Q2 2026 Bayerische Motoren Werke AG Earnings Call - Speeches

Speaker #1: Dear colleagues, ladies and gentlemen, good morning and welcome to the telephone conference of the BMW Group. Today, we have here Milan Nedeljković, Chairman of the Board of Management, and our CFO, Walter Mertl.

Speaker #1: First, Walter will take you through our financial results. Milan will then give you a general business update for the BMW Group. After a short break, we will have time for our Q&A sessions.

Speaker #1: And now, Walter, please go ahead.

Speaker #2: Thank you, Max. Ladies and gentlemen, good morning. Our second quarter results reflect the challenging market conditions the BMW Group is currently facing. As outlined in our ad hoc communication on June 16, during the quarter, both the Chinese automotive market and BMW Group retail sales in China continued to decline.

Speaker #2: At the same time, higher export volumes from China increased competitive intensity in other markets, with a particular impact on our business in the Asia-Pacific region.

Speaker #2: Together, the effects of the ongoing conflict in the Middle East and these developments weighed on both our sales and financial performance. While BMW Group deliveries increased by 7.6% in Europe and 11.9% in the U.S., this was not sufficient to offset the decline in China and Asia-Pacific.

Speaker #2: The Group revenues amounted to €31.3 billion in the second quarter and €62.3 billion in the first six months. Group earnings before tax totaled €1.7 billion, a decline of 35% compared to the second quarter of last year.

Speaker #2: Year-to-date through June, Group earnings before tax declined by 29.4% year-on-year to around €4 billion. This resulted in a Group EBITDA margin of 5.4% in the second quarter, and 6.5% for the first half of the year.

Speaker #2: In the Automotive segment, EBITDA amounted to €629 million in the second quarter, corresponding to a reported EBIT margin of 2.3%. This reported margin includes a burden from elevated tariffs of 1.25 percentage points in the second quarter.

Speaker #2: It also includes the depreciation from the BVA purchase price allocation, which reduced the EBIT margin by 1.2 percentage points. After six months, automotive EBITDA amounted to around €2 billion, with an EBIT margin of 3.6%.

Speaker #2: Let me now provide more detail on the performance of the Automotive segment. In the second quarter, the BMW Group delivered around 591,000 BMW, MINI, and Rolls-Royce vehicles to customers, 4.9% less than in the same quarter last year.

Speaker #2: Looking at the development by brand, BMW delivered around 509,000 vehicles in the second quarter, down 7.7% year-on-year, but the MINI brand continued to perform well.

Speaker #2: Deliveries were up 17.1% compared to the prior-year quarter, supported by strong demand for our all-electric MINI models. This brings me to our BAF retail sales.

Speaker #2: Between April and June, the BMW Group delivered around 117,000 all-electric vehicles to customers worldwide. Including plug-in hybrids, sales of electrified vehicles amounted to around 163,000 units.

Speaker #2: This corresponds to our BEV share of 19.8%, and an electrified vehicle share of 27.6% of total Group deliveries in the second quarter. Europe remains the main growth driver for our all-electric vehicle sales.

Speaker #2: Supported by the start of customer deliveries of the all-new BMW iX3, BEV sales in Europe increased by 38% year-on-year to more than 81,000 units.

Speaker #2: Almost one in three vehicles sold in Europe was all-electric. This BEV performance in Europe supports our expectation that we will once again meet our CO2 emission targets in the EU in 2026.

Speaker #2: Automotive segment revenues declined by 7.7% to €27.2 billion in the second quarter. The decrease was primarily driven by lower sales volumes and the highly competitive market environment.

Speaker #2: Let's now take a closer look at our sales performance across the major regions. In Europe, our largest sales region, retail sales increased by 7.6% year-on-year.

Speaker #2: In the Americas, retail sales increased by 9.4% year-on-year, driven primarily by the U.S., where deliveries grew significantly by 11.9%. In the U.S., the BMW brand once again outperformed the overall market in the second quarter.

Speaker #2: Higher deliveries of vehicles with internal combustion engines more than offset lower BAF sales. In China, the downturn in the automotive markets accelerated further during the second quarter, predominantly in the non-electrified vehicle segment.

Speaker #2: In this highly competitive environment, BMW Group retail sales declined by 30.2% between April and June. For the first six months, retail sales in China were down 20.4%, in line with the overall market decline of 20.2%.

Speaker #2: Against this backdrop, our focus remains on achieving the right balance between sales volumes, transaction prices, and profitability—for both the BMW Group and our dealer partners.

Speaker #2: In our sales region—Asia-Pacific, Eastern Europe, Middle East, and Africa—deliveries declined by around 9,000 vehicles, or 10.9%, year-on-year. Several markets in the region were affected by spillover effects from China, as well as vehicle consumer sentiment resulting from the ongoing conflict in the Middle East.

Speaker #2: Let's now take a closer look at the year-on-year development of automotive EBIT on the following slide. Changes in currencies had a negative impact of around €400 million on EBIT, while raw material positions were broadly neutral compared to the prior-year quarter.

Speaker #2: The adverse ex-development seen in the first quarter continued into Q2, as expected. Please expect FX headwinds also in the second half of the year, although at a lower level than in the first six months.

Speaker #2: That effect of volume, model mix, and pricing resulted in a negative impact of around €1.8 billion compared to Q2 2025. A large share of this impact was related to China, which was also the main driver behind our guidance update in June.

Speaker #2: Besides lower sales volumes, the decline in this position mainly reflects the highly competitive market environment across a number of regions, as well as vehicle consumer sentiment in selected markets.

Speaker #2: Since we fully consolidate BVA, the current headwinds from our business in China are fully reflected in Automotive EBIT. Research and development expenses recognized in the P&L increased by around €100 million year-on-year.

Speaker #2: This was mainly due to an increase in depreciation of around €150 million related to capitalized development costs from previous years. As in the first quarter, Group R&D expenditure remained below the prior-year level in Q2.

Speaker #2: Total R&D expenditure amounted to less than €2 billion, a decrease of 3.8% year-on-year. This is in line with the trend of R&D and capital expenditure reduction that will continue for the remainder of the year.

Speaker #2: The R&D ratio, according to the German Commercial Code, came in at 6.3% for the second quarter and 6.0% for the first half of the year.

Speaker #2: Reducing our operating cost base remains an important priority. Accordingly, selling and administrative expenses decreased by around €200 million year-on-year in Q2. Other cost changes provided a positive effect of around €1.2 billion.

Speaker #2: Compared to the second quarter of 2025, this reflects a number of factors, including lower warranty and manufacturing costs, as well as tariff-related effects. Overall, we reduced expenditure by €400 million in the second quarter and €900 million year-to-date through June.

Speaker #2: So, automotive EBIT for the second quarter amounted to around €629 million, and after six months, it totaled €2 billion. The free cash flow in the automotive segment amounted to around €500 million in the second quarter of 2026.

Speaker #2: The net change in working capital reduced free cash flow by around €1.3 billion. This was due to an event inventory buildup during the quarter, as production exceeded sales volumes.

Speaker #2: We made the necessary adjustments to our production planning, with the objective of bringing inventories back towards the prior year level by year-end. The net effect of capital expenditure and depreciation contributed around €600 million to free cash flow.

Speaker #2: As in the first quarter, depreciation exceeded declining capital expenditure in Q2, providing a positive contribution to free cash flow. Throughout the year 2026, depreciation will remain above capital expenditure.

Speaker #2: The CapEx ratio was 4.1% for the second quarter and 3.1% for the first six months. In the first half of the year, we have reduced CapEx by more than 30%.

Speaker #2: The change in provisions reduced free cash flow by €500 million in Q2. This includes the consumption of warranty provisions. Other items increased free cash flow by €1.1 billion.

Speaker #2: This position covers multiple topics, including accrued expenses and interest received. So, in the first six months, free cash flow amounted to €1.3 billion.

Speaker #2: And for the full year, the BMW Group is targeting an automotive free cash flow above €2.5 billion. Ladies and gentlemen, the BMW Group remains committed to its shareholder return strategy, which includes both dividend payments and share buybacks.

Speaker #2: We completed the second tranche of our third share buyback program on June 26, two months ahead of the original schedule. The third and final tranche started on July 1 and is expected to be completed no later than November 30.

Speaker #2: Five months earlier than originally scheduled. Once completed, the third share buyback will have reached its full volume of €2 billion. For 2026, this represents a capital return of €1.25 billion to our shareholders under the current share buyback program.

Speaker #2: And this acceleration of the third tranche underlines our focused approach to capital allocation. At the BMW Group, we take a long-term perspective to create sustained value for all our stakeholders.

Speaker #2: For us, financial performance and responsible business management go hand in hand. Alongside our environmental commitments, this also means maintaining high social and ethical standards across our operations and supply chains worldwide.

Speaker #2: In an evolving competitive landscape, we believe that customers worldwide will increasingly value these standards as an important differentiating factor. Let's now turn to our Financial Services segment.

Speaker #2: In the first half of the year, the number of new contracts concluded with retail customers increased by 5% to 866,000 contracts, as the penetration rate for lease and loan products rose to 52.9% in the first six months.

Speaker #2: This development was supported by changes in the competitive environment in China. Since mid-2025, local banks have significantly reduced commissions related to the brokering of financing and insurance products for end customers.

Speaker #2: Adjusted for FX effects, total new business volume grew by 6.1% to about €33 billion. Segment earnings for the first half of the year amounted to around €1 billion, down 15.4% year-on-year.

Speaker #2: This decline was mainly driven by an addition to an existing provision for a consumer compensation program in the UK in the first quarter. In the second quarter, Financial Services earnings increased by 15.7% year-on-year, supported by this larger portfolio volume.

Speaker #2: In the first half of the year, the credit loss ratio across the entire credit portfolio remained low at 0.27%. In the motorcycle segment, deliveries declined slightly by 1.9% year-on-year, and segment EBIT increased to €141 million, resulting in an EBIT margin of 15.2%.

Speaker #2: Ladies and gentlemen, based on the results for the first half of the year, we confirm our updated full-year guidance communicated in June. Group earnings before tax are expected to decrease significantly.

