterman: We've been clear on the ways that this product way puts us in a strong place. Not only in terms of having incredibly appealing products, but...

Doug Osterman: Critically from business perspective, give us more products and faster growing segments of the market, stand out multi-energy flexibility and putting a certain position to reduce our platform complexity.

Doug Ostermann: I want to take a moment to be especially clear on some of the frictions we've experienced when implementing this more appealing, more flexible, and more efficient product portfolio. For example, when an assembly facility prepares to go multi-energy for the first time, the degree of new equipment and associated training goes up, which can elongate factory downtime and slow the ramp of newly launched products. At the same time, the increase in technology required by today's products can create new challenges in the final stages of readying a vehicle for launch, and we've had to take the time needed to fully address issues before launch. Our last observation in this slide. Really, the diversity of brands represented on the page illustrates the massive opportunity we have to leverage our technology spend across an incredible array of customer and geographic segments. This is really a strategic advantage for Stellantis.

Doug Osterman: But I want to take a moment to be especially clear on some of the frictions we've experienced when implementing this more appealing, more flexible and more efficient product portfolio. Cruzempo.

Doug Osterman: When an assembly facility prepared to go multi-energy put first time the degree of new equipment and associated training goes up, which can elongate factory downtime and slow the ramp of new launch products. At the same time, the increase in technology required by today's products.

Doug Ostermann: At the same time, the increase in technology required by today's products can create new challenges in the final stages of readying a vehicle for launch, and we've had to take the time needed to fully address issues before launch. Our last observation in this slide. Really, the diversity of brands represented on the page illustrates the massive opportunity we have to leverage our technology spend across an incredible array of customer and geographic segments. This is really a strategic advantage for Stellantis.

Doug Osterman: can create new challenges in the final stages of Reading of Vehicle for Watch. And we've had to take the time needed to fully address issues before Watch.

Doug Osterman: and the last observation in this slide.

Doug Osterman: Billion Diversity of Brands represented on the page, illustrates the mass of opportunity we have, to leverage our technology spend across an incredible array of customer and geographic segments. This is really a strategic advantage for Stalontus.

Doug Ostermann: Now the next page, let's turn to something that I'm especially passionate about, because of my prior role developing our strategy in China, the Leapmotor International partnership. We've launched this partnership on time with the initial European launch commencing in late September through a scaled distribution network that already features over 200 European dealers. With plans for sales in IAP and the Middle East set to begin in Q4, and South America in 2025. I think it's important to note right now is that we're going to continue to move quickly because we think the market is very receptive to the high-tech, affordable, and efficient Leapmotor products.

Doug Osterman: Now the next page, let's turn to something that I'm especially passionate about, because of my prior role developing our strategy in China, the lead motor is international partnership.

Doug Osterman: We've launched this partnership on time with the initial European launch commencing in late September through a scale distribution network that already features over 200 European dealers.

Doug Osterman: and with plans for sales in IAP and the Middle East set to begin in Q4 and South America in 2025.

Doug Ostermann: I think it's important to note right now is that we're going to continue to move quickly because we think the market is very receptive to the high-tech, affordable, and efficient Leapmotor products. The latest example of that would be the announcement that we made at the Paris Auto Show in October that we're going to increase the nameplates offered in Europe from the initially launched T03 and C10 BEVs to include a range extender C10 variant, the BEV B10 by the end of 2025, and three more models by the end of 2027, giving us a very complete range of Leapmotor products in the region.

Doug Osterman: But I think it's important to know right now is that we're going to continue to move quickly.

Doug Osterman: Because we think the market is very receptive to the high-tech, affordable and efficient leap motors products.

Doug Ostermann: The latest example of that would be the announcement that we made at the Paris Auto Show in October that we're going to increase the nameplates offered in Europe from the initially launched T03 and C10 BEVs to include a range extender C10 variant, the BEV B10 by the end of 2025, and three more models by the end of 2027, giving us a very complete range of Leapmotor products in the region. We're also evaluating possibilities to utilize the European assembly capabilities of Stellantis to localize more quickly than competitors. Long term, we retain an unchanged view on the potential for over 500,000 annual sales globally through the Leapmotor International JV by 2030. Okay, now let's turn on the next page to a few quick highlights on some of the notable new products we've launched recently.

Doug Osterman: The latest example of that would be the announcement that we made at the Paris Autoshow in October that we're going to increase the name plates offered in Europe from the initially launched T03 and C10 BVs to include a range of C10 variant.

Doug Osterman: The best beat 10 by the end of 2025 and three more models by the end of 2027, giving us a very complete range of lead motors products in the region.

Doug Ostermann: We're also evaluating possibilities to utilize the European assembly capabilities of Stellantis to localize more quickly than competitors. Long term, we retain an unchanged view on the potential for over 500,000 annual sales globally through the Leapmotor International JV by 2030. Okay, now let's turn on the next page to a few quick highlights on some of the notable new products we've launched recently.

Doug Osterman: We're also evaluating possibilities to utilize the European Assembly capabilities of Stalantus to localize more quickly than competitors.

Doug Osterman: Long-term, we retain and unchanged view on the potential for over 500,000 annual sales globally through the Leapos International JV by 2030.

Doug Osterman: Okay, now it.

Doug Osterman: Turn on the next page to a few quick highlights on some of the notable new products we've launched recently.

Doug Ostermann: First is the Citroën C3 and ë-C3. These Citroën vehicles are incredibly exciting because they show how Stellantis can leverage significant advantages from the global nature of our business. In this case, leveraging a very innovative vehicle originally conceived for our third engine markets, but adapted in rapid fashion for the needs of the European customer. They deliver to customers a new level of capability and appeal at extraordinarily affordable price points. The C3 and ë-C3 began shipping in late September with a very healthy initial order book of over 50,000 units. We're especially excited by the roughly 50% BEV mix that customers are asking for, and the fact that a lot of the customers are choosing the higher trim versions.

Doug Osterman: First.

Doug Osterman: is the Citroen C3 and EC3.

Doug Osterman: These Citroen vehicles are incredibly exciting because they show how stalantis can leverage significant advantages from our global nature of our business.

Doug Osterman: In this case, leveraging a very innovative vehicle originally conceived for our third-edged markets.

Doug Osterman: but adapted in rapid fashion for the needs of the European customer.

Doug Osterman: They delivered a customer's a new level of capability and appeal and extraordinarily affordable price points.

Doug Osterman: The C3 at EC3 began shipping in late September with a very healthy initial order book of over 50,000 units.

Doug Ostermann: We're especially excited by the roughly 50% BEV mix that customers are asking for, and the fact that a lot of the customers are choosing the higher trim versions. The core value proposition of the C3 and ë-C3 will be shared with the soon-to-be-launched C3 Aircross, Opel Frontera, Fiat Grande Panda, all built on the Smart Car Platform. The BEV variants of all four, with their unique combination of European design and build at new levels of affordability, represent a powerful tool in our plans to meet the more stringent European emission requirements in 2025 and beyond.

Doug Osterman: were especially excited by the roughly 50% bent mix that customers are asking for. And the fact that a lot of the customers are choosing to hired from versions.

Doug Ostermann: The core value proposition of the C3 and ë-C3 will be shared with the soon-to-be-launched C3 Aircross, Opel Frontera, Fiat Grande Panda, all built on the Smart Car Platform. The BEV variants of all four, with their unique combination of European design and build at new levels of affordability, represent a powerful tool in our plans to meet the more stringent European emission requirements in 2025 and beyond. On the next page, let's look at the Peugeot 3008 and e-3008. These C-segment vehicles are not only an upgrade, they're a very important, profitable, and scalable franchise, together with the 5008.

Doug Osterman: The core value proposition of the C3 and EC3 will be shared with the C3 Aircross, OPPO Franchera

Doug Osterman: Fiat Grande Pandain, outbuilt on the Smart Car platform.

Doug Osterman: The Bed Variants of All Four, with their unique combination of European design and build, at new levels of affordability, represent a powerful tool in our plans to meet the more stringent European emission requirements in 2025 to be out.

Doug Ostermann: On the next page, let's look at the Peugeot 3008 and e-3008. These C-segment vehicles are not only an upgrade, they're a very important, profitable, and scalable franchise, together with the 5008. They're also the first products launched on the new STLA Medium platform, engineered BEV first, but with comprehensive multi-energy flexibility. The e-3008 crossover in particular sets a new EV performance standard with up to 700km of range, leading its segment, and does so with outstanding efficiency.

Doug Osterman: On the next page, let's look at the Pujo, 38, and E38.

Doug Osterman: B.C. segment vehicles are not only an upgrade, they're very important, profitable and scalable franchise together with the 5,000 and eight.

Doug Ostermann: They're also the first products launched on the new STLA Medium platform, engineered BEV first, but with comprehensive multi-energy flexibility. The e-3008 crossover in particular sets a new EV performance standard with up to 700km of range, leading its segment, and does so with outstanding efficiency. The Q2 launch has been very successful, with not only strong order volumes, but with 60% choosing the high-end trims and a 25% BEV powertrain mix. This bodes especially well considering its core capabilities are shared not only with the 5008 and E-5008 models, but also Opel Grandland and just announced the Citroën C5 Aircross. The last topic I want to touch on is our full-year financial guidance.

Doug Osterman: and they're also the first products launched on the new Stella Medium platform. Engineer's bed first, but with comprehensive multi-energy flexibility.

Doug Osterman: The E3000 and 8 crossover in particular sets a new EV performance standard with up to 700 kilometers of range, leading its segment and does so without standing efficiency.

Doug Ostermann: The Q2 launch has been very successful, with not only strong order volumes, but with 60% choosing the high-end trims and a 25% BEV powertrain mix. This bodes especially well considering its core capabilities are shared not only with the 5008 and E-5008 models, but also Opel Grandland and just announced the Citroën C5 Aircross. The last topic I want to touch on is our full-year financial guidance.

