Q2 2025 Volkswagen AG Earnings Call

Ladies and gentlemen, welcome to the folks. Walking AG, investor analyst and media call half-year Q2 2025 conference call. I'm more at the calls. Call Operator. I would like to remind you that all participants will be in a listen-only mode and a conference has been recorded. The presentation will be followed by a question and answer session. You can register for questions at any time by pressing star and 1 on your telephone for operator. Assistance, please press star and zero. The conference must not be recorded for publication or broadcast at this time. It's my pleasure to hand over to Dr. Zebastian Rudolf, vice president, Global Group Communications. Please go ahead sir.

Speaker Change: Thank you, Moritz and uh warm welcome, good morning um to the half year 2025 results, call of Fox 1 group.

Speaker Change: With me is Uma our head of group Treasury and IR because this is a joint call um, media and investors and analysts.

Speaker Change: Our main actors are with us as well, Oliver blumer, our CEO, and ano, and let's, our CFO and Chief, Operating Officer a few more remarks before we start. So you should have received the press release, the interim financial report, and all other related materials we, which were published this morning.

Speaker Change: if you don't have received these documents,

Speaker Change: please give us a call or drop us an email and we will take care.

Speaker Change: and with this, if I hand over to you and you guide us through the next time,

Thank you, Sebastian. Very good morning to everyone on the call also from my side and thanks for joining us today.

Speaker Change: Let's have a look at our agenda.

Oliver Blumer: Oliver will present the key developments of the first half year.

Oliver Blumer: And Anna will then take you through the financial results and the updated full year outlook.

Oliver Blumer: This time, not an easy task, but this is why we have him and he is super prepared. So we are looking very forward, very much forward to the explanations.

Speaker Change: Following the presentation, we will first host the Q&A session for the investor and analyst Community moderated by myself.

Speaker Change: And after this session and a short break, we will continue with the media Q&A, which is then hosted by the Bastion

Speaker Change: Since our call will include forward-looking statements the Safe Harbor language and other cautionary. Statements on the slide will govern today's presentation.

Speaker Change: I encourage you. As always to read the disclaimer carefully as all forward-looking statements are qualified by this language.

Speaker Change: In the interest of time, I will not read it out loud.

Oliver Blumer: And with that, I hand it over to Oliver Oliver. Go ahead. Please

Oliver Blumer: Yeah, thank you Rose. Uh thank you Sebastian. Oliver Blume is speaking a good morning to everyone.

Oliver Blumer: Let me start by highlighting the key developments in the first half of the year before, ano walks you through our financial results after that. Ano and I look forward to your questions and a lively discussion.

Oliver Blumer: The first half of 2025 was marked by Major challenges challenges, that were not foreseeable at the beginning of the year.

Oliver Blumer: First and foremost, the top increase in US import tariffs and the associated trade policy, uncertainties.

Oliver Blumer: Despite these challenges we continued to consistently Implement our strategic initiatives.

Oliver Blumer: Our model offensive is making great progress, and we are successfully launching new models in our markets.

Oliver Blumer: This year we are placing particular emphasis on our cost reduction and the execution of our group wide performance programs, the results show that our measures are beginning to take effect.

Oliver Blumer: The same time, they are initially causing High expenses.

Oliver Blumer: All these factors have had a significant impact on our operating results.

Oliver Blumer: With overall stable sales, the Volkswagen group generated sales, revenue of 158 billion Euro in the first half of the year.

This was on par with the previous year.

Oliver Blumer: Fee about a third to 6.7 billion Euro mainly due to the forementioned effects.

Oliver Blumer: The operating return on sales was 4.2%.

Oliver Blumer: Excluding the effects of, um, increased tariffs and restructuring costs. The return on sales was 5.6% in the first half of the year.

Oliver Blumer: The second quarter was even slightly higher at 6.8%.

This means that we are within the forecast, range communicated at the beginning of the year.

Oliver Blumer: Giving the challenges and in the face of extensive restructuring. This is a respectable result.

Oliver Blumer: But it also makes 1 think clearer for Volkswagen must. Consistently pursue the performance programs it has embarked upon

Oliver Blumer: We need to shift our cost efforts into high gear and accelerate implementation.

Oliver Blumer: After all, we cannot assume that the Tariff situation is only temporary.

Oliver Blumer: The changed import tariffs in the US resulted in expensive of around 1.3 billion Euro in the first half of the year.

Oliver Blumer: If the current import tariffs remain in place, the burden would increase to several billion.

We therefore have had to adjust our forecast for the full year.

Oliver Blumer: Our plea, to the negotiation Partners is therefore clear.

Oliver Blumer: We are counting on the EU commission and the UF government to reach a balanced outcome on the Tariff issue. An outcome that continues to ensure rule-based trade, open markets and stable trade relations.

Oliver Blumer: This is a basis for a competitive economy on both sides of the Atlantic North America and the US market in particular, as strategic growth markets for the Volkswagen group in Westmont of over 14 billion US dollar.

To date and local production Partnerships and cutting. Egg Technologies are clear, evidence of our strong commitment to local investment and value creation.

Oliver Blumer: Added to this are a significant investments in the construction of the new Scout plant in South Carolina. You can, um, do it on the picture and our partnership with rivian. We intend to continue on this pause.

Oliver Blumer: In 2025, We are continuing the most extensive product offensive in the group history with increasing success.

Oliver Blumer: We increase deliveries by 1% to 4.4 million units in the first 6 months of 2025 by region, Graves was driven by strong performance in Europe and South America here, our brand achieved increased of 2 and 18% respectively.

Oliver Blumer: This was offset by a slightly declining of 2% in China. Deliveries to North America customers fell significantly by 7% due to the Tariff situation, and the second quarter alone, they decline amounted to 16%.

Oliver Blumer: The overall positive development was driven by numerous new model lounges across all brands from Volkswagen and Audi, to skoda and kubra to Porsche.

Oliver Blumer: These Market lounges underscore our consistent, focus on Innovation, customer orientation and sustainable. Mobility in all market segments, each new model strength.

Oliver Blumer: Strengthens our Global competitiveness and reinforces our commitment to Leading the industry's transformation.

Oliver Blumer: Called electrification and digitalization.

Oliver Blumer: Deliveries offer battery. Electric vehicles. Recorded particular, strong rows. They reached 465,000 units. Representing 11% of group, deliveries and an increase of 47%.

Oliver Blumer: In addition, there were almost 200,000 plug-in hybrids 40% more than in the same period last year.

Oliver Blumer: Our best share in Western Europe, grew even more strongly.

Oliver Blumer: Its doubled compared with the previous year to around 20% of our sales.

Oliver Blumer: We have succeeded in further expanding our leading position, in electric vehicles, in Europe.

Oliver Blumer: We now have a market share of around 28%.

Oliver Blumer: Preparing for the market Lounge.

Oliver Blumer: Um, of our new models starting in the first 4 quarter of this year.

Oliver Blumer: Our new models are well received by customers. We are receiving very positive feedback on the design, technical performance software and features offered new vehicles across all brands and drive types are in a high demand including VW, id7 toura HRA mask. Gura AOK, Audi q6 Ron and Porsche 911 to name just a few

Oliver Blumer: This is clearly reflected in our order intake, which has developed very positively in Western Europe with an increase of 19%. Compared to the previous year. We have order are developing particularly dynamically Rising by 62%

Oliver Blumer: the order backlog in Western Europe due to around 9250 Vehicles, by the end of June and extends the well,

Oliver Blumer: Into the fourth quarter.

Beth account for over 22% on this figure, with numerous new models, coming to the market. In the next month, we expect additional momentum. This shows our strategy is working and we are implementing it consistently.

Oliver Blumer: Our model offensive will also kick off in China in the fourth quarter, with a new generation of intelligent connected vehicles that have been developed entirely in China for China, and that are tailored precisely to the wishes of our customers.