Speaker #2: In the automotive segment, we expect deliveries to decrease slightly, and the EBIT margin to come in within a range of 1% to 3%. This includes a burden of up to 1.25 percentage points for the workforce restructuring program agreed with the Works Council.

Speaker #2: The EBIT margin in the motorcycle segment is expected to be between 4% and 6%. And in the Financial Services segment, we expect a return on equity in the range of 13% to 16%.

Speaker #2: Ladies and gentlemen, our second-quarter results reflect the challenging market environment we outlined in our guidance update in June. We continue to address the short-term challenges with targeted operational measures.

Speaker #2: And disciplined management of costs are in these spending and capital expenditures. At the same time, we are intensifying our structural efforts to make the BMW Group faster, leaner, and more efficient in the years ahead.

Speaker #2: With our strong product pipeline coming to market, and with the expertise and commitment of our employees, the BMW Group has a solid foundation for the years ahead.

Speaker #2: This is especially important, as our competitive landscape is changing at a rapid pace. In this environment, our focus is clear: to manage the current headwinds with discipline, to strengthen the resilience of our business, and to lay the foundation for sustained long-term value for all our stakeholders.

Speaker #2: Thank you.

Speaker #1: Thank you very much, Walter. Now, over to our CEO, Milan Mitalković.

Speaker #3: Good morning, ladies and gentlemen. Over the past several weeks, we've seen how quickly our business environment can change. As Walter outlined, the Q2 results reflect our disclosed guidance.

Speaker #3: However, the figures in the first and second quarters are not satisfactory. The rapid deterioration of the market in China was the main trigger that led us to adjust our guidance in June.

Speaker #3: In addition, new competitors are also expanding into several markets across Asia-Pacific, Latin America, and Europe. These market dynamics, however, are just one aspect of the fundamental changes in our industry.

Speaker #3: In a little over a year, several other factors have converged and have had a significant impact on our business environment, including headwinds from tariffs, trade barriers, and currency exchange rates; increasing requirements in regulations, especially in Europe; and the impact of the ongoing conflict in the Middle East.

Speaker #3: To address these challenges, we are taking immediate, decisive action to drive the necessary change. This will ensure that we remain competitive and will return us to better results for the short, medium, and longer term.

Speaker #3: In the short term, we are taking steps to accelerate ongoing cost reduction initiatives, focusing on structural and efficiency measures. These will deliver a sustained reduction of our overall fixed costs.

Speaker #3: The impact will be visible from 2027 onwards and will provide a new baseline for our strategic and operational measures going forward. One important aspect is the dimension of the organization.

Speaker #3: Which we will make leaner to increase speed and efficiency. We have made very quick progress with the general works council to reach an agreement on a workforce restructuring program.

Speaker #3: This includes a voluntary severance program in indirect functions in Germany. Now, we will move forward with the implementation of the agreed measures in order to realize the benefits in the near term.

Speaker #3: As our industry continues to transform, we need to be prepared for the road ahead. By tackling both our structures and our processes to ensure that we are fit to deliver the necessary changes in the midterm, we are closely examining the entire value chain and have begun to take action on four key areas internally.

Speaker #3: Customer journey, our organizational structures, delivery and purchasing, and engineering. To give you an idea of what we are looking at on the customer side, our focus is on the continued implementation of a new sales model in Europe, which requires a shift in mindset from wholesalers to retailers.

Speaker #3: At the same time, we are optimizing every touchpoint in our customers' ecosystem and leveraging the data we have to generate additional business opportunities. On the organizational side, this means making greater use of AI to further automate processing and increase speed.

Speaker #3: As well as accelerating decision-making throughout the organization. In delivery and purchasing, we are looking at how value creation is distributed globally and identifying opportunities to expand our local-for-local approach.

Speaker #3: And on engineering, our focus is on increasing the speed of development through further standardization and commonality in engineering solutions and components. Across all these areas, we will fundamentally transform the company.

Speaker #3: From a long-term perspective, we are consistently looking at the broader strategic picture, covering technologies, products, markets, and brands. In all of these areas, we are taking significant steps and picking up the pace.

Speaker #3: For example, we are re-evaluating which technologies, model variants, and drivetrains we will need in the future. We are also further tailoring our approach to individual markets and their specific product and drivetrain requirements.

Speaker #3: We are evaluating where we can pursue new partnerships where it makes economic and technological sense. While we face a lot of headwinds at the moment, we also have a solid foundation to leverage.

Speaker #3: In Q2, we saw a strong performance in Europe and the US, which could partly counterbalance the developments in China and Asia-Pacific. Our performance in China today, in 2026, was at least in line with overall market development.

Speaker #3: We will also build on key changes that we have made in the last years, in particular the significant investment in Neue Klasse. But this also includes the consolidation of the dealer network in China, and at least the cost savings of €2.5 billion that we made in 2025.

Speaker #3: As we look ahead, our strong portfolio of premium products and technologies, our drivetrain approach, and our global footprint provide us with strategic direction as we navigate the current market environment.

Speaker #3: First, our products and technologies. The rollout of the Neue Klasse is now well underway. The BMW iX3 continues to see strong momentum. We are on track to reach the next major milestone of 100,000 orders.

Speaker #3: To support this incredible milestone, we introduced a second shift at Plant Debrecen ahead of schedule. Since the start of series production, the plant has already produced 50,000 BMW iX3 vehicles—the fastest ramp-up of a new BMW Group plant.

Speaker #3: We have also seen strong demand for the BMW i3 Launch Edition with initial orders, which we started earlier than planned in June. Regular ordering will open at the end of September.

Speaker #3: Just a few weeks ago, we also celebrated the world premiere of the new, fifth-generation BMW X5. The new X5 shows the full potential of our technology-open approach.

Speaker #3: The second pillar of our strategic foundation: customer needs and expectations vary widely from market to market, and even within individual markets. Our Q2 sales also reflect this reality and the strength of our technology-open approach.

Speaker #3: In Europe, sales were supported by robust growth, which jumped by over a third in Q2. In the US, sales of ICE vehicles drove growth to double digits in the second quarter, as BEV demand in the overall market fell.

Speaker #3: The positive response to the BMW iX3, i3, new 7 Series, and X5 shows that we have made the right investments to bring the right product momentum to the markets.

Speaker #3: And there is much more to come, as our product ramp-up remains firmly on track. By the end of next year, we will have launched 40 new and updated models.

Speaker #3: This includes the first Neue Klasse models in China—the BMW iX3 and i3 long wheelbase—produced at our manufacturing base in Shenyang. They have been developed specifically for Chinese customer preferences.

Speaker #3: And incorporate technologies from local tech players. This illustrates the third key pillar of our strategy: our global footprint with a local-for-local approach. In major markets, it allows us to better address individual market needs while serving demand through local production and supply chains.

Speaker #3: Particularly in challenging times, these set-up offers significant resilience and flexibility as developments vary from market to market. Ladies and gentlemen, we are operating in a dynamic and challenging environment.

Speaker #3: We are taking a critical look at how we work, including revisiting core processes and structures that were previously considered untouchable. We know we have hard work to do on the road ahead.

Speaker #3: My responsibility is to ensure that we pick up the pace and increase the impact. We know we can put the company back on a solid, enduring path to the premium profitability that the company is capable of generating.

Speaker #3: We remain ambitious, and intend to return to our strategic EBIT margin corridor of 8 to 10 percent by the beginning of the next decade.

Speaker #3: In the interim, we will work our way back to this target step by step. Ultimately, it’s about ensuring the long-term success of the company and creating value for our customers, our partners, and our investors.

Speaker #3: Thank you.

Speaker #1: Thank you very much, Milan. Ladies and gentlemen, we now have a short break before we move to the Q&A session. See you in five minutes.

Speaker #1: Thank you very much. Dear colleagues, welcome back to the second part of our earnings call. We are going to continue in German, but there is English translation.

[Company Representative] (BMW): Dear colleagues, welcome back to the second part of our earnings call. We are going to continue in German, but there is English translation. We are looking forward to hearing your questions. As always, we will give you some technical remarks, and then we will have the first question answered. Ladies and gentlemen, we will now start with the Q&A session. If you would like to ask a question, then please raise your hand. You find it at the screen at the bottom right. If you are connected by phone, then please press star and then nine, and then you can ask your questions one by one. As soon as your name has been announced, it's your turn to speak. In order to withdraw your question, please lower your hand via the Zoom function, and on the phone, please press the star button and then nine.

[Company Representative] (BMW): Dear colleagues, welcome back to the second part of our earnings call. We are going to continue in German, but there is English translation. We are looking forward to hearing your questions. As always, we will give you some technical remarks, and then we will have the first question answered.

Speaker #1: forward to hearing your questions, as always we will give you some technical remarks and then we will have the first question answered. Ladies and gentlemen, we will now start with the Q&A session.

Operator: Ladies and gentlemen, we will now start with the Q&A session. If you would like to ask a question, then please raise your hand. You find it at the screen at the bottom right. If you are connected by phone, then please press star and then nine, and then you can ask your questions one by one. As soon as your name has been announced, it's your turn to speak. In order to withdraw your question, please lower your hand via the Zoom function, and on the phone, please press the star button and then nine. We would like to have the first question. Our first question comes from Christina Amann from Reuters. Please open your mic now.

Speaker #1: If you would like to ask a question, then please raise your hand. You find it at the screen at the bottom right. If you are connected by phone, then please press We are looking star and then 9.

Speaker #1: And then you can ask your questions one by one. As soon as your name has been announced, it's your turn to speak. Now, in order to withdraw your question, please lower your hand via the Zoom function.

Speaker #1: And on the phone, please press the star button and then 9. Now we would like to have the first question. Our first question comes from Christina Ahrmann from Reuters.