Doug Osterman: The Q2 lunch has been very successful with not only strong order volumes, but with 60% choosing the high entrance.

Doug Osterman: and a 25% best power train mix.

Doug Osterman: This pose especially well considering its core capabilities are shared, not only with the 5,000,000,000,000,000,000 bottles, but also mobile grind land and just announced the Citroen C5 Aircross.

Doug Osterman: yeah

Doug Osterman: The last topic I want to touch on is our full year of financial guidance.

Doug Ostermann: In late September, the company adjusted its full-year guidance to reflect, in part, the very significant cost of corrective actions to address North American inventory levels and sales performance, as well as lower expectations in Europe, where market volume softened and we incurred some significant impacts from the delayed product launches. We are today reiterating this guidance for between 5.5 and 7% AOI margins for the full year and a projected industrial free cash flow of -EUR 5 to -EUR 10 billion. I'm certainly clear that the 2024 AOI guidance range is both far below our potential and wider than analysts and investors might want.

Doug Osterman: In Lake September, The End.

Doug Osterman: The company ingested its full-year guidance to reflect in-part the very significant costs of corrective actions to address North American inventory levels and sales performance, as well as lower expectations in Europe where market volume's softened, and we incurred some significant impacts from the delayed product watches.

Doug Osterman: We are today reiterating this guidance for between 5 and 1 and 7% A-Ward margins for the full year.

Speaker Change: Anna projected industrial free cash flow of negative 5 to negative 10 billion euros.

Doug Ostermann: I'm certainly clear that the 2024 AOI guidance range is both far below our potential and wider than analysts and investors might want. While I'd love to be more specific, I think it's probably more important to keep clear that the company continues to evaluate the best ways to position ourselves for better top line and cost performance in 2025 and beyond. As such, the wider range gives us valuable flexibility to take as much action as needed to set ourselves up for significant improvement.

Speaker Change: I'm certainly clear that the 2024 AOI guidance range is both far below our potential and wider than analysts and investors might want.

Doug Ostermann: While I'd love to be more specific, I think it's probably more important to keep clear that the company continues to evaluate the best ways to position ourselves for better top line and cost performance in 2025 and beyond. As such, the wider range gives us valuable flexibility to take as much action as needed to set ourselves up for significant improvement. In terms of free cash flow expectations, I view the significant cash outflow as really unacceptable in the context of the scale, profitability, and capital efficiency of our business, and I prioritize reviewing opportunities to improve our cash conversions.

Speaker Change: While I'd love to be more specific, I think it's probably more important to keep clear that the company continues to evaluate the best ways to position ourselves for better top line and cost performance in 2025 and beyond.

Speaker Change: and now, such.

Speaker Change: The wider range gives us valuable flexibility to take as much action as needed to set ourselves up for significant improvement.

Doug Ostermann: In terms of free cash flow expectations, I view the significant cash outflow as really unacceptable in the context of the scale, profitability, and capital efficiency of our business, and I prioritize reviewing opportunities to improve our cash conversions. On the topic of what this means for capital return support in 2025 and beyond, what I can say right now is that the company's robust balance sheet puts it in a place to weather what we're projecting to be cash outflows in 2024 without needing to change our long-term return practices.

Speaker Change: in terms of pre-cast reflectations.

Speaker Change: I view the significant cash outflow as really unacceptable in the context of the scale, profitability and capital efficiency of our business. And I prioritize reviewing opportunities to improve our cash conversion.

Doug Ostermann: On the topic of what this means for capital return support in 2025 and beyond, what I can say right now is that the company's robust balance sheet puts it in a place to weather what we're projecting to be cash outflows in 2024 without needing to change our long-term return practices. We will continue to rely on the capital policies that define our dividend payout and liquidity needs as a starting point on how we calibrate the 2025 capital return program in early 2025. Before we open it up for Q&A, let me recap the main messages. We're currently grinding through a transition year, which has included a mix of challenging industry dynamics, the temporary impacts of upgrading our product portfolio, and significant costs of resolving operational issues.

Speaker Change: On the topic of what this means for a cathedral return support in 2025 and beyond.

Speaker Change: What I can see right now is that the company's robust down sheet.

Speaker Change: Put it in a place to weather what we're projecting to be cash outflows in 2024 without needing to change our long-term return practices.

Doug Ostermann: We will continue to rely on the capital policies that define our dividend payout and liquidity needs as a starting point on how we calibrate the 2025 capital return program in early 2025. Before we open it up for Q&A, let me recap the main messages. We're currently grinding through a transition year, which has included a mix of challenging industry dynamics, the temporary impacts of upgrading our product portfolio, and significant costs of resolving operational issues.

Speaker Change: We will continue to rely on the capital policies that define our dividend payout and liquidity needs.

Speaker Change: has a starting point on how we calibrate the 2025 Capital Return Program in early 2025.

Speaker Change: So before we open it up for Q&A, let me recap the main messages.

Speaker Change: We're currently grinding through a transition year, which has included a mix of challenging industry dynamics, the temporary impacts of upgrading our product portfolio and significant cost of resolving operational issues.

Doug Ostermann: I'm very much looking forward to working with this leadership team and thousands of Stellantis associates globally to deliver on the benefits of our leading scale, and increasingly leveraging the powerful new platforms which are now finally beginning to come to market. Of course, maximizing the advantages of our portfolio of iconic brands. Thanks for your attention, and I'll now hand it over to our operator to open up the Q&A.

Speaker Change: I'm very much looking forward to working with this leadership team and thousands of so-ons to associate globally to deliver on the benefits of our leading scale.

Speaker Change: and increasingly leveraging the powerful new platforms which are now finally beginning to come to market. And of course maximizing the advantages of our portfolio of iconic brands.

Speaker Change: Thanks for your attention and I'll hand it over to our operator to open up the Q&A.

Operator: Thank you, sir. You have the opportunity to ask questions by typing star one on your telephone keypad. Please do not exceed one question and, if necessary, a related one. The first question comes from the line of George Galliers from Goldman Sachs. Your line is open. Please go ahead.

Speaker Change: Thank you sir, you have the opportunity to ask questions by typing star one on your telephone keypad. Please do not exceed one question and if necessary, it related one.

Speaker Change: The first question comes from the line of George Gulliers from Goldman Sachs. Your line is open. Please go ahead.

George Galliers: Yeah. Hi, Doug. Welcome to the new position, and congratulations, and thank you for taking the question. The question I had was just with respect to the inventory situation in North America. Obviously, this target of 330,000 units was set, I think, before you assumed the role, and I just wanted to get your thoughts on that target and whether or not you think it's enough. If I do some sort of rough math, assume a 16 million SAAR, I assume that your market share is around 8%, then I think that at 330,000 units, your day supply will still be fairly elevated in the context of peers.

George Gulliers: Hi dog, welcome to the new position in congratulations and thank you for taking the question. The question I had was just with respect to the inventory situation in North America.

George Gulliers: Obviously, this target of 330,000 units was set. I think before you assumed the role, and I just wanted to get your thoughts on that target and whether or not you think it's enough.

George Gulliers: If I do some sort of rock maps, a few, a 16 million stars, a few that your market share is around 8%.

George Gulliers: Then I think that at 330,000 units, your day supply will still be fairly elevated in the context of peers.

George Galliers: Actually, to get to GM, which we'll describe as best in class at this point, you'd actually need to see the inventory at closer to 280,000 units. Really the question I had was, do you see scope, and would you like to go further than the 330,000 units to get your day supply to a similar level to GM's? The alternative obviously would be that you improve your market share. If that is the case, how do you intend to do that? Will you do that through pricing, or do you have new products that you believe can help address the market share situation in the near term? Thank you.

George Gulliers: and actually to get to GM, which will describe this best in class at this point, you'd actually need to see the inventory closer to 280,000 units. So really the question I had was...

Speaker Change: Do you see scope and would you like it to go further than 330,000 units to get your day supply to a similar level to GM?

Speaker Change: The alternative obviously would be that you improve your market share. If that is the case, how do you intend to do that? Will you do that through pricing? Or do you have new products that you believe can help address the market share situation in the near term? Thank you.

Doug Ostermann: Yeah, George, thanks for the question. A couple things to say on that. You know, we're really normalizing the inventory in North America and the US, specifically is a very important, short-term corrective action for us. That's why we have been working so hard at it and have accelerated the timeline. Right now, you know, as I mentioned, we have a good line of sight to hit the initial target of 330 before the end of November. I think that's a great achievement for the team. That being said, at the same time, we are working clearly on sales effectiveness. When we think about, you know, days supply, we're really trying to hit it from both angles, right?

Speaker Change: Good George, thanks for the question.

Speaker Change: Couple of things to say on that. One, you know, that really normalizes the inventory in North America and in the US.

Speaker Change: Specifically is a very important short-term corrective action for us. And that's why we have been working so hard at it and accelerate the timeline.

Speaker Change: and right now, you know, as I mentioned, we have a good line of sight to hit the initial target of 330 before the end of November. So I think that's a great achievement for the team. That being said at the same time, we are working clearly on sales effectiveness.

Doug Ostermann: When we think about, you know, days supply, we're really trying to hit it from both angles, right? We're not satisfied with the sales pace and, of course, the inventory level, which combined with the days supply. I think, you know, roughly we're around probably 85 days supply right now. We certainly don't intend to stop working on all those things that are improving our market share and accelerating our market share improvement. That's a big focus for all of us. I have just relocated to North America.

Speaker Change: and so when we think about in days to fly, we're really trying to hit it from both angles, right? We're not satisfied with the sales pace.