Oliver Blumer: Our technology is state-of-the-art with our newly developed electric and electronic architecture and advanced safe level to plus level 2. Plus, plus 8 assistance, we cover the entire enemy Spectrum with flexible drivetrain Solutions, including bevs, P, haves and EFS.

Oliver Blumer: We will bring 30 new models to the road by 2027 and 50 by 2030.

Oliver Blumer: Thanks to consistent cost management and a structured fixed cost program. We have already reduced the material cost of our compact main platform by 40%

Oliver Blumer: We have set ourselves a further Target of 10%. This puts us on par with the leading competitors in the Chinese market in terms of cost.

Oliver Blumer: This is our approach local customer focused cost optimized and technologically leading.

Oliver Blumer: We are making great strides in the automotive driving even outside China. With the idba add, we are putting forth, first fully autonomous, serious production vehicle on the road.

Oliver Blumer: It has been consistently designed for use in Mobility Services.

Oliver Blumer: Muyuz. TurnKey platform gives cities and operators access to Safe scalable and intelligent right pooling Solutions initially in Hamburg. And from 2026 also in the US

Oliver Blumer: Mia's comprehensive solution, combines all components to turn an autonomous vehicle into a ready to use Mobility system.

Our software meets key regul, regulatory requirements for level 4 vehicles. According to the SAE standard,

Oliver Blumer: the idb bus ad brings future technology to the market. This is an important step on our journey to become the global automotive tech leader in the industry.

Oliver Blumer: We have also achieved significant milestones in the implementation of our group wide earning Improvement programs. This includes in particular, the future Volkswagen agreement reached. At the end of 2024, this agreement lays the foundation for the economic Kelly, successful future of Volkswagen and our German locations.

Oliver Blumer: Besides.

Oliver Blumer: of labor cost, reductions

Oliver Blumer: Um, we will achieve, um, 1 billion a year actually, and more than 4,000 employees have left the company. Since the end of the year, a further 20,000 departures have been contractually agreed and are already certain

The median term, we are expecting.

An annual Savings of over 4 billion euros.

Oliver Blumer: Competitive personnel and plant structures linked to the company agreements to accelerate implementation.

In June the brand group um Progressive around Audi reach agreements with employee representative on specific measures measures to reduce the workforce by around 7,500 positions. Primarily in indirect areas the performance related

Oliver Blumer: Pay will also be adjusted.

Oliver Blumer: The medium-term. Audi expect annual Savings of more than 1 billion. These measures are part of a clear plan. We are shaping change, responsibly proactively and in dialogue, with others.

Oliver Blumer: Future Ready, products and technologies will be the focus of our presentation at the IAA Motor Show in Munich in September.

Oliver Blumer: We are taking this opportunity to invite you. Our investors and analysts to a product and Technology update on the Volkswagen group and its brand groups on September 9th in Munich, my colleagues on the board of management and I look forward to providing you with key insights to our product strategy, and the convergence of our platform software Battery Technology, electric electronic architecture and other key Innovations. And of course, we would also like to take this opportunity to engage in a personal dialogue and answer your questions.

Oliver Blumer: Our investor relations team. Look forward to receiving your registrations.

Speaker Change: Let us now take a closer look at the financial performance in the first half of the year. I will hand over now to ano. Thank you very much.

Speaker Change: Yeah, thank you, Oliver and good morning also from my side colleagues.

Speaker Change: Or have your result continued to tell a story with 2 sides?

Speaker Change: Or on the 1 hand, there's tremendous success of our products, combustion engine and electric vehicles.

Speaker Change: In Europe, every force, a vehicle comes from the forks, 1 group, and we are making good progress in the structuring our company.

Speaker Change: On the other hand, operating results are down by 30% year, on year.

Speaker Change: This is due to the continued margin illusion, effect of the ramp up of our electric vehicles, on top of that, us tariffs, and restructuring have left their marks.

Speaker Change: In the first half of the year, the burden from increased us import tariffs amounted to 1.3 billion Euro restructuring, added cost of 7 billion Euro.

Speaker Change: Excluding these effects results. In the second quarter came in at 6.8%, which is at the high end of our expectations.

Speaker Change: This gives us the confidence that we are on the right track, both strategically and financially.

Speaker Change: But ultimately, it's only the cash in our bank account, that counts. This is clear. And that's why it's necessary to decisively implementing the ongoing programs and in some areas, take even further measures.

With that, let's move to the details of the financial result.

Speaker Change: Vehicle sales totaled, 4.4 million euros. In the first 6 months, slight increase of 1% compared with the prior year.

Speaker Change: The group sales revenue remains stable at 158 billion Euro the operating result totaled 6.7 billion euros minus 33% versus H1 2024.

Speaker Change: The operating return on sales, stood at 4.2%.

Speaker Change: In the first half of 2025, our business was marked by intense competition. High expenses related to us, import tariffs and restructuring costs as mentioned.

Use import tariffs and restructuring cost had a total negative impact of 2.2 billion. In the first half of the Year 1.7 billion in the second quarter loan.

A look at the corresponding key figures before these effects show that the product momentum of exciting vehicles and our restructuring efforts are gradually paying off. Restructuring expenditures will help us to achieve leaner cost structures in the future. However, tariffs are likely to remain a permanent burden and we must increase our efforts to offset this effect.

Speaker Change: The development of profit before tax after tax and earnings per share for those largely. The operating result with a positive effect from income from participation and a negative effect from interest result.

Speaker Change: Kipps and R&D expenditures.

Speaker Change: On top of that cash flow development was affected by cash out related to us, import tariffs of around.

Speaker Change: 0.7 billion Euro and payments of around 0.7 billion Euro for a structuring measures. In addition, 0.9 billion Euro was spent on the acquisition, um, of additional rivian shares, which was triggered as planned by rivian reaching Financial milestones.

At liquidity in the automotive business, decreased by around 6 billion euro compared with the end of 2024. In addition to the operating performance, the following factors explained, this development m&a, expenditures, 1.4 billion.

Speaker Change: Dividend payments of around 3.8 billion in the second quarter, interest payments, to hybrid bonds, um, to higher Bond holders in the magnitude of 0.4 billion Euro.

Speaker Change: overall, net liquidity, remained at a solid level of 28.4 billion Euro at the end of the second quarter of 2025,

Speaker Change: let's move to the performance of the divisions.

Speaker Change: Passenger cast generated an operator result of 4.4 billion Euro in the first half of 2025 down 40% versus prior year. This corresponds to an operating return on sales of 3.7%.

Speaker Change: Commercial vehicle recorded. The decline of operating profit to 1.2 billion Euro in the margins to that 5.9%.

Speaker Change: The financial services division performed well with an operating result of 1.9 billion Euro.

Speaker Change: It's now take a look at the drivers of earnings development in the passenger car segment.

Volume had a positive impact of Point 8 billion euro compared with the same period last year price. Mix had a negative impact of around 2 billion Euro. This was mainly due to the significant increase in BV, share and a negative product mix and brand mix.

Speaker Change: go to Provisions at the cumulative negative effect of around 0.5 billion Euro on earnings in Europe and the US and Forex had a negative effect of 1.1 billion Euro mainly due to the valuation effects of balance sheet items in foreign currencies,

Speaker Change: The development of broader cost and fixed costs, had a positive effect. The letter improving by 0.1 billion, despite continued restructuring efforts, and the ramp up of new businesses.

Speaker Change: Looking at the development of our overhead cost or the modification was able to keep over at Cost stable over over it cost ratio improved slightly specifically in the second quarter.

Speaker Change: Increase at trading and bankrupt Progressive as well as the ramp up of our new businesses were fully compensated by positive effects from restructuring measures throughout the group.

Speaker Change: The key factor in this development is the consistent implementation of efficiency programs. But particularly at 418,

Speaker Change: Future for is having an increasingly positive impact partly to to progress in realigning. The workforce, the new Collective Agreement which has now come into full force is ALS having an effect.