Christina Aman: We would like to have the first question. Our first question comes from Christina Aman from Reuters. Please open your mic now. Good morning to Munich. Welcome, Mr. Nedeljković. Great to hear your speech. Yesterday, you announced that jobs will be cut, and you said you're going to dive deeper into the topic. You mentioned a measure yesterday. Can you put a figure to it? What do we expect, and as of when? What number are we talking about? Number of jobs. Yesterday in Germany, we heard 8,000. Could you please confirm? What about worldwide and China? You pointed out that the entire company will be reorganized, the business model, the structures. You would like to have a more stable setup. Could you give us some details? You're talking about technology models that will be revised. What are you going to focus on?

Speaker #1: Please open your mic now. Good morning to Munich. Welcome, Mr. Nils Elkovic, great to hear your speech. Yesterday jobs will be cut, and you said you're going to dive deeper into the topic.

Christina Amann: Good morning to Munich. Welcome, Mr. Nedeljković. Great to hear your speech. Yesterday, you announced that jobs will be cut, and you said you're going to dive deeper into the topic. You mentioned a measure yesterday. Can you put a figure to it? What do we expect, and as of when? What number are we talking about? Number of jobs. Yesterday in Germany, we heard 8,000. Could you please confirm? What about worldwide and China? You pointed out that the entire company will be reorganized, the business model, the structures. You would like to have a more stable setup. Could you give us some details? You're talking about technology models that will be revised. What are you going to focus on?

Speaker #1: Now you mentioned a measure yesterday. Can you put a figure to it? What do you expect, and as of what number are we talking about, number of jobs?

Speaker #1: Yesterday in Germany we heard 8,000. Could you please confirm? And what about worldwide and China? Now you pointed out that the entire company will be reorganized, the business models, the structures.

Speaker #1: You would like to have a more stable setup. Could you give us some details? Now you're talking about technology models that will be revised.

Speaker #1: What are you going to focus on? What processes could just be omitted? Where do you see the possibilities of partnerships? And the main thing is, the main topic, the other one is also China.

Christina Aman: What processes could just be omitted? Where do you see the possibilities of partnerships? The main topic, the other one, is also China. BMW has difficulties in China just like others right now. What are you doing in order to improve the situation? How long will it take, and when will we see results? Thank you. Mrs. Aman, thank you very much for your question. I hand over to Milan Nedeljković. You asked a lot of questions, and to answer all of them will take too long. We will keep it brief because we have a lot of colleagues in the call, and please ask a maximum of two questions because we would like to hear all of you and all of your questions. Milan, over to you. Mrs. Aman, good morning. Thank you very much for your greetings to Munich. Thank you. Your questions.

Christina Amann: What processes could just be omitted? Where do you see the possibilities of partnerships? The main topic, the other one, is also China. BMW has difficulties in China just like others right now. What are you doing in order to improve the situation? How long will it take, and when will we see results? Thank you.

Speaker #1: BMW has difficulties in China just like others, right now. So what are you doing in order to improve the situation? How long will it take, and when will we see results?

Speaker #1: Thank you. Mrs. Ahrmann, thank you very much for your question. I hand over to Milan Nedeljkovic. You asked a lot of questions, and to answer all of them, we'll take too long.

[Company Representative] (BMW): Mrs. Amann, thank you very much for your question. I hand over to Milan Nedeljković. You asked a lot of questions, and to answer all of them will take too long. We will keep it brief because we have a lot of colleagues in the call, and please ask a maximum of two questions because we would like to hear all of you and all of your questions. Milan, over to you.

Speaker #1: We will keep it brief because we have a lot of colleagues in the call, and please ask a maximum of two questions because we would like to hear all of you and all of your questions.

Speaker #1: So, Milan, over to you. Mrs. Ahrmann, good morning. Thank you very much for your greeting to Munich. Thank you. Now, your questions. Concerning the figures, we are not going to confirm anything.

Milan Nedeljković: Mrs. Amann, good morning. Thank you very much for your greetings to Munich. Thank you. Your questions. Concerning the figures, we are not going to confirm anything. The mentioned figures are not the ones that we issued. We are a bit hesitant because it's not just a simple program, and we don't have overhang in the workforce and can derive how many jobs can be cut. The reduction program, it goes hand-in-hand with a reformation program in the company. In this program, we analyze the core processes, sales processes, procurement, purchase, development, technology. In the context of this transformation, we analyze possibilities. Where can the processes get leaner? How can we use digital means? In principle, we have to reanalyze the setup of the processes. They have to be redefined.

Milan Nedeljković: Concerning the figures, we are not going to confirm anything. The mentioned figures are not the ones that we issued. We are a bit hesitant because it's not just a simple program, and we don't have overhang in the workforce and can derive how many jobs can be cut. The reduction program, it goes hand-in-hand with a reformation program in the company. In this program, we analyze the core processes, sales processes, procurement, purchase, development, technology. In the context of this transformation, we analyze possibilities. Where can the processes get leaner? How can we use digital means? In principle, we have to reanalyze the setup of the processes. They have to be redefined. We see the need for restructuring internally. There will be new qualifications, and organizational units will be bundled.

Speaker #1: The mentioned figures are not the ones that we issued now. We are a bit hesitant because it's not just a simple program. And we don't have overhang in the workforce and can derive how many jobs can be cut.

Speaker #1: The reduction program, it goes hand in hand with a reformation program in the company. And in this program, we analyze the core processes, sales processes, procurement, purchase, development, technology.

Speaker #1: So in the context of this transformation, we analyze possibilities. So where can the processes get leaner? How can we use digital means? And in principle, we have to reanalyze the setup of the processes.

Speaker #1: They have to be redefined. So we see the need for restructuring internally. There will be new qualifications, and organizational units will be bundled. So all of this is a comprehensive program, and it's accompanied by the severance program, which we are going to launch.

Milan Nedeljković: We see the need for restructuring internally. There will be new qualifications, and organizational units will be bundled. All of this is a comprehensive program, and it's accompanied by the severance program, which we are going to launch. One goes hand-in-hand with the other. We are on a good and constructive path with our social partner. We are going to initiate this process. We cannot give you any specific figure. The lever is we see a lot of potential. It's not just about cutting jobs. This is one element to be faster and more effective, but the potentials are seen in our setup, in how we design the products, and in the processes with purchasing and our own production.

Milan Nedeljković: All of this is a comprehensive program, and it's accompanied by the severance program, which we are going to launch. One goes hand-in-hand with the other. We are on a good and constructive path with our social partner. We are going to initiate this process. We cannot give you any specific figure. The lever is we see a lot of potential. It's not just about cutting jobs. This is one element to be faster and more effective, but the potentials are seen in our setup, in how we design the products, and in the processes with purchasing and our own production. You had a question on China. Well, this year and last year, we changed the substance of our products and our products themselves. The content was reevaluated. We increased the value.

Speaker #1: So one goes hand in hand with the other. We are on a good and constructive path with our social partner. We are going to initiate this process.

Speaker #1: Hence, we cannot give you any specific figure. Now, the lever is we see a lot of potential. It's not just about cutting jobs. This is one element to be faster and more effective.

Speaker #1: But the potentials are seen in our setup and how we design the products. And in the processes, with purchasing and our own production. Now, you had a question on China.

Milan Nedeljković: You had a question on China. Well, this year and last year, we changed the substance of our products and our products themselves. The content was reevaluated. We increased the value. We also changed the dealers network, and we found a bottom line, so to speak, which has been consistent for the past months. In the Q2, we had a downturn, and it's not just a downturn that we see only with us. It's just the market development of the ICEs in China.

Speaker #1: Well, this year, and last year, we changed the substance of our products and our products themselves. The content was re-evaluated, we increased the value, we also changed the dealer's network and we found a bottom line, so to speak, which has been persistent for the past month.

Milan Nedeljković: We also changed the dealers network, and we found a bottom line, so to speak, which has been consistent for the past months. In the Q2, we had a downturn, and it's not just a downturn that we see only with us. It's just the market development of the ICEs in China. Of course, 39% in June in comparison to the previous year months, this, of course, was a heavy impact. Market share, our methods are relatively well accompanied and welcomed, and we are now on the market with Neue Klasse. The Neue Klasse will get the ramp-up in China at the end of the year. It's a possibility for us to position ourselves on the market. Okay, there was one more question. When will we see results or first results?

Speaker #1: However, in the second quarter, we had a downturn, and it's not just a downturn that we see only with us. Now, it's just the market development of the ICEs in China.

Speaker #1: Now, of course, 39% in June in comparison to the previous year months. This, of course, was a heavy impact. Now, market share our matters are relatively well accompanied and welcomed, and we are now on the market with Neue Klasse.

Milan Nedeljković: Of course, 39% in June in comparison to the previous year months, this, of course, was a heavy impact. Market share, our methods are relatively well accompanied and welcomed, and we are now on the market with Neue Klasse. The Neue Klasse will get the ramp-up in China at the end of the year. It's a possibility for us to position ourselves on the market. Okay, there was one more question. When will we see results or first results? I hand over to Walter Mertl to give an answer, a principal answer to this question.

Speaker #1: The Neue Klasse will get the ramp up in China at the end of the year. So it's a possibility for us to position ourselves on the market.

Speaker #1: Okay, there was one more question. When will we see results of first results? I hand over to Walter Mertl to give an answer principal answer to this question.

Walter Mertl: I hand over to Walter Mertl to give an answer, a principal answer to this question. Mrs. Aman, I'm sure you're aware of our guidance for the year. It's 1% to 3% of the EBIT margin, and 1.25% is contained for the severance program. We can explain it later on, or maybe in March for 2027 when we set the guidance for 2027. Thank you, Mrs. Aman. We are looking forward to the next question. The next question? Comes from Sebastian Asch from the Financial Times. Please open your mic now. Good morning also from my side. You talked about a change in the organizational structure. Mr. Nedeljković, could you please give us some details? You said that you're going to use AI more and more. You said this in your presentation. What functions shall be replaced by AI?

Speaker #1: Mrs. Ahrmann, I'm sure you're aware of our guidance for the year. It's one to three percent of the EBIT margin, and 1.25% is contained for the severance programs.