Doug Ostermann: We're not satisfied with the sales pace and, of course, the inventory level, which combined with the days supply. I think, you know, roughly we're around probably 85 days supply right now. We certainly don't intend to stop working on all those things that are improving our market share and accelerating our market share improvement. That's a big focus for all of us. I have just relocated to North America. I'm gonna be working very closely with the North American team on all of our initiatives around sales effectiveness. I think, like I said, we've seen some good progress, some early signs that the things we're putting in place are working, but clearly we wanna get the sales rate up so that ultimately the days supply is lower than we're at today.

Speaker Change: and of course the inventory level which combined with it is a fight.

Speaker Change: I think you know, roughly we're around probably 85 days supply right now and we certainly don't intend to stop working on all those things.

Speaker Change: that are improving our market share and accelerating our market share improvement.

Speaker Change: and Big Big Focus.

Speaker Change: for all of us. And I'm...

Speaker Change: Ev just relocated to North America on to be working.

Doug Ostermann: I'm gonna be working very closely with the North American team on all of our initiatives around sales effectiveness. I think, like I said, we've seen some good progress, some early signs that the things we're putting in place are working, but clearly we wanna get the sales rate up so that ultimately the days supply is lower than we're at today.

Speaker Change: Very closely with the North American team on all of our initiatives around sales effectiveness. I think, like I said, we've seen some good progress, some early signs that the things we're putting in place are working, but clearly we want to get the sales right up so that ultimately the day supply is lower than we're at today.

George Galliers: Great. Thank you.

Speaker Change: Great, thank you.

Doug Ostermann: Thank you.

Speaker Change: Thank you.

Operator: The next question comes from the line of José Asumendi from J.P. Morgan. Please go ahead.

Speaker Change: The next question comes from the line of Jose Asumendi from JP Morgan. Please go ahead.

José Asumendi: Thank you. Hi, Doug. Most welcome. It's Jose from J.P. Morgan. A couple of questions, please. When we think about the pricing and inventory situation in North America, I'm wondering if there are any processes which need to be changed in the house in order to keep a tighter control over these metrics, which eventually will allow you to reduce the earnings volatility in the region. And also, you know, any changes in how you plan to monitor financials in general across the group. The second question follow-up would be related to the dividend payment. I know it's very early days, but in the light of the severe cash burn in 2024, is the dividend policy still in place for next year? Thank you.

Jose Asumendi: Thank you, my dog, most welcome, it's Jose

Jose Asumendi: and I have a question please, when we think about the pricing and inventor's situation in North America. The wondering if there are any processes which need to be changed in the house in order to keep a tighter control over these metrics.

Jose Asumendi: with Rensley will allow you to reduce the earnings volatility in the region. And also, you know, any changes in how you plan to monitor financials in general across the group.

José Asumendi: And also, you know, any changes in how you plan to monitor financials in general across the group. The second question follow-up would be related to the dividend payment. I know it's very early days, but in the light of the severe cash burn in 2024, is the dividend policy still in place for next year? Thank you.

Jose Asumendi: The second question follow-up would be related to the dividend payment, I know it's very early days, but in the light of the severe cash per 2020-24, is that dividend policy still in place for next year. Thank you.

Doug Ostermann: Yeah. Thanks for the question, José. Yes, on your first question around pricing and what sort of things are we doing on the pricing front. You know, there's a couple of things that the new team that's been put in place is very focused on. One, of course, is working on the entire funnel, right? We don't wanna only be focused on price because we know that consumers love our brands and they're willing to pay a premium for our brands and recognize the technology and the value that we're bringing to the market.

Speaker Change: Yeah, thanks for the questions, Jose.

Speaker Change: It's on your first question around price and what sort of things are we, are we doing on the pricing front? You know there's a couple of things that the new team that's been put in place is very focused on.

Speaker Change: One of course, is working on the entire funnel, right? We don't want to only be folks on price because...

Speaker Change: We know that consumers love our brands and they're willing to pay a premium for our brands and recognize the technology and the value that we're bringing to the market. So really we're trying to work across the entire funnel and that means

Doug Ostermann: Really, we're trying to work across the entire funnel, and that means getting our share of voice at the top of the funnel to make sure that consumers are aware of all the great products that we're bringing out, working more closely with our dealers on all the leads that we're generating to make sure that those people get into the dealerships where the dealers can really help them understand the product and get them in the product. Because really, that's where people fall in love with our products, right? Of course, the pricing elements. But to add to that on the pricing element to convert people into sales, you know, so many people are really shopping on, you know, a payment.

Speaker Change: Getting our share of boys at the top of the funnel to make sure that consumers are aware of all the great products that we're bringing out.

Speaker Change: Working more closely with our dealers on all the leads that we're generating to make sure that those people get into the dealerships where the dealers can really help them understand the product and get them in the product.

Speaker Change: because really that's where people follow in level of our products, right? And then of course the pricing elements, but to add to that on the pricing element to convert people into sales, you know, so many pre-pricing are really shopping on, you know, payment.

Doug Ostermann: But to add to that on the pricing element to convert people into sales, you know, so many people are really shopping on, you know, a payment. Getting the right lease programs out there, getting the right subvention programs out there to really hit those sweet spots, you know, in terms of payment, is a big focus for the team as well. Now the other thing I mentioned that I'll just outline again is that on a number of products, we're looking also at the MSRPs.

Doug Ostermann: Getting the right lease programs out there, getting the right subvention programs out there to really hit those sweet spots, you know, in terms of payment, is a big focus for the team as well. Now the other thing I mentioned that I'll just outline again is that on a number of products, we're looking also at the MSRPs. There are three Jeep products that we have identified already, on the 2025 models, will go out with a price adjustment, but then also bring down the incentive spend. We believe that that provides more transparency to the consumer and also, of course, makes the products much more approachable, right? From an MSRP standpoint.

Speaker Change: and so getting the right lease programs out there, getting the right Subvention programs out there to really hit those sweet spots in terms of payment is a big focus.

Speaker Change: for the team as well. Now, the other thing I mentioned.

Speaker Change: Um, they're all just out right again.

Speaker Change: is that on a number of products we're looking also at the MSRP's. And so there are 3G products with it identified already.

Doug Ostermann: There are three Jeep products that we have identified already, on the 2025 models, will go out with a price adjustment, but then also bring down the incentive spend. We believe that that provides more transparency to the consumer and also, of course, makes the products much more approachable, right? From an MSRP standpoint. We think that's gonna pay dividends for us, you know, in terms of the sales area. We've gotten pretty good receptivity to that idea, but you know, we still have to play it out to see how it works in the marketplace. There's a lot of things that we're working on there, José.

Speaker Change: that we're on the 2025 models, we'll go out with the price adjustment, but then also bring down the incentive spent.

Speaker Change: We believe that that provides more transparency to the consumer and also, of course, makes the products much more approachable, right, from an MSRP standpoint. We think that's going to pay dividends for us.

Doug Ostermann: We think that's gonna pay dividends for us, you know, in terms of the sales area. We've gotten pretty good receptivity to that idea, but you know, we still have to play it out to see how it works in the marketplace. There's a lot of things that we're working on there, José. Let me try to address your second question now. I know you asked about the cash burn and the dividend policy that's in place and what the outlook could be for 2025. Look, you know, even though, of course, you know, as a person who spent a lot of time as a group treasurer, you know, I'm very disappointed by the cash conversion that we've got going on.

Speaker Change: You know, in terms of sales area and we've gotten pretty good receptivity to that idea, but we still have to play it out to see how it works in the marketplace. But there's a lot of things that we're working on there. Let me try to address.

Doug Ostermann: Let me try to address your second question now. I know you asked about the cash burn and the dividend policy that's in place and what the outlook could be for 2025. Look, you know, even though, of course, you know, as a person who spent a lot of time as a group treasurer, you know, I'm very disappointed by the cash conversion that we've got going on. You know, we fundamentally have a strong balance sheet, we have strong liquidity, and we have faith in the ability of our business model to perform. You know, a lot of the things that we talked about during the call, these are temporary operational issues.

Speaker Change: Your second question now. I know you asked about the cash burn and the dividend policy that's in place and what the outlet could be for 2025.

Speaker Change: Look, you know, even though, of course,

Speaker Change: You know, as a person, he spent a lot of time as a group director, you know, I'm very disappointed by...

Speaker Change: by a cash conversion that we've got going on. You know, we fundamentally have a strong balance sheet. We have strong liquidity. And...

Doug Ostermann: You know, we fundamentally have a strong balance sheet, we have strong liquidity, and we have faith in the ability of our business model to perform. You know, a lot of the things that we talked about during the call, these are temporary operational issues. We're very confident in the ability of the business to perform in 2025 and going forward. You know, we certainly have a balance sheet to absorb what is likely to be a negative cash flow this year. That's not something that's of the magnitude, in my opinion, to change, you know, our policy going forward.

Speaker Change: We have faith in the ability of our business model to perform. A lot of the things that we talked about during the call, these are temporary operational issues.

Doug Ostermann: We're very confident in the ability of the business to perform in 2025 and going forward. You know, we certainly have a balance sheet to absorb what is likely to be a negative cash flow this year. That's not something that's of the magnitude, in my opinion, to change, you know, our policy going forward. Those discussions, you know, we have to see how the rest of the year plays out, and have those discussions at the appropriate time, and of course, we'll come back to you after those discussions have taken place.

Speaker Change: So we're very confident in the ability of the business to perform in 2025 and going forward and so

Speaker Change: You know, we certainly have a balance you to absorb what is likely to be a negative cash flow this year and that's not something that's of the magnitude in my opinion to change.

Speaker Change: You know, our policy going forward. But those discussions, we have to see how the rest of the year plays out.

Doug Ostermann: Those discussions, you know, we have to see how the rest of the year plays out, and have those discussions at the appropriate time, and of course, we'll come back to you after those discussions have taken place. I would also say beyond the dividend, you know, on share buybacks, certainly where our stock is trading at right now would lead me to believe that we'll be having a discussion around buybacks as well. Obviously, I can't predict where that'll end, but I think it certainly warrants a discussion for where we're gonna take things in 2025. Thanks for the question, Jose.