Speaker Change: In the 6 months of the year, the number of active employees at Fang, achieve was again reduced by 4,300. Since the end of 2023. The reduction has amounted to almost 9,000

Speaker Change: Where the programs are being developed and implemented at all, the Porsche and carry it. And the programs have been extended to all units entities, and regions of the group,

Speaker Change: As a result, the number of employees, at group level has been reduced by a net total of 10,600 in the last 6 months.

Speaker Change: And the corresponding positive effects on our cost structures will be reflected in our accounts, in a subsequent borders.

Speaker Change: Let's move on to the development of the brand groups platforms and financial services.

Speaker Change: Within the passenger cars, the brand group core achieved overall. A solid result with sales revenue up 5% in the first half of the Year operating profit amounted to 3.5 billion Euro and the margins to that 4.8% in line with the previous year.

Speaker Change: Brand group Progressive also achieved the 5% increase in sales revenue driven primarily by the continued product offensive.

Speaker Change: positive volume effects were offset by ramp up costs for new models, use import tariffs, and the provisioning connection with the agreement on the future of Audi, burden the results with approximately 750 million euro

Speaker Change: .3%.

Speaker Change: Including the effects of restructuring and US tariffs. The margin would have stood at 6.1% in brand group Progressive.

Speaker Change: Porsche vehicle sales declined by 11% to approximately 135,000 units with the Macan emerging as the bestselling model 25,000 of, which were fully electric.

Sales revenue, dropped by 9% to 16.1 billion Euro, operating result failed to 0, 8 billion Euro, primary to the external charges driven by battery related activities, us, tariffs and strategic alignment measures totaling of about 1.1 billion Euro in the first half of the Year according to Porsche HG.

Porsche will report on its half year results at July the 30th.

Speaker Change: Let me outline some effects of brand group core.

Good impressively demonstrated that exceptional performance is possible even in a difficult Market environment. The first class product on Forex 1 group platforms combined with a competitive cost base.

Speaker Change: Would achieve the best quarterly results in its history with around 7, 4 0.

Speaker Change: Of 9% even 9.5% in the second quarter speaks for itself.

Works fine Passenger cars, recorded stable sales development. Nevertheless the brand increased. Its reported operating margin by 30 basis points to 2.5% and achieved an operating result of 1.1 billion, Euro 20% above prior year.

Speaker Change: The efforts are starting to pay off the consistent implementation of measures agree that the end of last year is beginning to have first positive effects on the cost structures of Forex 1. Brand and our component business.

Speaker Change: On top of that in advance booking from our China business, which had actually been expected for the second half of the year, had a positive effect.

Speaker Change: Leaving aside all non-operational effects, the operational performance was even slightly stronger.

Speaker Change: Us import tariffs and further expenses in connection with the structural activities and the diesel issue. Had a negative impact excluding these effects brand Forks around operating margin after 6 months to that 4.2% in line with the target set for the full year.

Speaker Change: And bankrupt Corps achieved almost 6% margin before restructuring and tariffs.

Speaker Change: But again, 1 Word of caution. Here, restructuring expenses, burden the result now, but help us to achieve inner cost structures in the future.

Speaker Change: However,

Speaker Change: We need to prepare for a scenario where tariffs are to stay in a certain level as part of our operating business. And this clearly means the restructuring work has to continue. And we even need to speed up the measures.

Speaker Change: Period reported Rising licensed Revenue. Supported by higher volumes on software platforms, 1.1 and 1.2.

Speaker Change: Revenue Rose by 32% to around 6 billion Euro, the operating results was minus 1.2 billion, Euro roughly on par with previous year.

Speaker Change: Power core is making good progress in ramping up. Battery production in such a

which is scheduled to start.

Speaker Change: Production at the end of the year.

And the company reported an operating loss of 46 billion. Euro around 400 million more than in the first half of 2024, mainly related to the ramp up activities for battery production at salka at Valencia and at Ontario, Canada sites.

Speaker Change: President recorded the decline sales.

Speaker Change: In the first half of the year due to weaker demand in Europe and customer restraint in North America as a result Revenue fed by 7% to around 2100 Euro.

Speaker Change: The lower volume higher fixed cost combined with the impact of exchange rate. Fluctuation led to a significant decline in operating profit of 39% to 1.2 billion Euro.

Threatened results have been released this morning.

Speaker Change: The financial services business developed positively. In a reported period, this was due to an increase in contract volume by roughly 10%, particularly in Europe. The credit loss ratio was broadly stable and the operating profit Rose by 35% to 1.9 billion Euro.

Speaker Change: Investment and expenditures on R&D.

Speaker Change: In the automotive business declined by around 6% to 16.3 billion Euro in the first half of the year.

Speaker Change: What about the magnitude, overall, reflects the high upfront investments from the transformation and the ramp up of future businesses such as batteries and autonomous driving?

Speaker Change: We intend to, and will bring down Investments, by leveraging group synergies. Even more consistently and reducing complexity beyond the level of today's range.

Speaker Change: Let's move on to the performance of our CH ventures in China.

Speaker Change: In the market environment, that remained, highly competitive and characterized by intense price pressure. Deliveries declined by 2% to around 1.3 million vehicles in the first half of the year.

Speaker Change: The proportionate operating profit of our CH Venture activities, in China, mounted to 506 million in the first half of 2025 and based on the current sales and earning development. We are reiterating our expectation of reading the upper end of the forecasted range of 0.5 to 1 billion Euro for the full year,

And this brings me to the full year outlook.

Speaker Change: The continuation of model offensive and the renewed product portfolio of exciting Vehicles across all brands support mixed effects and the second half of the year.

Speaker Change: You also expect to see increasingly positive effects from the consistent implementation of our cost programs and ongoing restructuring measures.

Speaker Change: At the same time, we expect the increase in the share of battery electric vehicles to continue, to have a negative impact on the margins. Furthermore, we anticipate negative effects from The increased import tariffs with chance resulting from potential mitigation measures.

Speaker Change: as promised in Cuban call, we have now factored all these effects into our outlook for 2025,

Speaker Change: Our adjusted annual forecast is based on 2 scenarios.

Speaker Change: The lower end of the range for the operating margin assumes that the current US import tariffs of 27.5% of imports from Europe and Mexico through the US will remain in place.

Speaker Change: on a 12-month basis at tariffs at this level would impact Us by around 200 basis points before any mitigation measures,

Speaker Change: At the upper end of the operating margin. We assume a scenario for much of the second half of the year, in which the current tariffs are reduced to 10% for both deliveries, from Europe to us and from Mexico to us.

Speaker Change: with this tariffs, the impact would be around 60 basis points on an annual basis before any mitigation

As a result, we now expect the revenues at the previous year's level based on the US. Tariff scenarios just outlined the operating return on sales is now expected to be in range between 4 and 5%. The capex ratio in the automotive division is expected to remain between 12 and 13%.

Speaker Change: We expect Automotive, net cash flow to be in the range of 1 to 3 billion Euro

Speaker Change: These figures include expected cash outs of around 2 billion in connection with the implementation of restructuring measures of which 1.3 billion will be in the second half of the year.

we now expect net liquidity to be in the range of 31 to 333 billion Euro,

Speaker Change: 1 month.

Speaker Change: Comment on the Outlook. We have taken note of traton mandatory announcement from last night.

We will be able to reflect the new range.

Speaker Change: For the operating result of the industrial business of trading within our existing range of 4 to 5% return on sales for the Forex bank group.

Speaker Change: For the new forecasts of net cash flow from Trading, that means that we will end at the lower end of the range for the net cash flow. And from here, we will increase in our efforts to work our way back towards the midpoint of our guidance.

Speaker Change: Ladies and gentlemen, our model offensive is proving successful for both combustion engines and electric vehicles.

Speaker Change: In Europe, 104 Vehicles. Now comes from the forks van group, our cost reduction measures are beginning to take effect.