Walter Mertl: Mrs. Aman, I'm sure you're aware of our guidance for the year. It's 1% to 3% of the EBIT margin, and 1.25% is contained for the severance program. We can explain it later on, or maybe in March for 2027 when we set the guidance for 2027.

Speaker #1: And we can explain it later on, or maybe in March for 2027 when we set the guidance for 2027. Thank you, Mrs. Ahrmann. We are looking forward to the next question.

[Company Representative] (BMW): Thank you, Mrs. Aman. We are looking forward to the next question.

Speaker #1: The next question. Comes from Sebastian Ash from the Financial Times. Please open your mic now. Good morning also from my side. Now you talked about a change in the organizational structure.

Operator: The next question? Comes from Sebastian Asch from the Financial Times. Please open your mic now.

Sebastien Ash: Good morning also from my side. You talked about a change in the organizational structure. Mr. Nedeljković, could you please give us some details? You said that you're going to use AI more and more. You said this in your presentation. What functions shall be replaced by AI? In this context, I would be interested to know more about consulting services. You are commissioning consulting services now, the restructuring reorganization processes in comparison to the past years. Have you used less of those services and is there a savings potential maybe also by using AI in this regard?

Speaker #1: Mr. Nedeljkovic, could you please give us some details? You said that you're going to use AI more and more. You said this in your presentation.

Speaker #1: So what functions shall be replaced by AI? In this context, I would be interested to know more about consulting services. You are commissioning consulting services now.

Milan Nedeljković: In this context, I would be interested to know more about consulting services. You are commissioning consulting services now, the restructuring reorganization processes in comparison to the past years. Have you used less of those services and is there a savings potential maybe also by using AI in this regard? Thank you very much, Sebastian. Milan. Well, the organizational change does not target 1 single unit. It's about restructuring our processes and the way we work. Just 1 example to show you into what direction we are heading. Well, we have a high degree of specialization in many departments, we have a lot of sharing the work. To resolve this is very difficult because each department has a very high competence. Here we can use AI. We can use AI agents, we can use supporting AI tools. This way, we can provide more information to individual employees.

Speaker #1: The restructuring reorganization processes in comparison to the past years. Have you used less of those services? And is there a savings potential, maybe, also by using Thank you very much, Sebastian.

[Company Representative] (BMW): Thank you very much, Sebastian. Milan.

Speaker #1: Milan, well, the organizational change does not target one single unit. It's about restructuring our processes and the way we work. Just one example. To show you into what direction we are heading.

Milan Nedeljković: Well, the organizational change does not target 1 single unit. It's about restructuring our processes and the way we work. Just 1 example to show you into what direction we are heading. Well, we have a high degree of specialization in many departments, we have a lot of sharing the work. To resolve this is very difficult because each department has a very high competence. Here we can use AI. We can use AI agents, we can use supporting AI tools. This way, we can provide more information to individual employees.

Speaker #1: Well, we have a high degree of specialization in many departments. Hence, we have a lot of sharing the work. Now, to resolve this is very difficult because each department has a very high competence.

Speaker #1: Now, here we can use AI. We can use AI agents. We can use supporting AI tools. This way, we can provide more information to individual employees.

Speaker #1: This way, they can better bundle their functions and their responsibilities. And this makes the decision process faster. Now, if the organization has many small details, of course, then we can have smaller teams to fulfill comprehensive tasks.

Milan Nedeljković: This way, they can better bundle their functions and their responsibilities, this makes the decision process faster. Now, if the organization has many small details, of course, we can have smaller teams to fulfill comprehensive tasks. This makes us faster and more cost-effective. Now this is our principle, and this principle applies to all of the processes in the company. We would like to implement this one by one. We have very good approaches, and you are saying consulting services. Well, of course, we're going to be supported by experts. We get benchmarked. We try to learn from other industries, and the overall package from all of this enables us to harvest potentials. Okay. Thank you. Next question, please. Next question comes from Christoph Rürmer from DPA. Please open your mic now. Good morning.

Milan Nedeljković: This way, they can better bundle their functions and their responsibilities, this makes the decision process faster. Now, if the organization has many small details, of course, we can have smaller teams to fulfill comprehensive tasks. This makes us faster and more cost-effective. Now this is our principle, and this principle applies to all of the processes in the company. We would like to implement this one by one. We have very good approaches, and you are saying consulting services. Well, of course, we're going to be supported by experts. We get benchmarked. We try to learn from other industries, and the overall package from all of this enables us to harvest potentials.

Speaker #1: This makes us faster and more cost-effective. Now, this is our principle, and this principle applies to all of the processes in the company. So we would like to implement this one by one.

Speaker #1: We have very good approaches, and you are saying consulting services. Well, of course, we're going to be supported by experts. We get benchmarks. We try to learn from other industries.

Speaker #1: And the overall package from all of this enables us to harvest potentials. Okay, thank you. Next question, please. Next question comes from Christoph Ruhrmeyer from DPA.

[Company Representative] (BMW): Okay. Thank you. Next question, please.

Operator: Next question comes from Christoph Rürmer from DPA. Please open your mic now.

Speaker #1: Please open your mic now. Good morning. Mrs. Ahrmann asked a lot of questions, but I actually was planning to ask. Thank you. Now, I would like to talk about the details of the severance program.

Christof Rührmair: Good morning. Mrs. Aman asked a lot of questions that I actually was planning to ask. Thank you. Now I would like to talk about the details of the severance program. As far as I know, it's a non-specific one, there is the possibility, some call it an open program. As a result, the best ones will usually go because they will find a new job soon. Why did you pick this variant? You are going to focus on local for local. Does that mean that from Europe, from Germany, you will go out in the upcoming years, go out more, or am I interpreting this too much? One minor detail, the FX effect that you mentioned, Mr. Mertl, does this apply just to the dollar or does this also apply to other currencies as well?

Christoph Rürmer: Mrs. Aman asked a lot of questions that I actually was planning to ask. Thank you. Now I would like to talk about the details of the severance program. As far as I know, it's a non-specific one, there is the possibility, some call it an open program. As a result, the best ones will usually go because they will find a new job soon. Why did you pick this variant? You are going to focus on local for local. Does that mean that from Europe, from Germany, you will go out in the upcoming years, go out more, or am I interpreting this too much? One minor detail, the FX effect that you mentioned, Mr. Mertl, does this apply just to the dollar or does this also apply to other currencies as well? Thank you very much. First, Mr. Nedeljković, and then Mr. Mertl.

Speaker #1: So as far as I know, it's a nonspecific one. So there is the possibility some call it an open program. As a result, the best ones will usually go because they will find a new job soon.

Speaker #1: Why did you pick this variant? So you are going to focus on local for local. Does that mean that from Europe, from Germany, you will go out in the upcoming years out go out more?

Speaker #1: Or am I interpreting this too much? Then one minor details. The FX effects that you mentioned, Mr. Mertl, does this apply just to the dollar, or does this also apply to other currencies as well?

Speaker #1: Thank you very much. First, Mr. Nedeljkovic, and then Mr. Mertl. Milan, you have the floor. Good morning, Mr. Ruhrmeyer. Now, you mentioned the severance program.

[Company Representative] (BMW): Thank you very much. First, Mr. Nedeljković, and then Mr. Mertl. Milan, you have the floor.

Milan Nedeljković: Milan, you have the floor. Good morning, Mr. Rürmer. Now, you mentioned the severance program. Well, we agreed with our social partner to have or to offer an open program. It applies to the indirect functions within BMW AG. The employees receive an offer in the form of a piece of information. They will be informed what the value is if they decide to leave the company. However, there's also an agreement that some key functions are not included in this offer. However, it's going to be very broad and offers the possibility to accept this to every possible employee. Now, the employees are also flexible in their decisions to change within the company.

Milan Nedeljković: Good morning, Mr. Rürmer. Now, you mentioned the severance program. Well, we agreed with our social partner to have or to offer an open program. It applies to the indirect functions within BMW AG. The employees receive an offer in the form of a piece of information. They will be informed what the value is if they decide to leave the company. However, there's also an agreement that some key functions are not included in this offer. However, it's going to be very broad and offers the possibility to accept this to every possible employee. Now, the employees are also flexible in their decisions to change within the company.

Speaker #1: Well, we agreed with our social partner to have or to offer an open program. So it applies to the indirect functions within BMW AG, the employees receive an offer in the form of a piece of information.

Speaker #1: They will be informed what the value is if they decide to leave the company. However, there's also an agreement that some key functions are not included in this offer.

Speaker #1: However, it's going to be very broad, and offers the possibility to accept this to every possible employee. Now, the employees are also flexible in their decisions to change within the company.

Speaker #1: It's also part of the agreement because if an employee leaves a role, but this role is still necessary, then a colleague will resume this role and they are going to further develop into that role.

Milan Nedeljković: It's also part of the agreement because if an employee leaves a role, but this role is still necessary, a colleague will resume this role, and they are going to further develop into that role. This is our common understanding that we agreed on, this flexibility matches the BMW flexibility. It's one of our strengths. Local for local, this is one element. Well, in China, we intensify the local dealers, and we harvest their potential more. We focus on the local production in China. In Europe, we stay in Europe. We don't want to deliver into other areas from Europe. We stay in Europe, and we're going to further enhance our footprint here. Okay, thank you very much. That was a question to Walter. Well, you talked about the FX effects.

Milan Nedeljković: It's also part of the agreement because if an employee leaves a role, but this role is still necessary, a colleague will resume this role, and they are going to further develop into that role. This is our common understanding that we agreed on, this flexibility matches the BMW flexibility. It's one of our strengths. Local for local, this is one element. Well, in China, we intensify the local dealers, and we harvest their potential more. We focus on the local production in China. In Europe, we stay in Europe. We don't want to deliver into other areas from Europe. We stay in Europe, and we're going to further enhance our footprint here.

Speaker #1: So this is our common understanding that we agreed on, and this flexibility matches the BMW flexibility. It's one of our strengths. So local for local, this is one element, which we well, in China, we intensify the local dealers and we harvest their potential more.

Speaker #1: So we focus on the local production in China. In Europe, we stay in Europe. We don't want to deliver into other areas from Europe.