Speaker Change: and have those discussions at the appropriate time and of course we'll come back to you after those discussions are taking place. I would also say beyond the dividend, you know, on Chair Bye-Backs.

Doug Ostermann: I would also say beyond the dividend, you know, on share buybacks, certainly where our stock is trading at right now would lead me to believe that we'll be having a discussion around buybacks as well. Obviously, I can't predict where that'll end, but I think it certainly warrants a discussion for where we're gonna take things in 2025. Thanks for the question, Jose.

Speaker Change: Certainly where our stock is trading at right now.

Speaker Change: would lead me to believe that we'll be having a discussion around buybacks as well. Obviously, I can't predict where that'll end, but I think certainly warrants a discussion for where we're going to take things in 2025. Thanks for the question, Jose. Thank you.

José Asumendi: Thank you.

Operator: The next question comes from the line of Thomas Besson from Kepler Cheuvreux. Please go ahead.

Speaker Change: The next question comes from a line of Toma Besson from Captain Shoehru. Please go ahead.

Thomas Besson: Thank you very much. It's Thomas with Kepler Cheuvreux. Welcome as well from my side. Two topics, please, Doug. First, I'd like to come back on the guidance range. You mentioned you like to keep options open, but I'd like you to be a bit more specific on what would imply you're closer to EUR 5.5 or 7, and EUR 5 to 10 billion cash burn, and whether you can help us as well understanding where you are in terms of underlying performance for H2, given the temporary nature of a lot of operational topics you've mentioned. That's the first question. The second, I'd like you to outline the timeline for key new products, not all of them, the key ones in terms of commercial launches and their impact.

Toma Besson: Thank you so much, it's the Master of the K-Plochovat. Welcome as well from my side. Two topics please, Doug Frost. I'd like to come back on the guidance range. You mentioned you like to keep options open, but I'd like you to be a bit more specific on.

Toma Besson: What would imply your closer to 5.5 or 7.5-10 billion cash burn, and whether you can help us as well, understanding where you are in terms of underlying performance for H2 given the temporary nature of a lot of operational topics you mentioned.

Toma Besson: and the first question and the second.

Thomas Besson: The second, I'd like you to outline the timeline for key new products, not all of them, the key ones in terms of commercial launches and their impact. Maybe talk about Ram in the US and how long it takes from a BEV version to a PHEV version. Finally, the timing of the Cherokee successor. One on the guidance and underlying performance, and one on products, please.

Speaker Change: I like you too.

Speaker Change: Goodline, the timeline for key new products, not all of the key ones in terms of commercial lunches and their impact.

Thomas Besson: Maybe talk about Ram in the US and how long it takes from a BEV version to a PHEV version. Finally, the timing of the Cherokee successor. One on the guidance and underlying performance, and one on products, please.

Speaker Change: Maybe talk about frame in the US and how long it takes from a BD station to a P-8 EV station and finally the timing of the Cherokee successor. So one on the guidance and the underlying performance and one on ProxPiece.

Doug Ostermann: Okay. Yeah. On the first one, you know, as I kinda mentioned during the call, right, we don't really see the need to narrow the guidance range at this point. We have just had a change of the management team, the leadership in North America, in Enlarged Europe, and in Maserati and Alfa. We are still developing all the things that we're gonna be implementing to improve the performance through the end of the year. I really don't wanna handcuff the team by providing a really narrow range and take things off the table when they really have only had a couple weeks to evaluate the business and start to plan.

Speaker Change: Okay, yeah, on the first one, you know, as I kind of mentioned during the call, right?

Speaker Change: You know, the word.

Speaker Change: We don't really see the need to narrow the guidance range at this point.

Speaker Change: We're still, we have just had a change of the management team, the leadership in.

Speaker Change: North America.

Speaker Change: in large Europe and in Maserati, Nalphan.

Speaker Change: and so we are still developing all the things that we're going to be implementing to improve the performance through the end of the year.

Speaker Change: So I really don't want to handcuff the team by providing a really narrow range.

Speaker Change: and taking soft-to-table when they really only had a couple weeks to evaluate the business and start to plan. I think we're already seeing some great ideas, and I certainly don't want to hamstring that progress.

Doug Ostermann: I think we're already seeing some great ideas, and I certainly don't want to hamstring that progress. You know, I'm not looking to provide a much narrower range until we have more clarity on all the strategic actions. There's so many great ideas coming forward that, you know, we really need to sort through them and evaluate what we're gonna implement at this point. I think we've got a lot of opportunity with this new team in place. I think your second question was on some of the core launches in North America. You know, I'm certainly very excited about the Dodge Charger Daytona. That is a product that, from my perspective as a car guy, is just amazing. I mean, I love that product.

Speaker Change: So, you know, I'm not looking to provide a much narrow range until we have more clarity on all the all strategic actions. And there's so many great ideas coming forward that, you know, we really need to sort through them and evaluate what we're going to implement at this point. But I think we've got a lot of opportunity with this new team.

Speaker Change: in place. And then I think your second question was on some of the core launches in North America. You know, I'm certainly very excited about the Dodge Charger Daytona, that is the product that...

Doug Ostermann: That is a product that, from my perspective as a car guy, is just amazing. I mean, I love that product. The sooner we can get it out, the better. We are, you know, building batches of those right now. Like I said, everybody in the company is very excited about it. Wagoneer S, same process. We're kind of in the early launch period. Look. You know, the key is, these new products offer a ton of technology, and, you know, in terms of hardware and in terms of software. It really requires an additional level of attention from our entire team to make sure that the quality is absolutely flawless when we launch these vehicles.

Speaker Change: from my perspective as a car guy is just amazing. I mean, I love that product. And the sooner we can get it out the better, we are building batches of those right now.

Doug Ostermann: The sooner we can get it out, the better. We are, you know, building batches of those right now. Like I said, everybody in the company is very excited about it. Wagoneer S, same process. We're kind of in the early launch period. Look. You know, the key is, these new products offer a ton of technology, and, you know, in terms of hardware and in terms of software. It really requires an additional level of attention from our entire team to make sure that the quality is absolutely flawless when we launch these vehicles.

Speaker Change: and like I said, everybody in the company is very excited about it. Wagner S. Same process, we're kind of in the early launch period and look, you know, the key is...

Speaker Change: These new products.

Speaker Change: Offer a ton of technology and you know in terms of hardware and in terms of software.

Speaker Change: and so it really requires an additional level of attention from our entire team to make sure that the quality.

Speaker Change: is absolutely flawless when we launch these vehicles.

Doug Ostermann: Because these early adopters who come in, remember, these are our first BEV products in North America, and the adopters who come in from our brands and get into these initial vehicles, we want their experience to be fantastic, and we want the word of mouth to spread like wildfire, that these are fantastic products. You know, we're really focused on making sure that these products are right, and I think the quality is paramount and needs to take precedence over the exact timing. I think that's the right decision for the business. It's the right decision for our brands long term. Of course, it has financial implications too, right? Because we don't wanna see big warranty expenses on these vehicles and that sort of thing as well.

Speaker Change: Because these early adopters who come in, remember these are our first bed products, Eden North America.

Speaker Change: and the doctors who come in from our brands and get in these initial vehicles.

Speaker Change: We want their experience to be fantastic and we want the word of mouth to spread like wildfire.

Speaker Change: that these are fantastic products. And so, you know, we're really focused on...

Speaker Change: Making sure that these products are right and I think the quality.

Speaker Change: is paramount and needs to take precedence over the exact timing. I think that's the right decision for the business. It's the right decision for our brand's long term. Of course, it's financial implications too, right? Because we don't want to see big warranty expenses on these vehicles, and that sort of thing as well. So it's financially beneficial as well. But we need to make sure that these brands are preserved, and that our customers just have a fantastic experience. Now, I think you asked specifically about the Cherokee.

Doug Ostermann: Of course, it has financial implications too, right? Because we don't wanna see big warranty expenses on these vehicles and that sort of thing as well. It's financially beneficial as well, but we need to make sure that these brands are preserved and that our customers just have a fantastic experience. Now, I think you asked specifically about the Cherokee.

Doug Ostermann: It's financially beneficial as well, but we need to make sure that these brands are preserved and that our customers just have a fantastic experience. Now, I think you asked specifically about the Cherokee. I think we've been clear that that is coming in the second half of 2025. That is clearly a big product gap right now for Jeep, and we're really looking forward to the new Cherokee coming out into the market. That's gonna really fill in some of those gaps that I talked about in the presentation. Thanks for the question.

Doug Ostermann: I think we've been clear that that is coming in the second half of 2025. That is clearly a big product gap right now for Jeep, and we're really looking forward to the new Cherokee coming out into the market. That's gonna really fill in some of those gaps that I talked about in the presentation. Thanks for the question.

Speaker Change: I think we've been clear that that is coming the second half.

Speaker Change: of 2025.

Speaker Change: That is clearly a big product cap right now for Jeep and we're really looking forward.

Speaker Change: To the new Cherokee.

Speaker Change: Coming out into the market and that's gonna really fill in some of those.

Speaker Change: Some of those gaps that I talked about in the presentation.

Speaker Change: So thanks for the question.

Thomas Besson: Thank you, Doug.

Speaker Change: Thank you very much.

Operator: The next question comes from a line of Patrick Hummel from UBS. Please go ahead.

Speaker Change: The next question comes from a line of Patrick Hamel from UBS, please go ahead.

Patrick Hummel: Yeah, thank you. Hi, Doug. First question on the US business. Your launch pipeline for the next few quarters is quite EV heavy, and I'm just wondering what that's gonna do to the mix from a AOI standpoint. Where would you see yourself relative to GM and Ford in terms of EV profitability? You obviously have a very different approach with the multi-energy platforms, and I'm hopeful that profitability would be better for that reason. If you can just give a little bit of context how you see the US mix evolving from an AOI standpoint with these EV launches kicking in over the next few quarters.