Speaker Change: At the same time, we are pushing ahead with the implementation of our strategy by continuing our extensive product offensive in China. We are working towards the model, launches of new locally developed and highly competitive models. In us, we ramp up activities for Scout and the unit model lineup for folks 1 brand.

Speaker Change: In view of the renewed challenges, we must increase our efforts and accelerate the implementation of our performance programs and continue absolute cost discipline.

Speaker Change: So that we are well prepared and on a stable footprint for the future.

Wolf: Thank you very much. And with that, I hand back to Wolf.

Wolf: And let us now enter into the Q&A session to ask a question. Please press star 1. And if your question has been answered, you can remove your question by pressing star 2.

Wolf: So we give it a little time in order to see the Q&A row piling up.

And we would start the Q&A session with the first question coming from Tim. Rowasa from Deutsche Bank, Tim, please unmute yourself and go ahead.

Wolf: Thank you very much row. It's Tim from Deutsche, um, I know and Ollie probably to both of you. Firstly, thank you for giving us the Tariff Sensitivity. I think that's very useful to work with now.

The Japan us deal seems to be the most likely scenario also for an EU us deal at the moment. With 15% tariff. Can you quantify what impact that would have on? You regarding ebit and free cash flow and also to that Ollie Mae probably more you do you also think that a 15% tariff is now the most likely outcome not anything that involves investment credit, so export credits, that the industry was actually pushing for, um, and secondly, uh, probably again, to both of you or maybe more Ollie, um,

Wolf: To understand the underlying business acts all of this obviously very material. Tariff noise in contrast to cylinders and Reno your mass Market business seems to do very well in Europe. Do you feel like you have cut the corner when it comes to restructuring and product improvements on the mass Market business? Are we going to see further strength from here and likewise

Wolf: Are we know also pretty much there for Audi is Audi going to improve from here. Thank you.

Speaker Change: Yeah. Tim thanks for your question. And yeah, look up. We we promise to give transparency now in the in the second quarter um and we gave you all the scenarios. So it's it's a lot of math. We need to do.

Speaker Change: To, to start with the tariffs of potentially, 15%, look, the the, the 25% on top. Now, the 27 we have today is 25% on top and and and the 15% would would basically 12 and a half percent on top, and that's exactly 100 basis points. Um, so so mathematically you would roughly end um, in the middle of our guidance. Uh, if you if we would end at the at the Chapman deal, but to I must make sure that this is completely understood

Speaker Change: That has to be applied for Mexico then and for Europe. Both because the, the combined figures we gave are always from from Mexico. And and for Europe, um, we have a significant import from Mexico to us as well to give you a rough idea. It's more like 60 65% from Europe but that that that means that you you can also do the to the math. Then if there would be a deal from Europe and not from Mexico or later on and and the second world of caution, obviously we we are already in July, so the longer we go into the second half of the year the the the longer we the the more we we tend to the lower end of of, of the guidance, that's clear as well.

Speaker Change: Yeah, Tim Tim. Good morning and uh, from from my point of view um,

Speaker Change: When we we hope, um, that it will come, um, to a well balanced deal, it would been uh, us and, and EU, which allows, um, fair trade in between the regions. Um, and yeah, we are expecting, um, a year around 15%

Speaker Change: And for us, it's important being able to continue with a specific additional deal for for Volkswagen. Um, we have a very attractive, um, investment package. Um, we will do there, we are acting with 8 brands in the US. Um,

Speaker Change: In between this 8 brands, also, 2 to American brands with Scout and international, and I think that this package is um, very attractive, um, for the US government. Um, we have been already in in good discussions with them and uh, we need then the opportunity after the U deal um to to enter with a specific deal.

Coming to your second question. Um, we see a positive trend um especially in the room and um when we look to to our market share um we were able to improve to over um 25% um overall market share and um electromobility. Um we are by far market leader now with um 2028 percent.

Speaker Change: And what's, um, positive for the future is a very promising order intake. Um, overall, um, drivetrains, um, 20% and electric vehicles, 60% better than the last year.

P*** design improved Technologies and and uh, also the quality um aspect.

Speaker Change: Um, and what we have mentioned. Um, also in the um, second quarter is a positive momentum on um, our product costs.

Speaker Change: Um, and um, finally, um, our restructuring programs. Um, in, um, all brands are um, step by step, um, the way to, to pay pay off. So, um, there is, um, a positive momentum on the EU market and we will use also this momentum for the rest of the world talking about, um, Audi

Speaker Change: Um, our expectation is, um, that we will touch the bottom. Um, this year at at Audi. Um, as you know uh at Audi we implemented a huge restructuring um process uh, on the organization. But um, especially also um, for the product strategy, um, we

Speaker Change: Developed a completely new design language. Um, the first Glimpse we will show at the IIA but also the technological Concepts and um we are um, facing now a huge product momentum and then on the other side also Audi is working heavily on restructuring the company and reducing um the the costs and um, and I I would give you an additional point because Audi and Porsche are also discussed, right? Right now, a Porsche situation is a bit bit different. Porsche has got, um,

Speaker Change: I am very positive substance. Um and in spite of a complete new product lineup, this year is very weak. Uh, why? Um, Porsche is in a sandwich positioning, um, because of 100% export to the yes on China. Um, China and the US are by far the biggest single markets of of Porsche.

Speaker Change: And uh so um, a Porsche we have had the need um, to to restructure, um, also, um, the company in terms of, of course, to adapting this to this new situation.

Speaker Change: And, uh, we adapted also, um, the product strategy in terms of, um, the development um, of, um, electromobility in the different, um, regions of the world, Porsche is strong in electromobility, for example. Um, the electric cars in Europe count already on 60%, um, volume share in between Porsche and from the 60 60%. Um, 36% um, are are BS. So, elected Mobility is working for Porsche, but the market is still, um, very, very small. So we decided to adapt the product strategy, uh, to even more, um, taking, um, Investments for more flexibility, um, in between, um, the different model lines. And on the other side as you have mentioned, also from the media. Uh, we kicked off a structuring, um, program, um, in Porsche to reduce a labor cost to adapt. Um,

Speaker Change: Uh, the the employees and uh, we will, um, enter in a second package, um, in the second half of the year. So for both companies Audi and Porsche we are expecting that. We will touch the bottom this year with positive momentum from 26 onwards.

Very clear. Thank you guys.

Speaker Change: Thank you, Ali for the comprehensive answer and the next 1 in line is Jose from JP Morgan Jose. Please go ahead.

Jose: Thank you all morning, Ollie and Arno. Um, great to see the progress done. Uh, so far in the year. I know I am 1 question in cash flow. I'm looking at uh, all the exceptionals you have this year and last year, right? Uh in terms of cash, outflows investments in XP Bank, ribbon exception restoring Cash Out flows battery Investments, Etc. So the question is, you know, beyond the quarter when you look at the year and you look at your free cash flow guidance, if you exclude the exceptional restructuring, um, cash, outflows and m&a, Etc. What is the underlying free cash generation of the group. I think this is very important because obviously, if you can go back again, to that 6, to 8 billion, or more than 8 billion free cash flow for the group in 2026. This will be definitely, I think a game changer for, for Volkswagen

Speaker Change: Second Ollie uh on robot, taxi and level 4, and 5 autonomous driving. Um I think look we love to get your comments in the light of the strong progress done by Tesla and way more uh, deploying robot taxes in the US. Um, what is false man doing about this technology and do you think this is a vital for VW to be present in this field to ultimately ensure the competitiveness of the group? Thank you.

Yeah, thanks for your question. Um, look

And and Diesel. So obviously they are the revenue transaction is not included. Um, and

Speaker Change: And if you look, then at the, the 2 Box, the info and the Box, we provided is basically 7 billion related to restructuring and 7 billion rated to us tariffs. So if if you want, then basically

Speaker Change: Kind of underlying uh, take out from the cleannet cash flow. The 1.4 billion we end up roughly on the cash flow from from previous year and this is a, the current cash flow performance in in the first half.