Speaker #1: We stay in Europe, and we're going to further enhance our footprint here. Okay, thank you very much. There was a question to Walter. Well, you talked about the FX effects.

[Company Representative] (BMW): Okay, thank you very much. That was a question to Walter.

Walter Mertl: Well, you talked about the FX effects. They have an effect not just concerning the dollar, but also for the Korean won and the yen. Remember, please don't forget, we have a full consolidation of our joint venture. Remember, in the loss and profit and in the balance sheet, it has an effect, whether it's about translation, so conversion, or at the effective date, there's a fundamental difference to others, which might do equity consolidation. For us, it's more than just the dollar.

Speaker #1: They have an effect not just concerning the dollar, but also for the Korean brand and the yen. And remember, please don't forget we have a full consolidation of our joint venture, and we remember in the loss and profit and in the balance sheet, it has an effect, whether it's about translation for conversion or the effective date.

Walter Mertl: They have an effect not just concerning the dollar, but also for the Korean won and the yen. Remember, please don't forget, we have a full consolidation of our joint venture. Remember, in the loss and profit and in the balance sheet, it has an effect, whether it's about translation, so conversion, or at the effective date, there's a fundamental difference to others, which might do equity consolidation. For us, it's more than just the dollar. Okay, thank you to Christoph Rehmeyer. Next question, please. The next question comes from Steven Vermot from The Wall Street Journal. Please open the mic now. Good morning. Thank you very much for the Q&A. I have two questions. First, please tell me more about the development of the BMW business model, because there are going to be market changes, and you talked about those changes during the last months.

Speaker #1: There's a fundamental difference to others which might do equity consolidation. So for us, it's more than just the dollar. Okay, thank you to Christoph Ruhrmeyer.

[Company Representative] (BMW): Okay, thank you to Christoph Rehmeyer. Next question, please.

Speaker #1: Next question, please. The next question comes from Steven Verma from the Wall Street Journal. Please open the mic now. Good morning. Thank you very much.

Operator: The next question comes from Steven Vermot from The Wall Street Journal. Please open the mic now.

Stephen Wilmot: Good morning. Thank you very much for the Q&A. I have two questions. First, please tell me more about the development of the BMW business model, because there are going to be market changes, and you talked about those changes during the last months. Second, you just talked about local for local, and you mentioned Europe and China. Could you please also tell us what that means for North America? Are you planning to localize the production in the United States a bit more? In the United States and Mexico, I should say. Thank you.

Speaker #1: For the Q&A, I have two questions. First, please tell me more about the development of the BMW business model because they're going to be market changes.

Speaker #1: And you talked about those changes during the last months, and then second, you just talked about local for local, and you mentioned Europe and China.

Steven Vermot: Second, you just talked about local for local, and you mentioned Europe and China. Could you please also tell us what that means for North America? Are you planning to localize the production in the United States a bit more? In the United States and Mexico, I should say. Thank you. Thank you very much, Steven. Milan Nedeljković, you have the floor. Mr. Vermot, good morning. Let me start with your second question, because before I already talked about local for local. We have a strong footprint in all of the regions. We have the largest plant in the United States with the production of the iX, and we also enhanced our footprint there. We have a very good dealer network and supplier network, and we are not planning any changes of our footprint in that region.

Speaker #1: Now, could you please also tell us what that means for North America? So are you planning to localize the production in the United States a bit more?

Speaker #1: So in the United States and Mexico, I should say. Thank you. Thank you very much, Steven. Milan Nedeljkovic, you have the floor. Mr. Belmont, good morning.

[Company Representative] (BMW): Thank you very much, Steven. Milan Nedeljković, you have the floor.

Milan Nedeljković: Mr. Vermot, good morning. Let me start with your second question, because before I already talked about local for local. We have a strong footprint in all of the regions. We have the largest plant in the United States with the production of the iX, and we also enhanced our footprint there. We have a very good dealer network and supplier network, and we are not planning any changes of our footprint in that region. With the new X and S generation, so X generation that we have in Woodruff, we set up a new site for the high voltage storage assembly. With this assembly plant, we further developed our footprint in the United States.

Speaker #1: Let me start with your second question. Because before I already talked about local for local, now we have a strong footprint in all of the regions.

Speaker #1: We have the largest plant in the United States, with the production of the IX, and we also enhance our footprint there. We have a very good dealer network, and right now, and supplier network, and we are not planning any changes of our footprint.

Speaker #1: In that region. Now, with the new XMF generation, so X generation that we have in Woodruff, we set up a new site for the high-voltage storage assembly, and with this assembly plant, we further developed our footprint in the United States.

Milan Nedeljković: With the new X and S generation, so X generation that we have in Woodruff, we set up a new site for the high voltage storage assembly. With this assembly plant, we further developed our footprint in the United States. The business model. Whenever we say business model, we focus on our processes. One thing is going to change, namely our sales concept with the direct sales, which we set up for the MINI, and which is very successful in the market. We're going to plan it for BMW step by step. Direct sales is one of the major changes in our business activities. This, yes, for me, is one part. Within the EU. Just to complement this applies to Europe. Next question, please. Next question comes from Felix Stippler from the Handelsblatt. Please open your mic now.

Speaker #1: Now, the business model, whenever we say business model, we focus on our processes. And one thing is going to change, namely our sales concept with a direct sales which we set up for the mini, and which is very successful in the market.

Milan Nedeljković: The business model. Whenever we say business model, we focus on our processes. One thing is going to change, namely our sales concept with the direct sales, which we set up for the MINI, and which is very successful in the market. We're going to plan it for BMW step by step. Direct sales is one of the major changes in our business activities. This, yes, for me, is one part. Within the EU. Just to complement this applies to Europe.

Speaker #1: So we're going to plan it for BMW step by step. So direct sales is one of the major changes in our business activities. And this, yes, for me, is one part.

Speaker #1: Within the EU. Now, just to complement this, this applies to Europe. Next question, please. Next question comes from Felix Stübler from the Handelsblatt. Please open your mic now.

[Company Representative] (BMW): Next question, please.

Operator: Next question comes from Felix Stippler from the Handelsblatt. Please open your mic now.

Speaker #1: Good morning, ladies and gentlemen. Thank you for taking your time. I have one question concerning the effect from the tariff reimbursements, which started in Q2.

Felix Stippler: Good morning, ladies and gentlemen. Thank you for taking your time. I have one question concerning the effect from the tariff reimbursements, which started in Q2. This is what you see in your annual report, financial report. What is the amount of the effect? Two questions on China. Yesterday, the GLA was presented, but it shall not be offered in China. What is the future of compact models from BMW? Will they exist in the future in China? Just briefly, a figure. What is your planned sales volume in that region? Sales model in China, what do you mean exactly? Mr. Stippler? Sorry, I was on mute. Yes. China, yes. What is the level of sales after the downturn now that you would like to see again? Sales level. Yes, okay. Tariff reimbursement, Walter Mertl. Good morning.

Felix Stippler: Good morning, ladies and gentlemen. Thank you for taking your time. I have one question concerning the effect from the tariff reimbursements, which started in Q2. This is what you see in your annual report, financial report. What is the amount of the effect? Two questions on China. Yesterday, the GLA was presented, but it shall not be offered in China. What is the future of compact models from BMW? Will they exist in the future in China? Just briefly, a figure. What is your planned sales volume in that region?

Speaker #1: This is what you see in your annual report. Financial report. What is the amount of the effect? Then two questions on China. Yesterday, the GLA was presented, but it shall not be offered in China.

Speaker #1: What is the future of compact models from BMW? Will they exist in the future in China? And then just briefly, a figure. Now, what is your planned sales volume in that region?

Speaker #1: Sales model in China, what do you mean Stübler? Sorry, I was unmuted. Yes, China, yes. What is the level of sales after the downturn now that you would like to see again?

[Company Representative] (BMW): Sales model in China, what do you mean exactly? Mr. Stippler?

Felix Stippler: Sorry, I was on mute. Yes. China, yes. What is the level of sales after the downturn now that you would like to see again?

Speaker #1: Okay, sales level, yes. Okay. So tariff reimbursements, Walter Mertl? Good morning. Well, in the course of May until the beginning of June, there was an agreement about the procedures with the tariff authorities for section 232 with how we deal with the credits going forward when we and then also the EPA reimbursement, the first payments were already made in the immaterial sector and in the second half of the year in the fourth quarter, not so much of the third quarter.

[Company Representative] (BMW): Sales level. Yes, okay. Tariff reimbursement, Walter Mertl.

Walter Mertl: Good morning. Well, in the course of May until the beginning of June, there was an agreement about the procedures with the tariff authorities for Section 232 with how we deal with the credits going forward, also the EPA reimbursement. The first payments were already made in the immaterial sector. In H2, in Q4, not so much of Q3, there will be more payments. Now, in March, we already pointed out that the cash is balanced, which we already booked in the profit and loss. We have it as debt in our balance sheet.

Walter Mertl: Well, in the course of May until the beginning of June, there was an agreement about the procedures with the tariff authorities for Section 232 with how we deal with the credits going forward, also the EPA reimbursement. The first payments were already made in the immaterial sector. In H2, in Q4, not so much of Q3, there will be more payments. Now, in March, we already pointed out that the cash is balanced, which we already booked in the profit and loss. We have it as debt in our balance sheet. Okay, China, the future of compact models in China. The sales prognosis. Milan, you have the floor. Stippler. Mr. Stippler. Well, I talked about China just before.

Speaker #1: There will be more payments. Now, in March, we already pointed out that the cash is balanced which we already booked in the profit and loss, and we have it as debt in our balance sheet.

Speaker #1: Okay, China, the future of compact models in China. And the sales prognosis, Milan, you have the floor. Stübler, Mr. Stübler, well, I talked about China just before.

[Company Representative] (BMW): Okay, China, the future of compact models in China. The sales prognosis. Milan, you have the floor.