Patrick Hamel: Yeah, thank you, hi Doug.

Patrick Hamel: First question on the US business. Your launch pipeline for the next few quarters is quite EV heavy. I'm just wondering what that's going to do to the makes from a A.I. standpoint.

Patrick Hummel: Where would you see yourself relative to GM and Ford in terms of EV profitability? You obviously have a very different approach with the multi-energy platforms, and I'm hopeful that profitability would be better for that reason. If you can just give a little bit of context how you see the US mix evolving from an AOI standpoint with these EV launches kicking in over the next few quarters. My second question, as far as enlarged Europe is concerned, with, you know, despite the delays now, the product ramp-up happening, is Q4 already more or less a normal quarter in Europe, in your view in terms of the run rate?

Patrick Hamel: or where would you see yourself relative to GM and then Ford?

Patrick Hamel: in terms of EV profitability. You obviously have a very different approach with a multi-energy platform. And I'm hopeful that profitability would be better for that reason. But if you can just give a little bit of context how you see the US makes evolving from a AOS 10 point with these EV launches kicking in.

Patrick Hummel: My second question, as far as enlarged Europe is concerned, with, you know, despite the delays now, the product ramp-up happening, is Q4 already more or less a normal quarter in Europe, in your view in terms of the run rate? Is there still a bit of a lag here to be expected that gives us some more momentum in 2025?

Speaker Change: Well, then, next few quarters. And my second question as far as enlarged Europe is concerned.

Speaker Change: and the director, and with despite the delays now the product, the ramp up happening.

Speaker Change: Um...

Speaker Change: is Q4 already more or less a normal quarter in Europe in your view in terms of the run rate.

Patrick Hummel: Is there still a bit of a lag here to be expected that gives us some more momentum in 2025? How in Europe do you think about this complex of CO2 compliance and EV? I'm wondering because there were some comments out of Stellantis you would push for more EVs production schedule from November onwards accordingly. My impression was that Stellantis is doing relatively well compared to competition. Why are you pushing EVs aggressively? You know, are you actually aiming at monetizing a long position in the European CO2 market here? What's the strategy behind? Thank you.

Speaker Change: or is there still a bit of a lag here to be expected that gives us some more momentum in 2025. And how in Europe do you think about this complex of CO2 compliance and EV? I'm wondering because there were some comments out of the launches you would push for more EVs, production schedule from November onwards accordingly. My impression was that the launches are doing relatively well compared to competitions. And so why are you pushing EVs aggressively and are you actually aiming at monetizing a long position in the Europeans your two market here? Or what's the strategy behind? Thank you.

Patrick Hummel: How in Europe do you think about this complex of CO2 compliance and EV? I'm wondering because there were some comments out of Stellantis you would push for more EVs production schedule from November onwards accordingly. My impression was that Stellantis is doing relatively well compared to competition. Why are you pushing EVs aggressively? You know, are you actually aiming at monetizing a long position in the European CO2 market here? What's the strategy behind? Thank you.

Doug Ostermann: Okay. Well, thanks for all the questions. Let me see if I can cover all those. Look, when we look at you know, North America, you know, in our EV mix and EV profitability, it's a little bit tough to predict this time. We're just kind of in the very early stages of the start of production of our first EVs. I can tell you that, you know, we've been pretty open about the fact that we are profitable on our EV products in Europe, and that we are driving with a clear objective to hit profitability parity over time between our BEV products and our ICE products. Now, that's a very challenging goal, but we've been making steady progress on it.

Speaker Change: Okay?

Speaker Change: Well thanks for all the questions. I'm going to check if I can cover all those.

Speaker Change: Look, when we look at...

Speaker Change: North America, you know, in our EV mix and EV profitability.

Speaker Change: It's a little bit tough to predict this time. We're just kind of in the very early stages of the start of production of our first EVs. But I can tell you that we've been pretty open about the fact that we are profitable on our EV products in Europe.

Speaker Change: and that we are driving with a clear objective to hit profitability parity over time between our best products and our ice products.

Speaker Change: Now that's a great challenge in goal that we've been making steady progress on it.

Doug Ostermann: It's probably gonna take a few more years, frankly, for some of the EV componentry, battery cell prices, et cetera, to come down. We're very, very focused on that. You know, North America, you know, of course, we are excited about these BEV products. I think customers are gonna love them. But I think, even if they have very successful launches, ultimately, they're in 2025 still gonna be a pretty small percentage of our North American mix. Now, when we look at Europe, to your question about BEVs, well, look, you know, the regulations are getting much stricter in Europe, and we've known that for a long time. We've made the investments.

Speaker Change: and it's probably going to take a few more years, frankly, for some of the EV componentry, battery, cell prices, etc to come down, but we're very, very focused on that.

Speaker Change: and in North America, you know, of course.

Speaker Change: We are excited about these bad products, I think customers are going to love them. But I think even if they have very successful watches, ultimately they're in 25, they're still going to be a pretty small percentage of our North American mix.

Speaker Change: Now, when we look at Europe to your question about that as well, look, you know, that the regulations are getting much stricter in Europe and we've known that for a long time. So we've made the investments.

Doug Ostermann: We've made the investments. We have a fantastic lineup that is deep and long across all of our brands of BEV products. Not just 'cause the regulations, of course, but because we think BEV products are very exciting, and we think our customers, you know, are exciting. I talked about a couple of them and the high percentage BEV mix that we have among the initial customer orders. That's very encouraging, of course.

Doug Ostermann: We have a fantastic lineup that is deep and long across all of our brands of BEV products. Not just 'cause the regulations, of course, but because we think BEV products are very exciting, and we think our customers, you know, are exciting. I talked about a couple of them and the high percentage BEV mix that we have among the initial customer orders. That's very encouraging, of course. Now, when we think about Europe's performance next year, and you ask the question is, you know, kind of this quarter and next quarter really kind of at what we expect to see in terms of European performance for 2025?

Speaker Change: We have a fantastic lineup that is deep and long across all of our brands.

Speaker Change: of Bad Products.

Speaker Change: and not just because of regulations of course but because we think that products are very exciting. And we think our customers, you know, are exciting and I talked about a couple of them and the high percentage that makes that we have among the initial customer orders. So that's very encouraging of course. Now, when we think about...

Doug Ostermann: Now, when we think about Europe's performance next year, and you ask the question is, you know, kind of this quarter and next quarter really kind of at what we expect to see in terms of European performance for 2025? I would say no, because we still have a lot of products that will launch in the first half of 2025 across our brands. I mentioned a number of them in the presentation, but those are certainly going to add to our product offer and a lot of segments that we're blank in right now and, you know, should help to drive more volumes and market share. Thanks for the question.

Speaker Change: Europe's performance next year, and you ask the question is this quarter and next quarter really kind of that what we'd expect to see in terms of European performance.

Doug Ostermann: I would say no, because we still have a lot of products that will launch in the first half of 2025 across our brands. I mentioned a number of them in the presentation, but those are certainly going to add to our product offer and a lot of segments that we're blank in right now and, you know, should help to drive more volumes and market share. Thanks for the question.

Speaker Change: for 2025. I would say no, because we still have a lot of products that will launch.

Speaker Change: in the first half of 2025. Across our brands, I mentioned a number of them in the presentation, but those are certainly going to add to our product offer and a lot of segments that we're blank in right now and should help to drive more volumes in market share.

Speaker Change: Thanks for your question, I'll go. Thanks.

Patrick Hummel: Thanks.

Operator: The next question comes from the line of Bruno dos Santos from Wolfe Research. Please go ahead.

Operator: The next question comes from the line of Bruno Dossena from Wolfe Research. Please go ahead.

Speaker Change: The next question comes from a line of Bruno the Sender from Vols Research, is Go ahead.

Bruno dos Santos: Hi, thanks Doug for taking the questions. Look, I recognize the progress the company's already made destocking inventories. But to me, I think the key issue is sell-through, not supply. We've heard Stellantis talk about changes to sales and marketing strategies, including shifts between MSRPs and incentives for most of this year. During this time, sell-through in the US has remained stable but at very low levels. To me, the simplest answer is that too many consumers cannot afford Stellantis vehicles or are not willing to pay that premium. I was hoping you could give us more context around how you and the new management team may rethink the overall pricing strategy, or if you are rethinking the overall pricing strategy, or at what point would it be time to actually make a change?

Bruno Dossena: Hi, thanks Doug for taking the questions. Look, I recognize the progress the company's already made destocking inventories. But to me, I think the key issue is sell-through, not supply. We've heard Stellantis talk about changes to sales and marketing strategies, including shifts between MSRPs and incentives for most of this year. During this time, sell-through in the US has remained stable but at very low levels.

Speaker Change: I think Doug for taking the questions.

Speaker Change: I recognize the progress the company has already made destocking inventories, but to me I think the key issue is self-route, not supply.

Speaker Change: We've heard Celantis talk about changes to sales and marketing strategies, including shifts between MSRPs and incentives for most of this year. During the time, self-through in the U.S. has remained.

Speaker Change: Sabel, but at very low levels.

Bruno Dossena: To me, the simplest answer is that too many consumers cannot afford Stellantis vehicles or are not willing to pay that premium. I was hoping you could give us more context around how you and the new management team may rethink the overall pricing strategy, or if you are rethinking the overall pricing strategy, or at what point would it be time to actually make a change? Thanks.

Speaker Change: To me, the simplest answer is that too many consumers cannot afford salantice vehicles or are not willing to pay that premium.

Speaker Change: So I was hoping you could give us more context around how you and the new management team.

Speaker Change: May rethink the overall pricing strategy, or if you are resting in the overall pricing strategy, or at what point would it be time to actually make a change? Thanks.

Bruno dos Santos: Thanks.