Speaker Change: Um coming to uh, robot taxis and their um, the expectation. Um, especially for the 30s is a huge, huge Market um of around 400 billion US dollar yearly.

And, um, we worked heavily on this field, making making good progress and we were happy um, to present um, during the last um, weeks.

Speaker Change: Um, our, our concept with the ID bus autonomous, driving.

Speaker Change: And um there we feel. Um also um comparing this competition as you mentioned way more or for example, Tesla,

Speaker Change: Uh, we are, um, in a good good position. Um, we have a kind of, uh, TurnKey solution. We have everything in our hands, we have a very Advanced, um, technology and that's not nothing for for the 30s. We will be um, in the market already in 26, still with the driver and our aim is um, to be able in 27 driving, uh, driverless, um, making good progress in our test Fields, um, in Germany in Hamburg and Munich and in Austin in, in the US. Uh, then we have, um, the car in our own hands and that gives us the opportunity for scale effects. Also, um, beside a very attractive car with the idb and then and, uh, that makes us special. Um, we have a platform for the whole Fleet Management and, uh, we have the platform for the customer management already, um, implemented with Moya.

Speaker Change: And so um we are um for us it's very promising, we have a lot of interests of many cities in in Europe and Middle East for example.

Speaker Change: Um, wants to to implement, um, our solution. We have the first external customer with with Uber starting, um, in 26 in Los Angeles.

And uh, so we are, we are ready to to compete.

Speaker Change: And uh, and and, you know, um, around 50% of the market cap of Tesla is counting on this. And, um, so I think there's still, um, also a potential um, for, for, for group at the market cap for for Volkswagen

Speaker Change: And um, we will, um, speed up the process. And, uh, this could be, um, a interesting, um, yeah, business business field for for for for group.

Speaker Change: Thank you.

Patrick: Thank you, the next. I'm sorry. The next 1 in line is Patrick from UBS Patrick

Patrick: Good morning, everybody. I I know. Um, hi Ollie. Um, first question, maybe for you ollie, um, regarding your us investment strategy, um, to which extent are these us Investments going to be dependent on a Volkswagen specific. Tariff deal post a potential, 15% EU us deal um and and more specifically um, as far as the Scout brand is concerned, um, and I know we shouldn't think in presidential election terms, but right now it's definitely not a great environment to launch electric or range extended rugged, SUVs or pickup trucks. Um, but you do have

Patrick: Cash house in the US that, uh, even after a tariff, deal would still face a significant tariff. I'm talking about the Audi and Porsche Vehicles. So I'm wondering to which extent you've got flexibility here to maybe, um, you know, come to a very efficient use of, of, of your investment or existing footprint. Even, um, rather than spending several billions more, um, to deal with the US tariff environment. And my second question, uh, are that's probably for you regarding the, um, the cash flow.

Patrick: Um,

Patrick: With a series of smaller assets that could be up for disposal. So any comment that would be appreciated. Thank you.

Speaker Change: Yeah. Good morning Patrick, thanks. Thanks for for your questions and um, we will intend um to to Discount the terrorists as far as possible. We will make a, a clear calculation behind. Uh what would it mean for for Investments and um

Speaker Change: So we have a uh a scalable um program. Uh we we could could offer offer their all um, all of these um projects um connected with with a clear positive um, business case and linked to to our growth growth strategy. You're right. Um we have um very very strong products um still especially in in the ice and plug in hybrid. Um segments. Um you you mentioned Porsche Porsche and Audi for Porsche uh, the US. Um,

Speaker Change: Uh, were able to, to achieve a historic. Um, um,

Speaker Change: Deliveries in the first half of of this year. So our product momentum, um, is, uh, is very, very strong. And, uh, so we are counting, um, on a better, tariff situation at Audi, Audi the same. Also, we can think about localizing, um, Audi products, um, products there and, uh, besides of, um, uh, Porsche Audi also for folks who are and we see opportunities,

Speaker Change: We have successful cars and making them even more American. Um, is our, Our intention and beside of this investment on the 1st on American brands like like Scout and some International.

Speaker Change: like school buses and and heavy trucks, and all the other side technology, um, as you know, um, you know of um, our partnership with rivian

And, uh, which uh, started very well and we see more opportunities uh, there. And so, um, that's a whole package there and um, everything linked with a clear clear business case and then entering into the um, discussions with you um government.

Speaker Change: Yeah, Patrick concerning the cash flow. Um, we expect a a Tailwind in the second half of the year that has 2 effects. First and foremost it's like a typical effect on the industry. So that's the end of the year to Christmas pipelines. Are basically lowered. Um factories are shut down. And then in general, you start up the business, you fill the pipelines. And so we expect by and large inventory of working capital on the level of of last year. But this is easily said what what we did 2 to 3 years ago, we started really in extensive um working Capital Management uh project. We look at inventories on on on on on deliveries on other effects um and in terms of percentage of sales

Speaker Change: So far, very good job. And we we, we also going forward. Our, our Target is to buy and large keep inventories on the current level while growing the business slightly. So that would mean that also going forward, we expect the positive um, effect from from the from the teamwork Finance production sales, uh, on on our net, net liquidity going forward. So this is the situation on on, on that side. Yes, positive effect but uh, typically in in in the industry and other not not 1 of um for this year. Um, and in terms of disposal, um,

Speaker Change: On our Capital markets day.

Speaker Change: Uh, in I think, yeah, we said we look into our non-controlled, shareholdings. We gave you a number of that. We, there's a team in place. We extensively. Work on that, for obvious reasons. We cannot go into details. There we don't expect major cash inflows today.

Speaker Change: From from, from, for, for the first, for this year, for the second half. But rest assured, we work on that topic. And you could expect some some I would say success stories from this team as well. Going forward, very clear.

Speaker Change: Thanks Arno, nollie.

Speaker Change: Thank you, Patrick. And we move on um, to the next question, which is coming from horse, Schneider from Bank of America host. Welcome

Schneider: Give any comment, um, what you see in the European market, I think you order intake. Also lately, came a little bit down. Is the Outlook still good. Uh, is it concentrated on certain segments, markets? And in that context? Also to Ollie, Ollie, you mentioned all the time that you are value over volume. I think stellantis is a proof that this does not really work. So how do you uh, look at this value over volume approach for the Volkswagen Mass Market business, is it really good strategy? Uh, and then the last 1, uh, on that brand group cause a great ebit margin. We have seen in Q2, was that now Peak? Will that come down? Why will it come down? Thank you.

Speaker Change: Yeah. I was um first of all I'm thank you very much for for your your comment that that is really very yeah. Motivating for us to continue on that path.

Speaker Change: Um, look, if if you look at the Abit Bridge, the price was pricing is minus 0.5 billion. And this is largely due to the to the ramp up of of PVS. Um, and we see a pretty stable pricing environment on our combustion engine cars, but this might be also due to the great product substance. Yeah, if you look at our cars, brand new TGO and brand new Passat, a golf, um, and also from Audi, the cars are doing very well in the market and, and on top, we have the ramp up of the electric vehicles which

Speaker Change: Which are Martin de in the price segment. There's obviously a positive pricing affect from from last year and the incentive burden from this year, from the bvs. But all in all the 0.5 billion is, is

Even slightly better than we originally thought. Um and there's also some effect in the mix. A mix is obviously also diluted by um the electric vehicles and some some brand mix obviously.

And, um, yeah, to this is on that side. Um, and you, you remembered, you, you mentioned the, the great success or the, the the great steps of, of our volume Brands, um, specifically brand fork and the brand group. And before I, I also refer to skoda. Yeah, almost 10% in the second quarter shows. Basically what can be done in in this environment with good product substance, combined with a good cost structure and forks. 1 brand is on the way.