Milan Nedeljković: Stippler. Mr. Stippler. Well, I talked about China just before. I already said that with Neue Klasse, we have very good momentum. We have the iX3 and other models in China, and the feedback from the customers is highly positive. In social media also in other media, we see a lot of good feedback. Our dealers are also highly interested. The sale is about to start. We can't really give you a prognosis. We can't really say how it's going to develop, but we are highly optimistic concerning the Neue Klasse. We think that we are going to be very successful with this in China.

Speaker #1: I already said that with Neue Klasse, we have very good momentum. And we have the IX3 and other models in China and the feedback from the customers is highly positive.

Milan Nedeljković: I already said that with Neue Klasse, we have very good momentum. We have the iX3 and other models in China, and the feedback from the customers is highly positive. In social media also in other media, we see a lot of good feedback. Our dealers are also highly interested. The sale is about to start. We can't really give you a prognosis. We can't really say how it's going to develop, but we are highly optimistic concerning the Neue Klasse. We think that we are going to be very successful with this in China. Okay, next question, please. The next question comes from Martin Hesse from Der Spiegel. Please open your mic now. Good morning, Mr. Mertl. Good morning, Mr. Liederkovich. I have one question concerning China, coming from the other direction. The Chinese competitors will be competitors in your segment in Europe.

Speaker #1: So in other media we see a lot of good feedback. Our dealers are also And the sale is about to start, so we can't really give you a prognosis.

Speaker #1: We can't really say how it's going to develop, but we are highly optimistic concerning the Neue Klasse. We think that we are going to be very successful with this in China.

Speaker #1: Okay, next question, please. The next question comes from Martin Hesse. From Der Spiegel, please open your mic now. Good morning. Mr. Mertl, good morning, Mr. Nedeljkovic.

[Company Representative] (BMW): Okay, next question, please.

Operator: The next question comes from Martin Hesse from Der Spiegel. Please open your mic now.

Martin Hesse: Good morning, Mr. Mertl. Good morning, Mr. Liederkovich. I have one question concerning China, coming from the other direction. The Chinese competitors will be competitors in your segment in Europe. The market share has increased, clearly, the market share of Chinese competitors in your segment. What do you expect in this regard? Now restructuring measures, in what type of scenario would you have to discuss the production and maybe savings in production? Other manufacturers also change working times, higher flexibility, or maybe going to 40 hours a week. What do you think?

Speaker #1: I have one question concerning China, but coming from the other direction. The Chinese competitors will be competitors in your segment, in Europe. The market share has increased clearly.

Martin Hesse: The market share has increased, clearly, the market share of Chinese competitors in your segment. What do you expect in this regard? Now restructuring measures, in what type of scenario would you have to discuss the production and maybe savings in production? Other manufacturers also change working times, higher flexibility, or maybe going to 40 hours a week. What do you think? Thank you, Mr. Hesse. Milan, you have the floor. Good morning, Mr. Hesse. Let me give you an answer to your questions. Competitors from China in Europe. Of course, we see that the Chinese competitors have increasing sales figures for Europe right now. This does not yet have a direct impact on our figures. We are not directly affected, not yet by this development. Of course, we have to keep an eye on the development of the market. We are preparing for this.

Speaker #1: The market share of Chinese competitors. In your segment, what do you expect in this regard? And now restructuring measures. In what type of scenario would you have to discuss the production and maybe savings in production?

Speaker #1: Other manufacturers and also change working times? Higher flexibility or maybe going to 40 hours a week? What do you think? Thank you, Mr. Hesse.

[Company Representative] (BMW): Thank you, Mr. Hesse. Milan, you have the floor.

Speaker #1: Milan, you have the floor. Good morning, Mr. Hesse. Let me give you an answer to your questions. Competitors from China in Europe, of course, we see that the Chinese competitors have increasing sales figures for Europe.

Milan Nedeljković: Good morning, Mr. Hesse. Let me give you an answer to your questions. Competitors from China in Europe. Of course, we see that the Chinese competitors have increasing sales figures for Europe right now. This does not yet have a direct impact on our figures. We are not directly affected, not yet by this development. Of course, we have to keep an eye on the development of the market. We are preparing for this. We are staying competitive in terms of the content of our portfolio. Now restructuring, as I said, it concerns the indirect functions. We have a very flexible management for the plant. This is one of our traditional strengths.

Speaker #1: Right now, this does not yet have a direct impact on our figures. So we are not directly affected not yet by this development. Of course, we have to keep an eye on the development of the market.

Speaker #1: And we are preparing for this. We are staying competitive in terms of the content and our portfolio. Now, restructuring, as I said, it concerns the indirect functions and we have a very flexible management for the plant.

Milan Nedeljković: We are staying competitive in terms of the content of our portfolio. Now restructuring, as I said, it concerns the indirect functions. We have a very flexible management for the plant. This is one of our traditional strengths. Right now, we have 3 shifts in some plants in Germany. This is a differentiating factor from our competitors. This will be driven by the product momentum by the Neue Klasse for the upcoming years. We will have 40 new models within the next 2 years, which are going to be rolled out. I'm not really concerned about the capacity of our production plants. They are well set up. Now, working times, 40 hours per week. Well, we have a very high flexibility of our working time models. In the central areas also at the other sites.

Speaker #1: This is one of our traditional strengths. And right now, we have three shifts, some in some plants in Germany. So this is a differentiating factor from our competitors.

Milan Nedeljković: Right now, we have 3 shifts in some plants in Germany. This is a differentiating factor from our competitors. This will be driven by the product momentum by the Neue Klasse for the upcoming years. We will have 40 new models within the next 2 years, which are going to be rolled out. I'm not really concerned about the capacity of our production plants. They are well set up. Now, working times, 40 hours per week. Well, we have a very high flexibility of our working time models. In the central areas also at the other sites.

Speaker #1: And this will be driven by the product momentum, by the Neue Klasse for the upcoming years. We will have 40 new models within the next two years, which are going to be rolled out.

Speaker #1: So I'm not really concerned about the capacity of our production plants. They are well set up. Now, working times, 40 hours per week, well, we have a very high flexibility of our working time models.

Speaker #1: In the central areas and also at the other sites, we have a very broad working times account. And this provides a high flexibility. Also, if the need changes, the need for volumes, we can flexibly we can react to changes in the market in a flexible manner.

Milan Nedeljković: We have a very broad working times account. This provides a high flexibility. If the need changes, the need for volumes, we can react to changes in the market in a flexible manner. There is no need for a change in this regard. Not for now. Walter, let me add something. I would like to underline, we are growing in Europe with more than 7%. We are growing in the Americas also with more than 9%. This underlines our competitiveness. Even though other Chinese competitors have growth in the 2 digits or 3 digits, it does not matter. We are growing as well. I would like to underline this. Yes. Thank you very much. Next question, please. Next question comes from Tim Loh from Bloomberg News. Please open your mic now. Thank you very much. Good morning.

Milan Nedeljković: We have a very broad working times account. This provides a high flexibility. If the need changes, the need for volumes, we can react to changes in the market in a flexible manner. There is no need for a change in this regard. Not for now. Walter?

Speaker #1: So there is no need for a change in this regard, not for now. Walter, let me add something. I would like to underline, we are growing in Europe with more than 7%, and we are growing in the Americas also with more than 9%.

Walter Mertl: Let me add something. I would like to underline, we are growing in Europe with more than 7%. We are growing in the Americas also with more than 9%. This underlines our competitiveness. Even though other Chinese competitors have growth in the 2 digits or 3 digits, it does not matter. We are growing as well. I would like to underline this.

Speaker #1: So this underlines our competitiveness, even though other Chinese competitors have growth in the two digits or three digits, it doesn't matter. We are growing as well.

Speaker #1: I would like to underline this. Yes, thank you very much. Next question, please. Next question. Comes from Tim Loh from Bloomberg News. Please open your mic now.

[Company Representative] (BMW): Yes. Thank you very much. Next question, please.

Operator: Next question comes from Tim Loh from Bloomberg News. Please open your mic now.

Speaker #1: Thank you very much. Good morning. You already talked about the feedback in China, feedback concerning Neue Klasse. Could you tell us something about the price strategy?

Tim Loh: Thank you very much. Good morning. You already talked about the feedback in China, feedback concerning Neue Klasse. Could you tell us something about the price strategy? Of course, there is an intense competition in China. Some people say it's a race for customers, driven by the price. My question is BMW even able to make profits given all of this? By how much would you lower the price in China? Second question. Would you also accept losses in China just to gain the customers?

Tim Loh: You already talked about the feedback in China, feedback concerning Neue Klasse. Could you tell us something about the price strategy? Of course, there is an intense competition in China. Some people say it's a race for customers, driven by the price. My question is BMW even able to make profits given all of this? By how much would you lower the price in China? Second question. Would you also accept losses in China just to gain the customers? Thank you very much, Tim. I hand over to Walter Mertl. Walter, you have the floor. Good morning, Mr. Loh. The first feedback concerning the Neue Klasse and the iX3 in the long version, long wheelbase, is extremely positive, the feedback. The version that will be sold will get tested very soon. Of course, we are not going to mention any prices.

Speaker #1: Of course, there is an intense competition in China some people say it's a race for customers. Driven by the price. So my question is, is BMW even able to make profits given all of this?

Speaker #1: So by how much would you lower the price in China? And then second question, so would you also accept losses in China just to gain the customers?

Speaker #1: Thank you very much, Tim. I hand over to Walter Mertl. Walter, you have the floor. Good morning, Mr. Loh. The first feedback concerning the Neue Klasse and the IX3 in the long version, long wheelbase, are extremely is extremely positive, the feedback.

[Company Representative] (BMW): Thank you very much, Tim. I hand over to Walter Mertl. Walter, you have the floor.

Walter Mertl: Good morning, Mr. Loh. The first feedback concerning the Neue Klasse and the iX3 in the long version, long wheelbase, is extremely positive, the feedback. The version that will be sold will get tested very soon. Of course, we are not going to mention any prices. They're going to be officially announced. We will announce the price as close to the start of sales as possible. That's how we normally do it. Thank you.

Speaker #1: And the version that will be sold will get tested very soon. Now, of course, we are not going to mention any prices. They're going to be And we will announce the price as close to the start of sales as possible.