Doug Ostermann: Okay. Thanks for the question. You know, you, Bruno, you hit on a couple of different topics there. You know, in terms of sales momentum, you know, we are seeing some positive signs, as I mentioned, from some of the changes that we've already made here in terms of the quality of the leads. Of course, quality qualified leads take a bit of time to work through the funnel. I think we're gonna be seeing further improvements as the months roll on, reflecting the changes that we've made in strategy. Certainly, we're not gonna stop there. I agree with you. We need to improve sell-through. You're absolutely right. It can't just be that we're gonna, you know, reduce production, reduce inventory, and not do anything on sell-through.

Speaker Change: But thanks for the question and you know you.

Speaker Change: We're going to leave it on a couple of different topics there.

Speaker Change: You know, in terms of sales momentum, you know, we are seeing some positive scientists I mentioned from some of the changes that we've already made here in terms of the quality of the leads and of course.

Speaker Change: Quality, qualified leaves, take a bit of time to work through the funnel. So I think we're going to be seeing further improvements as the months roll on reflecting the changes that we've made in strategy. But certainly we're not going to stop there.

Speaker Change: I agree with you. We need to improve cell throat. You're absolutely right. It can't just be that we're going to reduce production, reduce inventory and not do anything on cell throat. Clearly, we've got to hit it from both angles.

Doug Ostermann: You're absolutely right. It can't just be that we're gonna, you know, reduce production, reduce inventory, and not do anything on sell-through. Clearly, we've got to hit it from both angles. I think we've got a team that clearly understands that in the new leadership. We're very active at looking at what are the most effective methods of moving our customers. Frankly, finance can play an important role in that, in looking at the effectiveness of all of our strategies and all of our spend and making sure that we're maximizing our spend. I agree with you. I also, you know, would like to talk a little bit about affordability.

Doug Ostermann: Clearly, we've got to hit it from both angles. I think we've got a team that clearly understands that in the new leadership. We're very active at looking at what are the most effective methods of moving our customers. Frankly, finance can play an important role in that, in looking at the effectiveness of all of our strategies and all of our spend and making sure that we're maximizing our spend. I agree with you. I also, you know, would like to talk a little bit about affordability. Because that is a challenge, frankly, for the entire industry. As you know, at Stellantis, you know, we see our goal as providing clean, safe, affordable freedom of mobility to all, right?

Speaker Change: and I think we've got a team that clearly understands that in the new leadership and we're very active at looking at what are the most effective.

Speaker Change: of methods of moving our customers and frankly finance can play an important role in that. And looking at the effect of this.

Speaker Change: of all of our strategies and all of our spent and making sure that we're maximizing our spend. So I agree with you. I also, you know, would like to talk a little bit about affordability. Because that is a challenge, frankly, for the entire...

Doug Ostermann: Because that is a challenge, frankly, for the entire industry. As you know, at Stellantis, you know, we see our goal as providing clean, safe, affordable freedom of mobility to all, right? That affordability piece of it is particularly challenging because as the industry continues to introduce more and more technology on many vehicles, you know, the OEMs have been walking away from absolute affordability. One of, you know, my big to-do list items now as the new CFO is to really look at cost, look at affordability, and work on that over time.

Speaker Change: Industry, and as you know, at Stalanches.

Speaker Change: You know, we see our goal as providing clean, safe, affordable, free of mobility at all, right? And so that affordability piece of it is firstly to the challenge because as the industry continues to introduce more and more technology.

Doug Ostermann: That affordability piece of it is particularly challenging because as the industry continues to introduce more and more technology on many vehicles, you know, the OEMs have been walking away from absolute affordability. One of, you know, my big to-do list items now as the new CFO is to really look at cost, look at affordability, and work on that over time. Because you're right, it's a huge issue for us. It's a huge issue for the industry in general. Now, luckily, you know, we have a great leader in Carlos Tavares, who is laser focused on cost, right? This is one area where I think I'm gonna get a lot of support and guidance.

Speaker Change: On many vehicles, you know, that the OEMs have been walking away from absolute affordability.

Speaker Change: and so one of my big to-do list items now as the new CFO is to really...

Speaker Change: Look at cost.

Speaker Change: Look at affordability and work on that over time because you're right. It's a huge issue for us, it's a huge issue for the industry in general. Now, luckily.

Doug Ostermann: Because you're right, it's a huge issue for us. It's a huge issue for the industry in general. Now, luckily, you know, we have a great leader in Carlos Tavares, who is laser focused on cost, right? This is one area where I think I'm gonna get a lot of support and guidance. Clearly it's a very important piece of what we need to get done in the business. Thanks for the question.

Speaker Change: I, you know, we have a great leader in Carlos Tavares, who is laser focused on cost, right? So this is one area where I think I'm going to get a lot of support and guidance, but but clearly it's a very important piece of what we need to get done in the business.

Doug Ostermann: Clearly it's a very important piece of what we need to get done in the business. Thanks for the question.

Speaker Change: So thanks for your question.

Bruno dos Santos: Thanks. If I could just ask a quick follow-up. On free cash flow, it's low this year, and it's clearly being impacted by lower earnings, but there's also significant headwinds from negative working capital and other accruals associated with the lower volume. I was hoping you could give some context around the magnitude of the working capital and other headwinds so we can get a cleaner free cash flow ex working capital bridge as we or starting point as we bridge to 2025 free cash flow. Thank you.

Bruno Dossena: Thanks. If I could just ask a quick follow-up. On free cash flow, it's low this year, and it's clearly being impacted by lower earnings, but there's also significant headwinds from negative working capital and other accruals associated with the lower volume. I was hoping you could give some context around the magnitude of the working capital and other headwinds so we can get a cleaner free cash flow ex working capital bridge as we or starting point as we bridge to 2025 free cash flow. Thank you.

Speaker Change: Thanks, if I could just ask a quick follow up on free cash flow.

Speaker Change: Look, it's low this year and it's clearly being impacted by lower earnings, but there's also significant headwinds from negative working capital and other accruals associated with the...

Speaker Change: with the lower volume. So I was helping you, hoping you could give some context around the magnitude of the working capital and other headwind so we can get a cleaner free cash for the working capital bridge as we are starting point as we bridge to 25 for cash for the cash for the cash.

Doug Ostermann: Yeah. I mean, I think the earnings piece, you know, you can get from kind of our AOI guidance kind of the range at which we're going to end up there. Of course, there is a working capital impact from the lower production volumes and the negative working capital cycle in the industry, right? As we've cut production in Q3, that has impacted us. What will really matter there for where we end up year-end, of course, is how hard we run during kind of the last 6 to 8 weeks of the year in terms of our plans. That's why I'm excited, of course, about the marketing initiatives that are starting to show positive signs.

Speaker Change: Yeah, I think the earnings piece, you know, you can get from kind of our AOI guidance.

Speaker Change: and the Ranger, which we're going to end up there. And of course, there is a working capital impact from the lower production volumes.

Speaker Change: and the Executive Working Capital cycle in the industry, right? And so as we've cut production in third quarter, that has impacted us. What will really matter there for where we end up year end, of course, is how hard we run during kind of the last six to eight weeks.

Speaker Change: of the year in terms of our plants and that's why I'm excited to, of course, about.

Speaker Change: The Marketing Initiatives, the starting show, Paws, is a science, because we need a strong order book to run strong during kind of the final period of this year. And that's going to have a big impact on where we finish from a cash perspective, of course.

Doug Ostermann: Because we need a strong order book, to run strong during kind of the final period of this year. That's gonna have a big impact on where we finish from a cash perspective, of course. That also is important for 2025, right? That we continue to build the order book. Because frankly, you know, when we are bringing down plans to correct inventory, you know, short-term inventory issues and starting that back up, we run into a lot of the kind of off-standard costs. Of course, we don't have as much volume to spread our fixed costs across. There's a lot of knock-on effects.

Speaker Change: That also is important for 2025, right, that we continue to build the order book.

Speaker Change: because frankly, you know, when we are bringing down plants to correct.

Speaker Change: Immentory, you know, short term inventory issues and starting the back, back up.

Speaker Change: We run into a lot of kind of off-steering costs. Of course we don't have as much volume to spread our fixed cost across as a lot of knock on it.

Doug Ostermann: We really need to get into a position where we've right-sized the inventory, we've built up the order book, and then we can run very efficiently in 2025, and that's gonna help us, as I said, spread fixed costs, improve our margins, et cetera. It's really important that we finish this year in the right way with the business really aligned. Thanks for the question.

Speaker Change: A facts, and so we really need to get into a position where we've right-sized the inventory, we've built up the order book, and then we can run very efficiently in 2025, and that's going to help us, as I said, spread fixed costs, improve our margins, et cetera, so it's really important.

Speaker Change: that we finished this year in the right way with the business really aligned.

Speaker Change: So thanks for the question.

Operator: The next question comes from the line of Philippe Houchois from Jefferies. Please go ahead.

Speaker Change: The next question comes from relying on silly push-wars from Jeffries, please go ahead.

Philippe Houchois: Yes, thank you very much, and congratulations on your responsibilities. I have two questions. The first one is, talk about this captive finance organization that you've been trying to build in the US. With all the changes in pricing and maybe more limited capital at your disposal to build El Cinco, how is that proceeding? And do you see the current situation as helpful, or is that kind of impairing your ability to actually, you know, improve that sell-through, which I completely agree is as important as the supply side of the equation?

Speaker Change: Yes, thank you very much and that congratulations on your responsibilities. I have two questions. The first one is talk about this captive finance organization that you've been...

Speaker Change: Tried to build in the US with all the change in pricing and maybe more limited capital at your disposal to build a single. How is that proceeding?

Speaker Change: and do you see in a constitution as helpful or is that kind of impairing your ability to actually know improved that self-through which I come to do agree is as important as the supply side of the equation.

