Renault Sa Unsp/Adr

Good morning everyone and welcome to Renault Group first quarter 2024 revenue. This presentation will be made by Thierry Pieton, CFO of Renault Group and will be followed by a Q&A session. Thierry, the floor is yours.

Thank you, Philippine. Good morning to all and good afternoon to everyone and thanks for joining us this morning. I'm very pleased to be with you this morning to present our revenue figures for the first quarter of 2024. which incidentally is the highest first quarter we've had since prior to the COVID period. So group revenues was up 1.8% in Q1 at 11.7 billion euros. At constant exchange rate, it was up 5.9%. Automotive revenue stood at 10.5 billion euros, down 0.7%. At constant exchange rate, it increased by 3.6%. Mobility services contribution amounted to 15 million euros, up 6 million compared to last year, and mobilized financial services revenue increased by 27.9%, mainly driven by the rise in interest rates and higher average performing assets. Let's drill down in the automotive revenue. Automotive revenue was pretty stable compared to 2023 Q1. It included 4.3 points of negative exchange rates, mainly related to the Argentinian peso and to a lesser extent the Turkish lira devaluations. Again, at constant exchange rate, it increased by 3.6%. Volume effect was negative 4.6 points in the first quarter. Registrations increased by 2.6% at Renault Group level this quarter compared to Q123, despite a very tough comparison basis. All three brands contributed to this growth. Renault brand continued its progression with a 3.1% worldwide growth. In Europe, the brand was up 4.5% and remains on the podium of the PC and LCV market. On LCVs in particular, Renault brands enjoyed a growth of 12.5%, outperforming a market up 3.6%. In Europe, with a 12.9% growth and a market up 12%, Renault confirmed its second place and the first place in commercial vans. Dacia sales were up 3.2% worldwide. In Europe, its core market, they grew by 3.6%. and Dacia confirmed its second place on the retail channel. Alpine continued its double-digit growth after three years of consecutive progression with more than 1,000 units sold. It delivered an 89% volume increase versus the first quarter of 23, benefiting from the very strong success of the A110R and favorable comps as Q123 was relatively low. All in all, we expect volume to accelerate throughout the year, thanks to the numerous product launches ahead of us. More on this topic later. Let's take a look at the vehicles that drove this 2.6% growth in registrations. For the Renault brand, let me focus on four key vehicles of our current lineup. Megane Tech continued to attract new customers with a conquest rate still at around 50%. By the way, its residual value in percent continued to increase this quarter. Austral and Espace continued to support our comeback on the sea and above segments and to deliver record margins. Clio sales grew 17% versus last year. Clio was the best-selling vehicle in France in 2023. All these vehicles already benefit from the cost reduction we're delivering, and in some cases, we took advantage of this to lower selling prices while posting higher contribution margins than the previous generations. Some examples for you. The new Clio was launched 650 euros cheaper than the previous generation for hybrid versions and 2,000 euros for ICE versions in France. Espace was launched between 4K and 10K euros cheaper than the previous generation. And finally, the new Captur that's currently being launched is 900 euros lower for ICE versions and 1,100 euros on hybrids. Renault's lineup is also getting increasingly electrified with 48% of passenger cars that are either EV or hybrid in the first quarter. This represents an increase of eight points year on year and makes us very confident to reach our 2025 CAFE targets. Dacia's sales performance benefited from the success of its new brand identity deployed on all four models. Sandero, Dacia's best-selling vehicle, recorded strong growth at plus 20% and became, at the end of March, the number one model sold on the European market, all channels combined. Jogger remains the most affordable family car in Europe. Boosted by its hybrid version launched a year ago, Jogger sales grew by 11%. Regarding the two other pillar models, current Duster's end of life figures were excellent and both Duster and Spring will be renewed this year as we will see later. A110 still performs very well on top of the Turini version that continues to be extremely attractive. The teams are doing a great job across the range, A110, A110S, GT, and R. Eighty-five percent of our sales now are positioned on the top of the range versions, S, GT, and R, in the first quarter. Now let's have a look at the inventories. As mentioned previously, the volume