Walter Mertl: They're going to be officially announced. We will announce the price as close to the start of sales as possible. That's how we normally do it. Thank you. Okay, good. Thank you. Next question, please. The next question comes from Andreas Boes from Münchner Merkur. Please open your mic now. Good morning, Mr. Mertl and Mr. Nedeljković. Two questions. First, the job program does not apply to the ones in production. The FIZ has 25,000 employees, more or less, the FIZ in Munich. They are not working in production. They are designers, software developers, et cetera. This job program, what will the effect be on FIZ, the FIZ? Second question, the other competitors are reducing the model portfolio to have savings in the production and to also reduce the price. The individualization options are cut or reduced. Is that an option for you as well?

Speaker #1: That's how we normally do it. Thank you. Okay, good. Thank you. Next question, please. The next question comes from Andreas. Goes from Münchner Merkur.

[Company Representative] (BMW): Okay, good. Thank you. Next question, please.

Operator: The next question comes from Andreas Boes from Münchner Merkur. Please open your mic now.

Speaker #1: Please open your mic now. Good morning, Mr. Mertl and Mr. Nedeljkovic. Two questions. First, the job program does not apply to the ones in production.

Andreas Höß: Good morning, Mr. Mertl and Mr. Nedeljković. Two questions. First, the job program does not apply to the ones in production. The FIZ has 25,000 employees, more or less, the FIZ in Munich. They are not working in production. They are designers, software developers, et cetera. This job program, what will the effect be on FIZ, the FIZ? Second question, the other competitors are reducing the model portfolio to have savings in the production and to also reduce the price. The individualization options are cut or reduced. Is that an option for you as well?

Speaker #1: The fifth has 25,000 employees more or less. The fifth in Munich. And they are not working in production. They are designers, software developers, et cetera, et cetera.

Speaker #1: Now, this job program, what will the effect be on FIZ, the fifth? Now, second question. The other competitors are reducing the model portfolio to have savings in the production.

Speaker #1: And to also reduce the price, the individualization options are cut or reduced. Is that an option for you as well? Milan, you have the floor.

Milan Nedeljković: Milan, you have the floor. Mr. Boes, thank you very much for your question. I already talked about the program, the severance program. I talked about the principles. It's not about identifying individual areas where they're going to be cut. It's about the principle reorganization of the way we work. This applies to the FIZ or the FIZ as well. It applies to administration. It applies to indirect workforce. The result of this new process enables us to make savings to harvest potentials. It's a developing process. We are going to focus on it in the next 12 to 18 months. We're going to harvest the potentials. The model portfolio, of course, we are a premium manufacturer. There is a high variance for the customers. The products are highly individual. This characterizes us.

[Company Representative] (BMW): Milan, you have the floor.

Speaker #1: Mr. Huss, thank you very much for your question. So I already talked about the program, the severance program. I talked about the principles. It's not about identifying individual areas where they are going to be cut.

Milan Nedeljković: Mr. Boes, thank you very much for your question. I already talked about the program, the severance program. I talked about the principles. It's not about identifying individual areas where they're going to be cut. It's about the principle reorganization of the way we work. This applies to the FIZ or the FIZ as well. It applies to administration. It applies to indirect workforce. The result of this new process enables us to make savings to harvest potentials. It's a developing process. We are going to focus on it in the next 12 to 18 months. We're going to harvest the potentials. The model portfolio, of course, we are a premium manufacturer. There is a high variance for the customers. The products are highly individual. This characterizes us.

Speaker #1: It's about a principle reorganization of the way we work. This applies to the FIZ or the fifth as well. It applies to administration. It applies to indirect workforce.

Speaker #1: And the result of this new process enables us to make savings, to harvest potentials. So it's a developing process. We are going to focus on it in the next 12 to 18 months.

Speaker #1: And we're going to harvest the potentials. Now, the model portfolio, of course, we are a premium manufacturer. So there is a high variance for the customers.

Speaker #1: And the products are highly individual. This characterizes us. We are not planning to make any reductions of the portfolio or to cut the individual offers.

Milan Nedeljković: We're not planning to make any reductions of the portfolio or to cut the individual offers. Nevertheless, it's about profitability of the derivatives on a global level. That is what we also focus on. We also look at the drivetrain variants and the product models in individual markets. All this will be reanalyzed. Thank you, Milan. Next question, please. Next question comes from Christoph Kapczynski from Die Welt. Please open your mic now. Good morning. One question. You said you're going to assess drivetrain variants on a global level. Does this apply just to individual variants, or could you maybe not offer BEVs in the United States or no longer have ICEs in Europe? What does that exactly mean? Thank you very much. Milan, you have the floor. Well, this statement does not apply to entire drivetrain concepts or product portfolios.

Milan Nedeljković: We're not planning to make any reductions of the portfolio or to cut the individual offers. Nevertheless, it's about profitability of the derivatives on a global level. That is what we also focus on. We also look at the drivetrain variants and the product models in individual markets. All this will be reanalyzed.

Speaker #1: Nevertheless, it's about profitability of the derivatives on a global level. That is what we also focus on. We also look at the drivetrain variance and the product models in individual markets of this will be reanalyzed.

Speaker #1: Thank you, Milan. Next question, please. Next question comes from Christoph Kapaczynski. From Die Welt. Please open your mic now. Good morning. One question. You said you're going to assess drivetrain variance on a global level.

[Company Representative] (BMW): Thank you, Milan. Next question, please.

Operator: Next question comes from Christoph Kapczynski from Die Welt. Please open your mic now.

Christoph Kapalschinski: Good morning. One question. You said you're going to assess drivetrain variants on a global level. Does this apply just to individual variants, or could you maybe not offer BEVs in the United States or no longer have ICEs in Europe? What does that exactly mean?

Speaker #1: Does this apply just to individual variance or could you maybe not offer best in the United States or no longer have ICEs in Europe?

Speaker #1: What does that exactly mean? Thank you very much, Milan. You have the floor. Well, this statement does not apply to entire drivetrain concepts or product portfolios.

[Company Representative] (BMW): Thank you very much. Milan, you have the floor.

Milan Nedeljković: Well, this statement does not apply to entire drivetrain concepts or product portfolios. It applies specifically to markets, to countries, to sales regions. We check whether a drivetrain variant, the content of the vehicle, or individual derivatives which do not match the market, whether those can be withdrawn from the market. It's not consistent. It doesn't mean that we are not going to offer an entire drivetrain. Now you're challenging the BEVs as a whole. This is not what I meant.

Speaker #1: It applies specifically to markets, to countries, to sales regions. We check whether drivetrain variance, the content of the vehicle, or individual derivatives which do not match the market, whether those can be withdrawn from the market.

Milan Nedeljković: It applies specifically to markets, to countries, to sales regions. We check whether a drivetrain variant, the content of the vehicle, or individual derivatives which do not match the market, whether those can be withdrawn from the market. It's not consistent. It doesn't mean that we are not going to offer an entire drivetrain. Now you're challenging the BEVs as a whole. This is not what I meant. Okay. Thank you very much. We will accept three more questions. Okay, next question. Next question comes from Stefan Rodomski from Süddeutsche Zeitung. Please open your mic now. Press the star button and then six. Good morning. Good morning, ladies and gentlemen. Can you all hear me? Yes, we can hear you. Just continue with your question. Okay. Two questions.

Speaker #1: But it's not persistent. It doesn't mean that we are not going to offer an entire drivetrain. Now, you're challenging the best as a whole.

Speaker #1: This is not what I meant. Okay. Thank you very much. We will accept three more questions. Okay. Next question. Next question comes from Stefan Radomski from Süddeutsche Zeitung.

[Company Representative] (BMW): Okay. Thank you very much. We will accept three more questions. Okay, next question.

Operator: Next question comes from Stefan Rodomski from Süddeutsche Zeitung. Please open your mic now. Press the star button and then six.

Speaker #1: Please open your mic now. Press the star button and then six. Good morning. Good morning, ladies and gentlemen. Can you all hear me? Yes, we can hear you.

Stephan Radomsky: Good morning. Good morning, ladies and gentlemen. Can you all hear me?

[Company Representative] (BMW): Yes, we can hear you. Just continue with your question.

Speaker #1: Yes, we can hear you. Just continue. What's your question? Okay. Two questions. Mr. Nedeljkovic, before you said that you're going to analyze things because of this restructuring, which were not analyzed before, what are you specifically referring to?

Stephan Radomsky: Okay. Two questions. Mr. Nedeljković, before you said that you're going to analyze things because of this restructuring, which were not analyzed before. What are you specifically referring to? What was inconceivable to analyze or to touch in the past, and what you're going to do now? Second question, yesterday, we heard a report which said that the managers, because of the austerity program, are going to have just 30 hours per week, and this will also reduce their wage. Could you confirm this, and could you tell us how many employees will be affected and what the expected savings volume is? Thank you.

Stefan Rodomski: Mr. Nedeljković, before you said that you're going to analyze things because of this restructuring, which were not analyzed before. What are you specifically referring to? What was inconceivable to analyze or to touch in the past, and what you're going to do now? Second question, yesterday, we heard a report which said that the managers, because of the austerity program, are going to have just 30 hours per week, and this will also reduce their wage. Could you confirm this, and could you tell us how many employees will be affected and what the expected savings volume is? Thank you. Thank you very much. Milan, you have the floor. Something that could not be touched. Well, that was my statement. Everything can be reanalyzed and touched. Let me just give you an example to explain.

Speaker #1: What was inconceivable to analyze or to touch in the past? And what you're going to do now? And then second question, yesterday we heard a report which said that the managers because of the austerity program are going to have just 30 hours per week and this will also reduce their wage.

Speaker #1: Now, could you confirm this? And could you tell us how many employees will be affected and what the expected savings volume is? Thank ank you.

Speaker #1: Thank you very much, Milan. You have the floor. Now, something that could not be touched. Well, that was my statement. Everything can be reanalyzed and touched now.

[Company Representative] (BMW): Thank you very much. Milan, you have the floor.