Speaker Change: To to achieve that cost structure, it will take some some quarters. Obviously we gave you the the Outlook that we reduce the headcount by 35,000 in Focus 1 ah but that takes some years. Um and this is also the reason why for the for the full year brand Forks, wagon guides for roughly 4%.

Speaker Change: Um, and so that that's also the answer to the question. Uh, Q2 will be from the single quarter will be Peak with basically 2 2 Reasons. First. It's, it's from a, from a seasonality point of view is always the best season. Q3 will be burdened by Summer shutdowns. And and and and so this this is 1 effect and the other effect we had a slightly positive um, effect from from, from a, from from China. Um, and this will not repeat in the magnitude, but the we are on a very good way, uh, to, to achieve the basically, the, the, the, the, the 4%. And, but 1 Word of caution. Excluding the, the, the effects we we had. No, this is, this is, this is, I think a very, very clear. And and then the last word, um, at the end of the day, we have to achieve 4% and and more than also in a situation where tariffs are here to stay.

Speaker Change: So this is why I said we we have to anticipate and speed up some of the measures and and increase our efforts. So that we are able at Brand group, eventually to deliver, also the 4 and the 6 and a half percent in the potential scenario with tourists.

Speaker Change: And also, let me come to, um, to your point value over volume, um, which um, still is, um, our orientation and, um, I would like to answer coming from our product, Focus. Yeah. Um, that, that was 1 of the main points. Um, restructuring for X1 group bringing in order software, improving design, improving quality.

Speaker Change: Uh, improving Technologies.

Speaker Change: Ives. And so this is bringing us step by step in a stronger position and the product momentum. Momentum is, uh, just just to start.

Speaker Change: So, um, that's the positive aspect. On the other side, we have to differentiate, um, when it comes to to BS, um, because, um, there we need to fulfill, um, the, um, CO2, um, regulations.

Speaker Change: Um, we were happy, um to um, come to a to averaging um, between 25 and 27. But beside of this, um, we need to to fulfill um, the the Target and therefore, um, we are leveraging sometimes in between um yeah, putting incentives, um into, but um, the positive feedback we are getting from the market in terms of order, intakes allows us, um, to be more restrictive, um, with discounts and and incentives. Yeah. And and everything is driven by, by, um, the products we are bringing to the, to the market right now, that that core and there, we will focus in the future future as well.

Speaker Change: But but then uh just quick follow up, you don't see deterioration of the market in terms of volume or pricing at the moment in Europe.

Speaker Change: Yeah. Look, um, when you look to the European market, um, the European market, um, decreased, um, during The Last 5 Years of over 15%, we have in many segments 3 times more products in the market. We, um, but, uh, we we don't, um, expect um, any any more effects. Um, for Volkswagen, we are stable. That's a clear message and everything is, uh, driven by the strong product momentum. Yeah. That that gives us more space and than others.

Speaker Change: And, um, and even more for, for the future. What, what we see right now?

Speaker Change: Okay, thank you.

Speaker Change: Thank you host and we are moving on to Adrien. Adrien from Redbarn. Good to have you back Adrian?

Adrien: Morning morning, Rolf. And uh, morning everybody thanks for taking my questions. Um, just a couple, uh, from me. So uh, I was curious to know a little bit more in the Q2 earnings Bridge. Uh, some of the benefits from both the product costs and the fixed costs in Q2 were impressive almost uh a couple of billion between the 2. Could you give us a little bit more color on the sources of some of those? And I guess also importantly the the Outlook into H2. So that's kind of my first 1 and I guess the second 1 is a little bit more.

Adrien: Um, tactical the Tariff costs were um a little over a billion in terms of the p&l a little bit less than that in the free cash flow. So, clearly some timing mismatch, um, just curious your thoughts on how that plays out, uh, through the rest of the year as well. Um, in terms of the the mismatch thanks.

Adrien: Hey Adrian, thanks um yeah Q's 2. Um, if you do the maths and deducted there was actually really a strong element from product cost and and yeah, the first positive designs, I would say from fixed cost that with the fixed cost. Now, we see we see a really a positive design science in the fixed cost, in in the overhead cost. Um, and that despite, uh, the ramp up of of new businesses, like

Adrien: Scout like battery and others. So, um, in in this quarter the first time and we want, of course, we want to continue on that path.

Adrien: We want to lower the

Adrien: The the overhead cost despite the ramp up of of these new businesses, and we need to do that and we want to do that in order to compensate for the margin illusion, effect of of the BBS. And and if you look at the

Adrien: Just the the the reduction overhead um of the 4300. We are on a good path there and just to to remind you several programs are underway at Audi and Porsche like Oliver mentioned, all the communicated reduction of 7000 and this is like they are slightly behind in terms of schedule and then they will kick in. Also in the next in next quarters in terms of product cost there to to to understand that the majority of of course is is is the material cost. The were some 1 of Burden last year that that we don't see this year again. We saw some first improvements of product and there's also I don't know what's in English. S, there's the first small sign is on the product cost are also the cost of our Factory cost so productivity and and first signs of productivity improvements um are also now seen in the broader specifically in the German plants. Uh, they make

Adrien: In terms of factory costs not in a magnitude as planned, but significant progress. And this is also um, seen under the product cost um, Improvement in the second quarter.

Adrien: Given given you an additional information about the product costs and to to reduce product cost does not happen from from a low on end. I mentioned the reduction we have done in China, for example, with this 40% of of our products because it's a very detailed um, hard work. Um, we are doing their thousands of measures and we implemented. Overall our model lines, um, product events where every areas come together and fighting for, for our recent. Yeah, that's an ongoing going process. But now, um, we have a structured process like we implemented it uh, with a performance programs in All Brands. And also um, with um, our executive executive board members. Uh, we are watching on this process, um, regularly

Speaker Change: thank you, Janos actually for your questions and then with the green shoots, we are moving on to, uh, Philip bushwa from Jeffrey's Philip

Philip bushwa: Oh, thank you and good morning. Um, got a couple of questions. The first 1 is to, to be clear on the reduction in the revenue guidance from up to 5% to Flat um is it right to assume most of that is demand destruction in the US. Uh, as a result of tariffs and to what extent, you also factor in the fact that so far, I don't think you have increased prices in the US to

Philip bushwa: Compensate. When should we start to see price increases? And, um, and again, is that all factored in, uh, what what drives the cut in the revenue expectation, or are there any, um, other factors?

Philip bushwa: And and my second question if possible is, is on this this whole discussion, we hear in Germany about private public investment to catch up on infrastructure. Um, curious to have your views on, what, what would you like to see as an investment in Germany to improve your competitiveness, something about no telecommunications and stuff like that, that would be uh, worth investing in and to what extent if you do participate in that effort. Um, does it how does it impact your, your, your, your your Ambitions to reduce the investment ratio, initially 12 to 13% and eventually 10%, would that be a a headwind to that to that ambition? Thank you.

Philip bushwa: Yeah, I feel about take the first question and I assume the second 1 is always answering. Yeah, and the answer is very clear. Yes. Basically the reduction in in Outlook is due to the reduction in sales in the Years due to the tariffs. Um, if I have it rightly in mind, I think uh, June single months, June was 25% down.

Philip bushwa: uh, in the US and that makes makes it even even more clear that we, we, we need a good compromise and, and a solution on that topic that both fits the needs of

Philip bushwa: of course of the American Administration and us as a company but has also an impact of our local organization on our dealers and their families. So it's really this you can see on on the on the single month of June um of course they are mitigation measures. If you look at the industry there were some

Philip bushwa: First announcements, for obvious reason. I cannot talk about price increases in public. This is very clear, but but um, in our, in our sensitivity analysis of of the, of the impact,

Philip bushwa: um, when we said, for example, if it says that 27.5% and the 200 basis points, we we clearly indicate that this is before mitigation measures and as soon as we have more more clarity, we we also look at potential mitigation. There's a that's

Philip bushwa: That that's very clear.