effect was negative 4.6 points this quarter as the 2.6% growth in registrations was more than offset by a higher destocking of the independent dealers network, which was 40K units higher compared to the first quarter of 2023. Destocking was 73,000 units in Q124 versus 33,000 units last year. At the end of March, total inventories represented 530,000 vehicles, consistent with our strict policy to keep inventories at very healthy levels It decreased significantly compared to March 23, which was at 580,000 units, so 50,000 units more, less, sorry, and evolved in line with normal seasonal patterns. This level of inventory is fully supported with our very sound order book, which stood at 2.5 months of forward sales at the end of March. This order book reflects the success of our products and a very good start of the year in terms of order intake. Again, even though the key product launches for 2024 are still ahead of us. It's important to note that the portion of these inventories that's assigned to end customers has continued to increase over the quarter. another proof of its health. Sales to partners generated a positive effect of 2.4 points thanks to the increased R&D billings in line with a ramp-up of the group's partnerships. In Q1, we recorded a robust price effect of 4.1 points on already tough comps, despite some of the price repositionings that I described earlier on Clio, Espace, and Keptio, for example. It reflects the continuation of our commercial policy focused on value and price increases to offset currency impacts. As already announced, in 2024, we will continue to have positive pricing, but obviously not to the same extent as we had over the last few years. The price effect will mostly offset foreign exchange. Here are some key data points to illustrate our relentless focus on value. Firstly, the C-segment and above represented 37% of the Renault brand sales with a range of four vehicles, Arcana, Megane E-Tech, Austral and Espace. Secondly, the high-end versions of our last launches continue to represent a large majority of our mix. For instance, they represented 66% of Espace sales, 69% of Jogger, and 63% of Megane. This highlights the attractiveness of these vehicles. Third, we kept a strong discipline in channel mix. The Renault brand kept a healthy one in two sales to retail customers in Europe, while Dacia remained at a high level at more than 80%. Finally, our stable MSRP policy and our relentless focus on quality have enabled our residual values to significantly increase in all brands over the last quarters. This is key as it provides additional competitiveness to our vehicles, especially for customers that acquire the car with the financing, as it helps keep monthly installments low. The product mix effect was stable at plus 0.1 points. The good performance on the Renault brand C segment and above vehicles with higher average selling prices had a positive effect on mix. This effect was offset on one hand by the end of life of Zoé, which had a selling price above the group's average, and on the other hand by strong volumes on Twingo, Kiyo, and Sendero, which have average selling prices below group average. All in all, product mix will improve subsequently during the year in line with the upcoming launches. By the way, as I already mentioned in previous calls, flat mix effect on revenue doesn't mean flat on margins. Each new car is launched with financial metrics that are much better than the previous generation. The geographic mix was slightly positive at 0.6 points, mainly driven by a higher relative contribution from Europe. To finish the analysis of the revenue change, the other bucket contributed positively for one point, mostly thanks to the strong activity for parts and accessories, and our margins are not complaining. Now, let's switch to mobilised financial services. New contracts production was stable over the first quarter 24, with an increase on new vehicle sales, offsetting a decrease on used vehicles, driven by our focus on retail channels, which has kept second-hand cars relatively scarce on the market. The average performing assets increased by 9.8% at €54.2 billion, mostly thanks to new vehicle sales growth over the last year. All in all, mobilized financial services revenues were up 27.9% to €1.2 billion, mainly driven by higher interest rates, the increase in average ticket per vehicle, and the volume growth described above. Overall, Q1 2024 revenue therefore came in line with our expectations and therefore we fully confirm our 2024 financial guidance with a group operating margins superior or equal to 7.5% and an automotive operational free cash flow superior or equal to 2.5 billion euros. During the full year results, we shared our views regarding the 2024 challenges and opportunities for Renault