Doug Ostermann: Yeah, I've been a proponent of us having, you know, a captive finance organization for a long time, so I'm very happy to see it building up in the United States. You know, a captive finance organization that is well run is not only a great profit opportunity, but it's a great loyalty tool. You know, clearly, if you look, I believe some of our competitors have been transparent about this as well. If you look at customers that are financed by your captive, the loyalty rates are much higher. Why?

Speaker Change: Yeah, I've been a proponent of us having, you know, a captive financialization for a long time, so I'm very happy to see it building up in the United States. You know, a captive financialization that is well run is not only a great profit opportunity, but it's a great loyalty tool.

Speaker Change: You know clearly if you look.

Speaker Change: and I believe some of our competitors have been transparent about this as well. If you look at customers that are financed by your captive.

Speaker Change: The World Re-Rates are much higher.

Doug Ostermann: Because you know when they're coming back to market and your captive finance group has a clear incentive to get them back into one of your vehicles, as opposed to, you know, the banks that we partner with who just wanna get you into a vehicle again. You know, the captive really has an opportunity also to have a relationship with the customer over the entire life cycle, the entire ownership, and then, of course, come out with offers for that vehicle and conversion offers. There's a lot of loyalty advantages there. I'm very excited. Now, of course, as you know, you know, we bought a subprime lender, and it does take time to build out all the pieces of the business. Of course, we're building out the book of prime.

Speaker Change: Why? Because you know when they're coming back to market and you're kept to find in-screw.

Speaker Change: has a clearance set of to get them back into one of your vehicles.

Speaker Change: as opposed to the banks that we partner with who just want to get you into a vehicle again.

Speaker Change: You know, the captive really has an opportunity also to have a relationship with the customer over the entire life cycle, the entire ownership and then of course come out with offers for that vehicle and and and converting offers and so there's a lot of way of being there and so I'm very excited. Now of course as you know.

Doug Ostermann: Now, of course, as you know, you know, we bought a subprime lender, and it does take time to build out all the pieces of the business. Of course, we're building out the book of prime. We're building out the wholesale floor plan. We're building out lease. Of course, lease, as you know, is so important to the market today, getting at the right lease rates, particularly as we enter into, you know, the BEV mix, where there's just frankly a lot of leasing, right? It's gonna be a very important tool for us. Now, in terms of you asked the question of, you know, is capital constraint gonna keep us from building the book there?

Speaker Change: We bought a surprise lender and it does take time to build out all the pieces.

Speaker Change: of the business. So of course we're building out the book of prime, we're building out the whole cell floor plan. We're building out lease. And of course, lease, as you know, is so important to the market today getting the right lease rates.

Doug Ostermann: We're building out the wholesale floor plan. We're building out lease. Of course, lease, as you know, is so important to the market today, getting at the right lease rates, particularly as we enter into, you know, the BEV mix, where there's just frankly a lot of leasing, right? It's gonna be a very important tool for us. Now, in terms of you asked the question of, you know, is capital constraint gonna keep us from building the book there? I would say the answer is no. We, you know, the book is expanding rapidly, and we're very happy to see that the progress that the team has made there. Yeah, we're gonna continue to support that business as it grows.

Speaker Change: Particularly as we enter into the Bez Mix.

Speaker Change: where there's just frankly a lot of leasing, right? So it's going to be a very important tool for us. Now in terms of the question of, you know, is Capricorn strain going to keep us from building the book there? And I would say the answer is now.

Doug Ostermann: I would say the answer is no. We, you know, the book is expanding rapidly, and we're very happy to see that the progress that the team has made there. Yeah, we're gonna continue to support that business as it grows. It's, you know, still relatively small compared to what we see at our competitors, right?

Speaker Change: We're keeping in the book, is it spanning rapidly and we're very happy to see that. The progress that the team has made there, but yeah, we're going to continue to support that business as it grows. But it's, you know,

Doug Ostermann: It's, you know, still relatively small compared to what we see at our competitors, right?

Speaker Change: Still relatively small compared to what we see at our competitors, right?

Philippe Houchois: Yeah, indeed. If I can follow up with another question, I always have an issue a bit with your balance sheet at Stellantis or before the predecessor companies, because you have a lot of net cash these days, but also a lot of negative net working capital, as touched upon. Your predecessor said they would reduce the negative net working capital. What I've seen so far is, yes, you sell fewer receivables, but you keep, you know, having very long payables. That inflates the cash flow in good years, and that creates a big cash burn when all of a sudden you have declines in volume, even without the destocking impact.

Speaker Change: Yep indeed, and if I can follow with another question is...

Speaker Change: I always have an issue with what you balance, you know, it's still anti-issel, before the process of companies because you have a lot of neck-cash these days but also a lot of negative neck-cooking capital has touched upon.

Speaker Change: Your predecessor said they would reduce the negative networking capital, what I've seen so far is, yes you sell fewer receivables, but you keep no having very long payables.

Speaker Change: and that inflates the cash for ingredients and that creates a big cash burn when all of the sun you have declines in volume even without the destocking impact.

Doug Ostermann: Mm-hmm.

Philippe Houchois: Where do you stand on this? Are you determined to, you know, properly reduce that negative working capital and especially improve the risk profile of the balance sheets? Because it's not as strong as it looks, basically.

Speaker Change: So what do you stand on this? Are you determined to probably reduce that negative working capital and especially improve the risk-profile balance sheet because it's not as strong as it looks basically.

Doug Ostermann: I understand your point. Look, you know, if you look at our half-year numbers, right, the Q2 figures that we put out, if you look then focus on the trade working capital-

Doug Ostermann: I understand your point. Look, you know, if you look at our half-year numbers, right, the Q2 figures that we put out, if you look then focus on the trade working capital- We're not that far off of neutral trade working capital. We are making progress on that. I think we had previously some of my predecessor CFOs had said, you know, we kinda would like to be at neutral working capital kind of by 2026 or so.

Speaker Change: I understand your point up, you know, if you look at our half-year numbers, right, the Q2 figures that we put out.

Speaker Change: If you look then focus on the trade working capital. We're not that far off of neutral trade working capital.

Philippe Houchois: Mm.

Doug Ostermann: We're not that far off of neutral trade working capital. We are making progress on that. I think we had previously some of my predecessor CFOs had said, you know, we kinda would like to be at neutral working capital kind of by 2026 or so. You know, I think it's something that we really do wanna focus on because you're right. It will reduce the volatility in our cash flows in our business. We're keeping on top of it. We aren't that far off when you look at trade working capital from being in a fairly close to a neutral position.

Speaker Change: and we are making progress on that. I think we had previously some of my predecessor.

Speaker Change: CFOs had said, you know, we kind of would like to be a neutral.

Speaker Change: Working Capital, kind of like 26 or so. You know, I think it is something that we really do want to focus on, but there's your right. It will reduce the volatility.

Doug Ostermann: You know, I think it's something that we really do wanna focus on because you're right. It will reduce the volatility in our cash flows in our business. We're keeping on top of it. We aren't that far off when you look at trade working capital from being in a fairly close to a neutral position. Clearly there is a bit of work to do there and we need to keep focused on it. Thanks for the question.

Speaker Change: in our cash flows in our business. So we're keeping on top of it, but we aren't that far off when you look at trade working capital from being in a fairly close to neutral position. But clearly there is a bit of work to do there, and we need to keep focused on it.

Doug Ostermann: Clearly there is a bit of work to do there and we need to keep focused on it. Thanks for the question.

Speaker Change: So thanks for your question. Thank you very much.

Philippe Houchois: Yep. Thank you very much.

Operator: The next question comes from the line of Stephen Reitman from Bernstein. Please go ahead.

Speaker Change: Next question comes from a line of Steven Whitman from Bernstein, please go ahead

Stephen Reitman: Yes, good afternoon, and again, congratulations on the new position. I'd like to ask you a little bit about your experience so far, and the kind of feedback loops within the organization, because I think it's quite clear that the issues came about, and you know, we obviously saw that a lot of it was reported, or a lot of the dealers had been complaining for a long period of time. I'm just wondering, how do you feel the feedback loops are developing within Stellantis to avoid a similar situation happening again? And can you maybe talk about if you've been meeting with the dealer groups already? Thank you.

Steven Whitman: Yes, good afternoon and again congratulations on the new position.

Steven Whitman: I'd like to ask you a little bit about your experience so far and the kind of feedback loops that will within the organization, because I think it's quite clear that the issues came about. And you know, we obviously saw that a lot of it was reported or a lot of the dealers were had been complaining for a long period of time.

Steven Whitman: So I'm just wondering how do you feel the feedback loops or the developing within Slant's to avoid some some some situation happening again and create you maybe talk about if you've been meeting with the dealer groups already.

Steven Whitman: Thank you.

Doug Ostermann: Well, the answer to the second question is no, I have not had time to meet with dealer groups yet. That being said, you know, I just relocated to the United States. My office is right next to Antonio's office, and we're gonna be working very closely together. I would love to be included in those dealer meetings, and I look forward to it. As you may know from my background, I was a zone manager for a while during my time at General Motors. I worked with dealers in the Northeast region, you know, every day, all day. I have a very healthy respect and admiration for dealers. I understand their business.

Speaker Change: Well, the answer to the second question is, is no, I have not had time to meet with the other groups yet.

Speaker Change: That being said, you know, I just relocated to the United States. My office is right next to Antonio's office and work to be working very closely together. So I would love to be included in those in those dealer meetings.

Speaker Change: and I look forward to it as, as you may know from my background.

Speaker Change: I was a zone manager for a while during my time at General Motors. I worked with dealers in the Northeastern region, you know, every day all day. I'm up there.

Speaker Change: Healthy Respect and Ademiration for Dealers, understand their business and yeah, I'd look forward to being a part of that.