Philip bushwa: yeah, and then let let me come to to the initiative um made, um made for Germany and

Philip bushwa: Um, we have had a um, kickoff meeting this week um together with the German Chancellor, which was very positive. Um, 60

Companies in Germany, we put together our investments, um, in in Germany, um, to, to amount of, um, over 630 billion. Uh, we will invest, um, during the next 4, 4 years,

Philip bushwa: um, this initiative is more than than investment, um, is, um, to bring a positive momentum, um, to the German economy and, um, this 1 is linked. Um, with improving all the framework, conditions for investing and for doing business in in Germany, that's the main part.

Philip bushwa: Very, um, professional, um, product and program management, um, with Milestones targets, responsibilities, clear, transparency, um, to to execute, um, this this programs and therefore, um, that was a very good kickoff of the initiative and we will, we will follow up, um, in terms of Volkswagen, um, uh, we we have a part, um, of um, this amount of, um, 6030 billion, um, over 10%. Uh, but everything is included in into our planning around, no additional Investments. Uh, that is what we have planned. And um, the main Investments are going to product and, um, our engineering we do have in in Germany and everything is completely in line with our restructuring program. Um, we are we are doing, um, into into Germany.

Philip bushwa: And um, so um, we think, um, for folks to run group, we are well prepared, and uh, we support um, to to improve the business situation in in Germany.

Philip bushwa: Okay, thank you.

Speaker Change: Thank you very much, Philip and we are moving on. We still have 2 questions in line and with the next 1 is handing Cosman from barklay is handing please go ahead.

Um, yeah, good morning. Um, thanks very much for taking my question. Um, I wanted to talk a little bit about the, the true underlying margin that we can, um, we have the 6.8% in in the second quarter. But we understand that this China, license payment for forward, um, is a little bit inflated but you have

Speaker Change: Haven't really included any of the Porsche restructuring or indeed, the 500 million impairment. So if we just broadly

Speaker Change: Think that's a a wash perhaps between the 2.

Speaker Change: I wanted to ask you to talk about a bit where you see the true underlying on a group level is a 6.8 a good number and then we we we can, we can make our own tariff assumptions, uh, to to get to a reported figure. Or would you want to highlight any particular puts and tanks?

Speaker Change: Yeah, hanging. Um, so the the thing is, um,

Speaker Change: If you we gave some some transparency but but of course it's it's really now. It's not very easy to dig even deeper into that. And then that that we said underlying is is um, basically in in the second half was the the the the 6.8, let's say sorry in the second quarter was a 6.8 in the second half 5.6%.

Speaker Change: Um, and you're quite right. There was a anticipation on brand for expiring from China. On the other hand, there are some restructuring on, on the operative basis, not included in that. So this is, I think it's a good view to say. It's basically a wash. Um, if you look at the second quarter, I talked about seasonality. Um and and so the second quarter is typically the, the strongest 1 and we are basically

Speaker Change: Proud that we could achieve that significantly on the upper end of of our guidance due to the what what we said before strong products and, and restructuring. So, and now if if you look out on the second year and you take out all the 1 offset, the the second quarter,

Speaker Change: call it underlying roughly in 9 performance wise in a in a, in a, in a like the the first quarter uh due to say analogy, we expect a slightly higher sales

Speaker Change: Um, but margin roughly on, on power, on on, on the first half.

Speaker Change: Okay, that's helpful.

To, to be very clear. We, we handing, we meant the second half to be roughly on par underlying with the first half. Yeah, so the 9 billion in the first half, underlying second half to be roughly in line with that.

Speaker Change: Okay, thank you. Um, and can I just ask you as a second question? Um, with respect to the investment, um, sort of a relatively wide range. Now, still that 1 percentage Point, um, with the second half first half was below the corridor. Um, could you just help us understand what would take you to the to the top or bottom end of that? And um, yeah, are you, are you hoping to come perhaps in at the at the bottom end of that given the discipline performance in the first half? Thank you so much.

Speaker Change: Yeah, first and foremost. Um I said before, not that we we uh we have set up a comprehensive program to really um uh increase efficiency on investment both in capex but specifically R&D without making compromise on our our ramp up of of products and and the the new businesses like

Speaker Change: Battery and and Scout and others, which will help us in the future. Um, so

Speaker Change: What's what's very clear? We see the, the, the effect of the tariffs and we have even to and to compensate. Some of the effects that might be a small chance on on that. But on the other hand it's also a significant seasonality in our spending specifically in R&D. Um, and so the the guidance of 12 to 13% and I think it's roughly where we expect to end. Also for the full year 2025 and we gave us very specific uh Outlook now for for sales basically on par with prior year 20, 25 billion uh 30 325 billion and that gives you an indication. What we expect in terms of R&D and capex,

appreciate it. Thank you.

Speaker Change: Thank you Henning, and that brings us to the final question here, which is this time Best For Last Mike Tindle? Mike from HSBC? Please go ahead.

Mike Tindle: Thank you, gentlemen. I've got 2 very, very quick ones. Uh the first 1 just regarding the guide. Um,

Mike Tindle: Am I right in? Assuming there's very limited mitigation in that you've talked about turning a basis points on margins for tariffs.

Mike Tindle: But no mitigate. And that's ex mitigation, is that true in the 4 to 5% as well?

Mike Tindle: And then the second question is, is

Mike Tindle: Just a little bit of confusion here in the cash flow walk. You've Got 7 billion for tariffs.

But it was 1.3 billion in the p&l, is that just a timing issue, or is there something else in there that I've missed? Thanks.

Mike Tindle: Yeah, um, it's you're quite right. We, we said 200 basis points that 27.5% tariffs before mitigation. So mitigation is a chance. Um, either for for, for the, for the guidance, for the Outlook, um, or to compensate for potential additional headwind.

Mike Tindle: um, this this is

Mike Tindle: this is clear. Um,

Mike Tindle: and,

Mike Tindle: yeah, to

Mike Tindle: When we now it's becomes very technically look, I make 1 example. Why? Why it's why it's different, what we see in the pnl and in the cash flow? Um and that example makes it hopefully clear.

Mike Tindle: Expecting tariffs for the future. That means all the acrs we have to do. For example, for warranty, we have to to to take up because the parts for the warranty which comes from Mexico. And we come from Germany really in future to be more expensive. So this is 1 technical effect by by the the pnl burden is right now.

Mike Tindle: Um, slightly higher than the cash flow burden. But I mean at the end of the day, the 2 figures will be the same.

Mike Tindle: Got it.

Mike Tindle: Quickly follow up.

Mike Tindle: So if the Tariff was then to fall, would you see a possible reversal of those provisions?

Mike Tindle: Can you say it again?

Speaker Change: Sorry if the Tariff was to Fall, Would you potentially see a reversal of that provision then for the warranty, the higher part cost if they're in a world where we find, hopefully an agreement that below the 27.5%.

Speaker Change: We would see um, a small Improvement.

because some of the not all, but some of the, um, rules would be partially reversed

Speaker Change: But thank you very much, a work of caution. We always talk about Europe and Mexico, and we must not forget that in order to make that happen, we we need basically an improvement on both sides.

Yeah, got a. Thank you.

Speaker Change: Thank you, Mike. Thank you gentlemen for the very comprehensive Q&A session. Uh we are now at the end of the investor and analysts call and as always if you found anything was left unanswered, please contact the our team in bossburg. Thank you already in advance for keeping us employed.

Speaker Change: Our next event will be the Foxfire group product and Tech update in the context of the IRA in Munich on September 9th.

Speaker Change: Um, and the 9-month results will be released on October 30th.

Speaker Change: Um thank you very much for attending. Um we have now a short break and will continue after that. Yeah, 5 minutes about and will continue after that short break with a question answer session for the journalists. Thanks very much again for your numerous participation. Um we hope you will have a great summer holiday and sometime with your families and um take care and speak soon.