Group. These have not changed, and our assumptions are still valid. Our upcoming product offensive and the acceleration of cost reduction definitely remain the key drivers of our operational performance and our strong cash generation in 2024. Our three strong and complementary brands are today all set to support the strongest product offensive ever known at Renault Group. So the best is still to come. 2024 will be a historic year with 10 brand new vehicle launches across our brands. Seven new launches for Renault brand, plus two facelifts, two for Dacia and one at Alpine. Starting with Renault, Renault Brand will enjoy a full range of new products, both on the BEV market with Scenic and Renault 5, and on the ICE and hybrid markets with Symbios, Rafale, and Captur Phase 2. International markets will also be addressed, specifically with Cardian, Renault Duster, and a D SUV for the South Korean market. And finally, on the LCV market, with the arrival of Master, we will have the most up-to-date LCV lineup in Europe, with all vehicles available in full electric versions. Dacia will renew two of its pillar models this year. The all-new Duster, for which we opened orders mid-March, recorded already more than 20,000 orders during its first 30 days, this without any car actually visible in the dealership network yet. The version mix is also promising. Combined with the current version of Duster, It represented around 30,000 orders all in all for Duster in one month. Our new Duster launch paves the way for the upcoming arrival of Dacia's first full-size C-segment SUV, Bigster, which will occur next year. The new spring orders will be opened across Europe in the second quarter, continuing to make EVs affordable to the many, with its price positioning below €20,000. Alpine finally will also launch a new model this year, the A290 100% electric. It will be the first car in Alpine's dream garage made of three electric models. The future hot hatch B-segment car will be revealed in Le Mans on June 13th and will reach the road towards the end of 2024. In addition to executing flawlessly on this exciting product roadmap, we're 100% focused on the other levers of our performance improvement and official capital allocation strategy. As mentioned previously, we remain religiously faithful to our value over volume commercial policy, but this year is also the year of the acceleration of our cost reduction program. At the same time, our open partnership approach is an additional lever of performance improvement, allowing us to share investments and risks, and more importantly, to keep technological flexibility. This enables us to generate cash sustainably, semester after semester, in line with our commitments, and we don't intend to stop. Let me take a moment to look at an example of our innovative partnership strategy. As you saw last month, we successfully created Flexis with Volvo Group and CMA CGM to introduce a breakthrough player in electric vans and last mile delivery. Flexis is completely unique. It's the perfect full electric product slash solution to enable the reduction of total cost of usage by up to 30% for our customers. Flexis is one more resolution project that we're delivering. More to come very shortly. Another important development in the first quarter was the second monetization of Nissan shares. We initiated, as you remember, a first disposal in December of 2023 with the sales of 211 million shares. This was followed by a second move in March 2024 of 99 million shares. These two sales represented together a cash inflow of 1.1 billion euros, which contribute to improve our net financial position. This is not over. We still have 888.6 million monetizable shares, representing a potential cash inflow of circa 3 billion euros at today's Nissan stock price. This future cash inflow will allow us to accelerate our deleveraging while developing our activities and returning cash to our shareholders and, of course, Until the effective disposal of these shares, Renault Group continues, as you know, to receive Nissan's dividends. As a conclusion, Renault Group has opened a new chapter with fundamentals that are based on performance improvement and official capital allocation on one side and flexibility on the other. I already touched on our strategy of performance improvement and capital allocation, so I won't come back on it. What's also important to note is that we have the flexibility now to adapt to the evolution of the powertrain mix in Europe and outside of Europe. We have on one side Ampère, our tech growth weapon for EV and software, and on the other side, our high-cash generating businesses for ICE and hybrids with power and horse. This concludes my presentation, and we're now ready to answer your questions. Thanks for your attention.