Doug Ostermann: I look forward to being a part of that feedback loop that you mentioned. Look, when you look at our inventory build last year in 2023, which happened for a number of reasons, right? We were going into labor negotiations, so we built up some inventory. We did not want our dealers to run out of vehicles to sell. We didn't know how those labor negotiations were gonna go, if they were gonna lead to a protracted strike, et cetera, so we built some inventory. We knew that some of the vehicles were gonna be in an extended changeover period, Charger, Challenger, et cetera.

Speaker Change: of feedback loop that you mentioned. But look, when you look at our inventory build last year in 2023, which happened for a number of reasons, right? We were going into labor negotiations.

Speaker Change: and so we built up some inventory. We did not want our dealers to run out of vehicles to sell. We did know how those labor negotiations were going to go. So we're going to lead to a protracted strike, et cetera.

Speaker Change: and so we built a memory story.

Speaker Change: We knew that some of the vehicles were going to be in an extended change over period, charge or challenge or etc. And so we built some inventory again at the dealerships.

Doug Ostermann: We built some inventory again at the dealerships to make sure that they would have product to sell till the new product came out. You know, as I think we were pretty clear in the Q2 call, you know, we had some marketing initiatives where, you know, while we recognized that the end of kind of the scarcity period, if you will, was coming to an end, our marketing initiatives in the first half in North America just were not as effective as we were hoping they would be.

Speaker Change: to make sure that they would have product to sell until the new product came out. And then, you know, I think we were pretty clear in the Q2 call on, you know, we had some marketing initiatives where, you know, while we recognized.

Speaker Change: that the end of kind of the scarcity period, if you will, was coming to an end, our marketing initiatives in the first half in North America, just where not as effective as we're hoping they would be. And when you have dealers that have taken a bunch of inventory for good reasons.

Doug Ostermann: When you have dealers that have taken a bunch of inventory for good reasons, you then come out with marketing programs that aren't as effective as you'd like to, of course, it's gonna impact their business, and that's not where we wanna be. We do need to have more effective marketing, of course, number one. But also we need to work with the dealers to understand, you know, what kind of headwinds they're experiencing and where we can be more effective. Of course, it's not just about price. It's about how we provide high-quality leads, how we work with them to get those customers familiar with the products and treat them well, and all that kind of stuff. It's pretty broad.

Speaker Change: But you then come out with marking permanence, aren't as effective as you'd like to, of course, it's going to impact their business. And that's not where we want to be. And so we do need to have more effective marking, of course, number one.

Speaker Change: But also we need to work with the dealers to understand what kind of headwinds their experience is.

Speaker Change: and where it can work and we'd be more effective.

Doug Ostermann: Of course, it's not just about price. It's about how we provide high-quality leads, how we work with them to get those customers familiar with the products and treat them well, and all that kind of stuff. It's pretty broad. Look, I think, given my background, you know, I hope I can be helpful in those discussions and support the business. I think it's a very important area, too, to your point.

Speaker Change: and of course it's not just about price, it's about how we provide.

Speaker Change: High Quality Lead.

Speaker Change: How we work with them to get those customers, familiar with the products, and treat them well, and all that kind of stuff. So it's pretty broad, but look, I think, given my background, you know, I hope I can be helpful in those discussions and support the business. But I think it's a very important area to your point.

Doug Ostermann: Look, I think, given my background, you know, I hope I can be helpful in those discussions and support the business. I think it's a very important area, too, to your point.

Stephen Reitman: Also, the dealer inventory, I mean.

Speaker Change: and I'm a professional entry.

Doug Ostermann: Mm-hmm. Yeah.

Doug Ostermann: Yeah.

Stephen Reitman: On the subject of inventory, maybe could you comment on the quality of the dealer inventory? Obviously, you've made progress reducing the absolute figures, but, in terms of where it stands at the moment between 2023s, 2024s, and 2025s?

Speaker Change: Yes, I've been very pleased. Could you comment on the quality of the deal in the material? You may progress reducing the absolute figures, but in terms of the wear stands of the moment between 23 and 24s and the worry 25s in the mix is at any use.

Doug Ostermann: Mm-hmm.

Stephen Reitman: in the mix. Is there anything you can say about that?

Doug Ostermann: Yeah. I mean, look, the majority of our incentive dollars have been put on the 24 and older models, clearly, right? I mean, that's where we're focused on bringing down the inventories, is kind of the aged stock. That's obviously crucial to the health of our dealers because those are the older units that, you know, they're eating up their floor plan dollars and, of course, interest charges for them and the like. We're very focused and I think very aligned in that regard.

Speaker Change: Yeah, I mean, I love the majority of our, of our in seven dollars I've been put on the 24 and older parts, literally. Right. And that's where we're focused on bringing down the inventory is kind of the age stock.

Speaker Change: and that's obviously crucial to the health of our dealers because those are the older units that are eating up their floor planned dollars. And of course,

Speaker Change: Interest charges for them at the like. So, we're very focused and I think very aligned in that regard.

Stephen Reitman: Thank you.

Speaker Change: Thank you.

Doug Ostermann: Mm-hmm.

Operator: The last question comes from the line of Michael Jacks from Bank of America. Please go ahead.

Speaker Change: The last question comes from the line of Michael Jackson from Bank of America. Please go ahead.

Michael Jacks: Hi, Doug. Thanks for taking my question as well. I just have one left.

Michael Jackson: Hi, Doug. Thanks for taking my question as well. I just have one left. The US Mexico Canada Agreement and more broadly imports from Mexico are one of the focus points for the US presidential race.

Doug Ostermann: Yeah.

Michael Jacks: The US-Mexico-Canada Agreement and more broadly, imports from Mexico are one of the focus points for the US presidential race. Could you perhaps try to frame for us what the potential challenges are here for Stellantis and the measures or levers you might have to help offset a more adverse trade outcome here? Thank you.

Doug Osterman: Could you perhaps try to frame for us what the potential challenges are here for Stylantis and the measures will leave as you might have to help or set a more adverse trade outcome here. Thank you.

Doug Ostermann: Yeah. Look, you know, the US presidential election, you know, as a fellow American, I, you know, it's just so close, you know, it's too close to call. Of course, everybody in the industry is trying to study the different policy positions of the two potential administrations, right? When things could take effect and how they could impact us, of course, on trade and emissions and other things. You know, I think the key for us is not being able to accurately predict which way things are going. To put in place the type of flexibility that regardless of which way things go, that we can adjust and adapt.

Speaker Change: Yeah, I'd love to, you know, that the US presidential election, you know.

Speaker Change: as a fellow American, you know, it's just...

Speaker Change: So close to, you know, to close to call and of course everybody in the industry is trying to study the different

Speaker Change: Policy positions of the two potential administrations, right? And when things could take effect and how they could impact us.

Speaker Change: Of course on trade and emissions and other things.

Speaker Change: You know, I think the key for us is not being able to accurately predict which way things are going. But to put in place the type of flexibility that regardless of which way things go, that we can adjust and adapt.

Doug Ostermann: To your point, look, you know, in terms of emission policy, which I know wasn't part of your question, but I think it's an important issue as well. Our multi-energy platforms clearly can allow us the type of flexibility to adjust to adoption rates of EVs that may get accelerated by fiscal policies or may get retarded by fiscal policies. I think we've built in flexibility there. Likewise, we have plants all over North America, and there are many products that are built in multiple locations even. You know, in the near term, we can adjust on the edge. In the longer term, of course, it would be a more significant to really move away and make big adjustments.

Speaker Change: and two-year point, look, you know, in terms of emission policy, which I know was a part of your question, but I think it's an important issue as well.

Speaker Change: Art Multi-energy platforms.

Speaker Change: are clearly can allow us.

Speaker Change: The type of flexibility to adjust.

Speaker Change: Q.A.

Speaker Change: The Doption Rates.

Speaker Change: of EVs that may get accelerated by fiscal policies or may get retarded by fiscal policy. So I think we've built in Fuxa, the way there. Likewise, we have plants all over at North America, and there are many projects that are built in multiple locations even. So, you know, in the near term, we can adjust on the edge.

Doug Ostermann: You know, in the near term, we can adjust on the edge. In the longer term, of course, it would be a more significant to really move away and make big adjustments. Like I said, we have plants all over North America, and I think we have the flexibility to deal with those policy changes.

Speaker Change: in the longer term, of course, it would be more significant to really move away and make big adjustments. But like I said, we have plans all over North America and I think we have the flexibility to deal with this policy changes.

Doug Ostermann: Like I said, we have plants all over North America, and I think we have the flexibility to deal with those policy changes.

Michael Jacks: Helpful. Thank you.

Speaker Change: Thanks for watching!

Doug Ostermann: Yeah.

Speaker Change: The End.

Operator: This ends today's Q&A session. I'll now hand over to Doug Ostermann for closing remarks.

Speaker Change: This ends today's Q&A session on Handover to Douglas Toman, or closing remarks.

Doug Ostermann: Thank you. Look, I'd just like to thank everyone for taking the time to follow the Stellantis story and your interest in the company. As I think I made clear, we have a lot of opportunity, but we will have a lot to do to secure it. I very much look forward to continuing the dialogue that we've started today in the months to come. I'll be scheduling some meetings with investors and at various conferences. Also really, you know, look forward to getting to ask you some questions and hear your views on the company as well. Thanks again for your time, and we'll talk to you soon.

Douglas Toman: Thank you, look, I just like to thank everyone.

Douglas Toman: for taking the time to follow this swamp of story and you're interested in the company. As I think I made clear, we have a lot of opportunity, but we will have a lot to do to secure it.

Douglas Toman: and I very much look forward to continuing the dialogue that we've started today in the months to come. I'll be scheduling some meetings with investors at various conferences.

Douglas Toman: and also really look forward to getting to ask you some questions and hear your views on the company as well. So thanks again for your time and we'll talk to you soon.

Operator: Thank you for joining today's call. You may now disconnect your lines.

Speaker Change: Thank you for joining today's call. You may not, this contact your lines.

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