Milan Nedeljković: Something that could not be touched. Well, that was my statement. Everything can be reanalyzed and touched. Let me just give you an example to explain. Every company has a certain culture, and of course, we have a high product affinity, so we focus on every component, and we focus on the development. Some things you don't have to develop yourself. It's about standardization. Things that you like and love, and that you love doing, can be omitted and then just purchased. That's one example, which amends by what I said.

Speaker #1: Let me just give you an example. To explain. Every company has a certain culture. And of course, we have a high product affinity. So we focus on every component.

Milan Nedeljković: Every company has a certain culture, and of course, we have a high product affinity, so we focus on every component, and we focus on the development. Some things you don't have to develop yourself. It's about standardization. Things that you like and love, and that you love doing, can be omitted and then just purchased. That's one example, which amends by what I said. Of course, there's also a potential for change in our processes and in our content. We can redefine those. You mentioned the managers, the executives. Well, the executives and managers are not directly affected by this because they don't have working times. They are very sovereign and flexible when it comes to their working times, but they're still part of the severance program. Next question. Next question comes from Frank Falk from Automobilwoche. Please open your mic now. Good morning.

Speaker #1: And we focus on the development. Some things you don't have to develop yourself. It's about standardization. So things that you like and love and that you love doing can be omitted.

Speaker #1: And then just purchased. So that's one example which I meant by what I said. Now, of course, there's also a potential for change in our processes and in our content.

Milan Nedeljković: Of course, there's also a potential for change in our processes and in our content. We can redefine those. You mentioned the managers, the executives. Well, the executives and managers are not directly affected by this because they don't have working times. They are very sovereign and flexible when it comes to their working times, but they're still part of the severance program. Next question.

Speaker #1: We can redefine those. Now, you mentioned the managers, the executives. Well, the executives and managers are not directly affected by this because they don't have working times.

Speaker #1: They're very sovereign when it comes and flexible when it comes to their working times. But there's still part of the severance program. Next question.

Speaker #1: Next question comes from Frank Volk from Automobilwoche. Please open your mic now. Good morning. Good morning, Mr. Mertl. You said before that you're growing in Europe.

Operator: Next question comes from Frank Falk from Automobilwoche. Please open your mic now.

[Company Representative] (BMW): Good morning.

Frank Falk: Good morning, Mr. Mertl. You said before that you are growing in Europe and in the United States. That's dynamic, it has turned out that you can't grow as fast as you're losing business in China. My question concerns the production. We talk a lot about the dealers network and a new focus. The plant capacity in the joint venture plant in China is at a very low level. What is planned? Will there be adjustments in the production network in China as well? Just to be very direct. Then one follow-up question, just a small one you mentioned in your speech. What did you say the entire value chain was analyzed in order to find the potentials to be more efficient? This analysis, in what time period was it done? Thank you. We start with Walter Mertl. You have the floor.

Frank Volk: Good morning, Mr. Mertl. You said before that you are growing in Europe and in the United States. That's dynamic, it has turned out that you can't grow as fast as you're losing business in China. My question concerns the production. We talk a lot about the dealers network and a new focus. The plant capacity in the joint venture plant in China is at a very low level. What is planned? Will there be adjustments in the production network in China as well? Just to be very direct. Then one follow-up question, just a small one you mentioned in your speech. What did you say the entire value chain was analyzed in order to find the potentials to be more efficient? This analysis, in what time period was it done? Thank you.

Speaker #1: And in the United States. That's dynamic. But it has turned out that you're not that you can't grow as fast as you're losing business in China.

Speaker #1: Now, my question concerns the production. We talk a lot about the dealers' network and a new focus. However, the plant capacity in the joint venture plant in China is at a very low level.

Speaker #1: So what is planned? Will there be adjustments in the production network in China as well? Just to be then one follow-up question. Just a small one.

Speaker #1: You mentioned in your speech. What did you say the entire value chain was analyzed in order to find the potentials to be more efficient?

Speaker #1: Now, this analysis in what time period was it done? Thank you. Okay. We start with Walter Mertl. You have the floor. Mr. Volk, good morning.

[Company Representative] (BMW): We start with Walter Mertl. You have the floor.

Walter Mertl: Mr. Falk, good morning. The Chinese production structure, I can only say that the cost structures are fundamentally different from the rest of the world. This has to be accepted in the first step. We have already made adjustments, already last year, and again this year. We react to the market situation and hence we can deal with this in a flexible manner. We make adjustments step by step. Milan, what about the value creation chain? Well, before I said that the analysis of the processes will last for the next 12 to 18 months. Pretty fast we will have the first approaches. We are already in the implementation stage, and now we take it process by process. Until the end of next year, the transformation process should be implemented. Thank you very much. Last question.

Walter Mertl: Mr. Falk, good morning. The Chinese production structure, I can only say that the cost structures are fundamentally different from the rest of the world. This has to be accepted in the first step. We have already made adjustments, already last year, and again this year. We react to the market situation and hence we can deal with this in a flexible manner. We make adjustments step by step. Milan, what about the value creation chain?

Speaker #1: Now, the Chinese production structure I can only say that the cost structures are fundamentally different from the rest of the world. This has to be accepted in the first step.

Speaker #1: Of course, we have already made adjustments, already last year. And again, this year, we react to the market situation. And hence, we can deal with this in a flexible manner.

Speaker #1: So we make adjustments step by step. Milan, what about the value creation chain? Well, before I said that the processes that the analysis of the processes in the next 12 to will last for the next 12 to 18 months.

Milan Nedeljković: Well, before I said that the analysis of the processes will last for the next 12 to 18 months. Pretty fast we will have the first approaches. We are already in the implementation stage, and now we take it process by process. Until the end of next year, the transformation process should be implemented.

Speaker #1: So pretty fast, we will have the first approaches. We are already in the implementation. Stage and now we take it process by process until the end of next year, the transformation process should be implemented.

Speaker #1: Okay. Thank you very much. Last question. The last question comes from Regina and Clear. And Clear from the Medien Gruppe Bayern. Please open your mic now.

[Company Representative] (BMW): Thank you very much. Last question.

Regina Ehm-Klier: The last question comes from Regina Ehm-Klier from the Mediengruppe Bayern. Please open your mic now. Good morning. Good morning, Mr. Mertl. Good morning, Mr. Nedeljković. It's not just about the cost for me, but also the earnings. To which extent is BMW willing to enter the fight for prices in China? Because the competitors are also in Europe. Are you going to adjust the prices of the models? Can we expect a lowering of the prices? Thank you. Thank you very much. Greetings to Passau, I hand over to Walter Mertl. Good morning. In the past 18 months, we worked on our products. We broadened the products. We also reduced the list prices, and the transaction prices were kept.

Operator: The last question comes from Regina Ehm-Klier from the Mediengruppe Bayern. Please open your mic now.

Speaker #1: Good morning. Good morning, Mr. Merkel. Good morning, Mr. Nedeljkovic. It's not just about the costs for me, but also the earnings. Now, to which extent is BMW willing to enter the fight for prices in China?

[Company Representative] (BMW): Good morning.

Regina Ehm-Klier: Good morning, Mr. Mertl. Good morning, Mr. Nedeljković. It's not just about the cost for me, but also the earnings. To which extent is BMW willing to enter the fight for prices in China? Because the competitors are also in Europe. Are you going to adjust the prices of the models? Can we expect a lowering of the prices? Thank you.

Speaker #1: Because the competitors are also in Europe. Are you going to adjust the prices of the models? Can we expect a lowering of the prices?

Speaker #1: Thank you. Thank you very much. Greetings to Passau and I hand over to Walter Mertl. Good morning. So in the past 18 months, we worked on our products.

[Company Representative] (BMW): Thank you very much. Greetings to Passau, I hand over to Walter Mertl.

Walter Mertl: Good morning. In the past 18 months, we worked on our products. We broadened the products. We also reduced the list prices, and the transaction prices were kept. First, it was large discounts, then less, the transaction prices, this is key for the dealers, we have independent dealers, were kept, we are still on the price level of the Q1 of last year. That's also positive news. As for the rest, it principally applies that prices and profit have to be in balance. The profit doesn't just come from the BMW Group, but also from the dealers. This has to be taken into account, otherwise the entire business model doesn't work. We are partners. In this system, we are well set up. Betty?

Speaker #1: We broadened the products. We also changed the list, reduced the list prices and the transaction prices were kept. First, it was large discounts. Then less.

Walter Mertl: First, it was large discounts, then less, the transaction prices, this is key for the dealers, we have independent dealers, were kept, we are still on the price level of the Q1 of last year. That's also positive news. As for the rest, it principally applies that prices and profit have to be in balance. The profit doesn't just come from the BMW Group, but also from the dealers. This has to be taken into account, otherwise the entire business model doesn't work. We are partners. In this system, we are well set up. Betty? Yes, that's a good concluding remark. I would like to thank Walter Mertl. Dear colleagues, this brings us to the end of our call. Thank you for your participation.

Speaker #1: But the transaction prices, this is key for the dealers. We had independent dealers. Were kept. And we are still on the price level of the first quarter of last year.

Speaker #1: That's also positive news. As for the rest, it principally applies that price and profit has to be in balance. And the profit doesn't just come from the BMW Group, but also from the dealers.

Speaker #1: This has to be taken into account. Otherwise, the entire business model doesn't work. We are partners. So in this system, we are well set up.

Speaker #1: Thank you. Yes. That's a good concluding remark. I would like to thank Walter Mertl. Dear colleagues, this brings us to the end of our call.

[Company Representative] (BMW): Yes, that's a good concluding remark. I would like to thank Walter Mertl. Dear colleagues, this brings us to the end of our call. Thank you for your participation. I wish you a good rest of the day and have a great summer, great holidays, and we will be back soon. All the best from Munich.

Speaker #1: Thank you for your participation. I wish you a good rest of the day. And have a great summer. Great holidays. And we will be back soon.

[Company Representative] (BMW): I wish you a good rest of the day and have a great summer, great holidays, and we will be back soon. All the best from Munich.