Thank you, Jay. So we'll now start the Q&A session, and we'll start with the first question from George Galliers, Goldman Sachs. George, please, could you open your mic?

Yeah, good morning, and thank you for taking my questions. Good morning. The first couple of questions I had was just on pricing theory, and I was wondering if you could just help clarify a few points. Firstly, with respect to the new Clio starting at a lower price point, Could you just confirm, is some of that reflected in the pricing bucket or is that 100% reflected in the product mix bucket? A bit of clarification there would be much appreciated. And then obviously, when we look at pricing, there is a lot of dynamics going on, particularly with the FX market. Could you perhaps just provide some general commentary in terms of what you're seeing with respect to pricing in Europe specifically and how that has evolved during the first quarter and how you see it over coming quarters? Then somewhat related, my final question was just more as we think about the European industry. Obviously, we've seen the destock that you've put through with your dealers. How do you assess the industry in Europe today in terms of overall levels of dealer inventory and pricing? Are your competitors remaining pretty disciplined or are you starting to see competitive pressure that wasn't there 12 months ago? Thank you.

Thanks, George. So look, on Nucleo, yes, I confirm that the adjustments in price are in the pricing bucket. So the 4.1% that you see there is net of some of those adjustments, right? So it's a key point to take into consideration. And as I said, you know, we'll continue to do this. The team's been working very hard on the cost reduction and for models that represent a strong volume for us, keeping competitiveness is key. So we'll continue to do this when we have the opportunity. So give a portion of the productivity back to the consumers while improving the margins and obviously the cash inflow on our side. From a foreign exchange pricing perspective or the content of pricing, Look, overall I would say foreign exchange probably represents around 80% of what you see in pricing here. So clearly, you know, the dynamic is a little bit different than what it was in the prior years. There's no longer the headwinds that we have to compensate on the raw material side and the other input costs. And the market is a little bit more tense. I'll come back to that. In this environment, though, we've been, you know, pretty stable from a pricing perspective. and remain pretty faithful to the pricing policy that we've applied over the last couple of years. You know, if I look at the industry overall, you know, again, I would say the order intakes, you know, it's hard to have reliable data on order intakes, but again, It seems like the first quarter was relatively positive for the industry overall. You know, we did see a little bit of channel mix evolution towards more fleet and a little bit more self-regs. In this environment, you know, we remained extremely disciplined. So we now have a retail segment for the overall group that's almost 15 points higher than the split of the industry, the split of the TIV. And even for Renault brands, you know, we're over one in two cars that are sold at retail today, whereas the industry is roughly at 40%. So we're not seeing massive changes, a little bit more competitive pressure, but I would say an order intake that looks pretty healthy for everyone. And on the inventory side, we had anticipated a tough market for 2024, so we had started to reduce inventories quite significantly in the second half of last year. And we tried to remain at the same level of health and continue to do our homework on this topic. in the first quarter and will continue to do so. So not sure how everyone else is treating it, but I can tell you we're entering the second quarter with a very healthy inventory position.

Thank you, Thierry. We now have a question from Thomas Besson, Kepler Chevreux. Thomas, please, could you open your mic? Thank you.

Well, thank you, Philippine. Good morning, everyone. A few questions, please. I'd like to come back to all those first. Thierry, can you give us a bit more granularity on how it splits in terms of brands, passenger cars, LCVs, and parts of Europe? Because you have a very different age of vehicle splits that may generate different... types of order and also different level of economic activity. But the first question, the second, you have very, very dynamic growth in your financial services business, where I think the automotive activity is more aligned with what we were expecting. Can you discuss if there is any impact from this growth huge growth from the financial services earnings on its potential contribution. I'm sorry, I know it's a revenue call, but I thought I would still try to ask that question. And I have a third question which also doesn't really fit with this revenue call, and apologies for that. But I think there are two key debates currently, two rules that are going to impact your business and more material than any other caremaker. One is on the potential discussions on the 2025 CO2 rules, but it seems one of your German competitors tries to change now. Do you think it could be changed? And what is your view on that? And second, could you give us your view on what you expect the European Commission to set in terms of rules for Chinese BEVs import duties, either in terms of duties or quotas? Thank you.