Speaker Change: Move it.

Speaker Change: Okay.

Speaker Change: If you you you can also ask questions in English, then press star. 1 to ask a question, then you appear here on the dashboard and I will, um,

Speaker Change: Will put your name on and then you can ask a question either to all of a bloomer or Co or to an our chief operating officer and CFO. And with this

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Speaker Change: um,

Speaker Change: My folks.

Monica, as you like German or English, please, the floor is yours.

Investment package investors calls. Um,

Speaker Change: We have successful cars and making them more American is. Our intention made in America,

Speaker Change: with you, um, as I said earlier,

Speaker Change: um,

Speaker Change: pick up segments again.

Speaker Change: um the uh, Porsche is Extreme

Speaker Change: Now, I switched to English because we're going to the Wall Street Journal and Stefan Wilmont Stefan. The floor is yours.

Thank you. Can you hear me?

Yes, we can.

Speaker Change: Right. Yeah. Well to just follow up on that. Um,

Speaker Change: And authorities, if I've missed anything, um, because I've been following in German. But, um, the uh,

Speaker Change: so,

Speaker Change: You talked about this uh potential. Um, quid pro quo, uh deal. Um,

Speaker Change: so if I understand it correctly, um, following a

Speaker Change: EU us deal. Um, there there could be a special Vox that I can deal. Um,

Speaker Change: or is this something that would be available also to the

Speaker Change: other companies, um,

Speaker Change: Maybe you can clarify that. Um and also um you talked I think early on the analysts call about

Um, or maybe it was early on this press call. Sorry about the possibility of exporting Aldi's. I think you were talking about. Um, so uh, investing in an Aldi Factory which could then potentially be used for export. I guess that plays into this idea that you just mentioned of

Speaker Change: Um, making American Products, um, and then you perhaps using them as an export for export? Does that mean you're also, um, supporting the idea of, um,

Speaker Change: Uh, I think draw draw Duty drawbacks. I think they're called in in English or that they kind of, um,

Speaker Change: compensatory kind of where you can count exports against Imports for Duty purposes. Maybe you can clarify those those points in in, in, in, in the way that you're thinking about, um,

Speaker Change: How the the US situation could work out, thank you.

Speaker Change: Investments, and um, our ideas um, with our growth plan in the US. Um, we can offer huge Investments.

Speaker Change: And um, then I'm having the opportunity to Discount, um, the the Tariff level, but also with potential for the future, um, to export cars, um, from the US to other parts of of the world. This is a Volkswagen model, um, and I think um, it should be open for European. Um, companies. That's not only Automotive, um, that's uh, pharmaceutical products or um, chemistry or whatever, um, um your your deal um to to make specific deals in the past. Also, when you're investing in the region, um, sometimes you're getting support, um, local support because the multiplier um is is much better uh than in this case, um, from the 1 time effect. Um,

Speaker Change: Having having terrorists and that is, um, our aim to come to a win-win situation in between the US government and then our company with a very attractive package.

Speaker Change: And we have 2 more questions on the list. Uh, the first is lazore, the second auto car. We start with uh lizzo and two madla please.

Speaker Change: Yeah, uh, couldn't talk. Duncan does he mind if I get a name and normal? That's who is in field of Frank,

At the beginning.

Speaker Change: um,

Speaker Change: yeah.

Speaker Change: And the last question for this, call goes to auto car and uh mark this show please mark.

Speaker Change: Um, couple of quick ones for me. Uh, so Porsche seems particularly hard here in its markets and its sales at the moment, how how does Porsche turn it around? Is it, is it on cost control or is it in terms of Market, appeal, and, and products relevant to the market. And, and then just on China,

Speaker Change: Um, what you presented this morning is really interesting. It kind of seems a bit at odds to what many Europeans were sort of pulling out of the European areas are pulling out of China, but your investment is huge. What are the risks of a western area in China and do is it, or is it having that level of investment with 50 new products to 2030 helps? Mitigate that risk?

Speaker Change: Yeah, Mark let me let me start with the Porsche situation.

Speaker Change: On the 1 hand side, Porsche invested a lot during the last years, uh, for the new product lineup, which is very well received in the market. For example, the record sales in the US,

Speaker Change: The first half of this year.

Speaker Change: and um,

Speaker Change: therefore, um, Porsche lost a lot of volume because, um, of the structural effects in the China Market, on the other side, um, Porsche is exporting, um, 100%, um, to, um, the US from Europe and, um,

Speaker Change: The, um, tariff level is hitting Porsche heavily. And why is Porsche in the sandwich positioning more than other, um, manufacturers? Uh, because China and the US are by far the biggest single market for, for Porsche

Speaker Change: then the second, um, a third term effect is, um, that, um, the ramp up of Electric Mobility is not as strong as expected. Um, on the 1 hand side, Porsche is very successful with electric cars. Um, as I mentioned before, um in Europe, um, the volume share of Porsche is already 60% of electrified, cars, best and plug-in, hybrids and 36% perhaps only. Yeah. And Porsche, there is, um, in the top line of the traditional car, manufacturers, in terms of electrification,

Speaker Change: Uh, but um, all these effects um, together, um, puts um, the business model of Porsche Under Pressure. Um, we reacted already, uh, with the first package um, in the first half of this year to improve the structural costs of Porsche continued by a second package. Um,

Speaker Change: And we will negotiate. Um, now in the second half of this year and on the other side to being more flexible, in terms of product strategy, uh, we kicked off a huge investment program. Um, for more flexibility in in the program, um, to having in between combustion engines and um, hybrids and electric cars is so kind of hatching, um, having more offers and in each segment and, uh, all of this, um,

Speaker Change: Is being done in, um, in this year.

Speaker Change: So, uh, we expecting, um, that we are touching the bottom, um, with a very positive perspective for the future because Porsche is counting, um, on a, um, great, um, product lineup and on the other side, a great, um, company structure. And so we have to adapt it, um, in this framework conditions,

Speaker Change: And the second question was about China, in China? We are still market leader in combustion, engine cars. We are um, 1 of only few companies uh, in China um, still earning money.

Speaker Change: And, uh, what we have done. Um, yeah, around 2, to 3 years ago to, um, switch our strategy completely, um, with a clear product assessment. And, uh, we changed our products strategy. We, um, changed our philosophy, doing more business in China, for China. Uh, we ramped up in the meantime, a new engineering center and cafe with over 3,000. Um, colleagues, uh,

Speaker Change: Working working. There we implemented, also, with Partnerships, um, a new. Electric electronic platform which will come at the end of the year, and, um, a completely new new lineup, we were able to reduce, um, our costs of over 30%, uh, we, um, speed it up our Engineering Process of, um, 30%. And now, we will enter up to the end of 27, with 30 new metals to the market and up to the end of uh, 2030 with um, over 50 new models to the market together with our joint venture partners.

Speaker Change: And um, the first feedback, we are getting um we presented. Um, the first glimpse of our, our cars at the Shanghai auto show was very positive. And uh, so we think that that's promising because, um, we are on the level, um, on the comp competition

In terms of Technology. What are, um, our, um, Chinese customers are expecting, uh, we are in line, uh, with our cost positioning. So, um, pricing, um, play, um, important role in the, in the market and we have a big Advantage because, uh, we have, um, 50 million customers, um, in in China. Um, we have very strong dealer partners. And, uh, we have a service network and, um, a lot of the new Chinese, um, Brands don't have, um, this, um, all-in-1 solution. We are, we are offering good products. Uh, great customer base, um, strong partner Network and, um, service.

Speaker Change: Network and high quality, um, what our customers are used from, um, from Our Brands. And so, um, we think, um, we need 1 or 2 years and then we will have, uh, also a great comeback in terms of volume, also in the um, electric segment.

Ladies and gentlemen, the conference is now concluded. And you may disconnect. Thank you for joining and have a pleasant day. Goodbye.