Hi, Thomas. Thanks for the questions. You know, so order intake, as I mentioned, you know, order intake was pretty strong for us in the first quarter. And it's evidenced by the fact that we still have an order book at 2.5 months. So significantly higher. than the typical two months that we aim at having. I would say if you want to break it down a little bit more, Renaud Brand was particularly strong, in particular benefiting from the continued performance of some of the launches that we did last year and very strong performance from Clio. We had additional small benefit of the leasing social in France, but even without that, the performance would have been very, very strong. So Renault Brand is off to a good start. Dacia was pretty healthy, but we're waiting for the renewal of the range. I mentioned the first figures on Duster. So March was very good for Dacia. January and February were a bit slower. March was very good, carried by Duster. And we're entering second quarter with, I would say, a very positive outlook thanks to the first figures that I mentioned. So, again, on Duster specifically, you know, between the old model and the new one, It's 30,000 units of order in one month, which for us is good news. And despite the fact that it's not an earnings call, it's good news on the margin side, as you can imagine. LCVs were pretty stable. You know, performance of the segment remains good. Again, we're awaiting the launch of Master, both ICEV and EVs. And on EV specifically, you know, we benefited a little bit from Leasing Social again. Megane was pretty stable compared to previous quarters in terms of registrations, was quite high in terms of order intake, thanks in part to Leasing Social and to the price repositioning. But we're, again, in sort of a transition on the EV lineup of Renault. because Zoé is basically done now, and Twingo EV is at the end of life. So we're eagerly awaiting the launches of Scenic and Renault 5. So in terms of EV penetration, it's going to increase significantly for us in the second half of the year. Financial services, look, a large portion of the financial services growth is due to interest rates increase. And so for us, that's not really, you know, that's not really a benefit from a bottom line perspective as we tend to have the same thing on the cost side. There's a little bit of lag between the two, but generally speaking, the two offset each other. Financial services on the foyer will be a positive contributor though. especially since last year we had a negative one-off impact of the reversal of the swaps that we had done, which will not reoccur. So that alone is, you know, more than 100 million of tailwind. And then your last question was on sort of regulation evolution. So on 2025 CO2, you know, I guess maybe I'm not sure I understood the question, but there's two sides to it. One is will there be a change? in terms of the expectation and to the position of Renault. On the position of Renault, as I mentioned, you know, the performance of electrified cars is pretty good, so we're quite comfortable that we're going to reach the target. One thing to take into consideration is that there is a change in the calculation methods of the target. In the past, weight used to be a benefit almost because you were allowed higher CO2 if the car was heavier. In the new environment, it's the other way around. So you have to have lower CO2 with higher weight. So this actually plays a little bit in our favor, since on average we tend to have a bit lighter cars than some of the competition. So we're relatively well positioned. In terms of change of expectation, we're not banking on any change of rules on CO2, at least for 2025. On the Chinese BEV investigation, so, you know, the investigation was launched in October, and the first phase, from what I understand, was to evaluate whether there was a significant increase in the level of imports I think the conclusion of that part of the inquiry was positive in the sense that there is a large increase. Therefore, some initial measures were put in place in particular to register the imports so that potentially there might be a retroactive penalty that will be applied in the future. The nature and the amount of that penalty, I have no insight. So we'll have to sit tight and wait to see what comes out. In any case, as usual, you know, we're not banking on that in our forecast. So it'll be upside if something happens. Great. Thank you very much.

Thank you. Thank you, Thomas. So now we have a question from Michael Jacks, Bank of America. Michael, please, could you open your mic?

Thank you, Philippine. Good morning, Thierry. Good morning. Thank you for the presentation. My first question is on sales departments, which made quite a strong positive contribution in Q1. Might we expect this to continue through the remainder of the year? And can you also give us a sense for the underlying profitability here versus other revenue lines? My second question, is Q2 the right quarter for us to make the first judgment on the success of Scenic? Or should we base our assessment more on Q3? And could you please give us a sense for the level of order intake here relative to your expectation? And then one final question added on to that. How do we think about the contribution of Scenic to overall profitability in 2024? Thank you.

Thanks for the question. So sales to partners, they were driven to a large extent by the billing of R&D activities. So when we have a new partnership with someone, Typically the first benefit we get before the actual financial impact of the sale of vehicles is the re-billing of some of the R&D activities that we do on behalf of the partner. And that's what drove a large extent of the increase that we had in the first quarter. We will continue to have some of that throughout the rest of the year, but not to the same extent. So you should bank on sales to partners that are sort of flattish or slightly positive to the remainder of the year. From a profitability perspective, we don't sign up partners unless they actually provide a benefit to the bottom line. So for us, it's always sort of upside to our day-to-day business. So you should see it as a positive profitability driver. On Scenic, Q2 is probably a little early because, you know, as usual, we will do the deployment of the car country by country. So the full commercialization of Scenic will take place in the second half of the year. So it's probably better to wait until Q3 and Q4 to have a full idea. of how Scenic is doing. Too early to talk about order intakes since at this point the only orders that we're getting on Scenic are orders from the dealerships, not from the end customers. So we can't really draw any conclusions from that. What I would say is the car is very well received. from our dealers and from the press. So, you know, we're cautiously optimistic about the launch. I think the fact that it received Car of the Year is good news for us and it's going to help, but we're going to have to wait and see for now. And then from a contribution of Scenic to the profitability, it's a profitable car, so it's going to help the financial results. In terms of contribution margin, on a percentage basis, it's lower than a typical ICE vehicle. But in absolute value, as the car comes with an average selling price that's significantly higher than the average of our range, the contribution margin is actually pretty good. So we look forward to seeing the impact of Seneca.

Thank you, Thierry. We now have a question from Steven Reitman from Bernstein SG. Steven, please could you open your mic?

Hi, Steven. Steven, we can't hear you.

Thank you. Yes, thank you very much. Good morning and thank you very much for taking my questions. I apologize if I might have missed this at the beginning. I had some trouble connecting. First of all, just a comment. Obviously, it's quite impressive, the very high trim levels you're recording on your vehicle sales. Could you comment on what your dealers are telling you about the health of the customers, really? Because, again, obviously, in the United States, we've seen this has been an issue, but you seem to be still doing very well on that. And my second question is on the Renault 5. Again, in very early days, of course, but we're hearing, obviously, that he's encountering very few, seeing massive amounts of interest in it. Would you be able to share with us any details about potential conquest element of that interest, of how many people are new to Renault who are looking at that vehicle? Thank you very much.

Hi, Stephen. Thanks for the questions. On the trim levels, I think for us it's a reflection of the attractiveness of these trim levels and of the vehicles. And we keep seeing the same thing since the launches. And if you go into the details, there's two elements to that. There's the powertrain side and the trim level itself. We continue to see... People go for the more powerful versions of the electric vehicles with the bigger batteries on the powertrain side. So from again, we're at 80% of the big battery and the more powerful motor. On the ICE and hybrid vehicles, you know, we have, you know, two-thirds of Austral that are the full hybrid version. Espace is 100% full hybrid. Even on Clio, it's a good third now that's full hybrid. And I mentioned that it's helping also on Jogger. So I think there's... There's a switch to electrification, no question. And it's very, very clear that this is not going to change anymore. And I don't know if you were there, but I mentioned in the speech we're at 48% of electrification in total now on Renault. So it's almost every second car that comes with some kind of electrification. And then you've got the trim level. We typically see, you know, on Austral, half of the vehicles sold with the Esprit Alpine trim. So people just want the attractive car and the one that comes with a lot of the bells and whistles. You know, we don't see any material change from that perspective, and the dealers remain open. you know, positive about the tendency. So no big evolution since the launch of these vehicles. It remains positive. And then on the Renault 5, look, you know, it's, again, we haven't opened the order. So at this stage, what we've got is what we call sort of interest proofs or interest manifestations, we call them in French. They're quite significant in volume, so it's a large amount in absolute value. I would say the way we look at R5 is we don't look at it specifically as an EV. We just look at it as an interesting car in the range, an iconic car that people love from a looks perspective and a design standpoint. And it's going to take its place in the range, regardless of whether it's electric or ICE. The signs are very, very encouraging. Obviously, the press reception has been very, very good. And so, you know, we'll start taking the orders just before the summer and start shipping just after the summer. And, you know, we're very optimistic about how that car is going to perform. Thank you.

Thank you, Terry. We now have a question from Pushkar Tendulkar from HSBC. Pushkar, please, could you open your mic?

Yeah. Hi, good morning, Terry. Good morning, Philippine. Thanks for taking my questions. I have three questions. So the first one is on the pricing. And if you look at the FX offset, and I believe that what you're trying to offset is the impact on profitability. So if you assume just a 30% drop through on FX offset, what I see is that you're still doing a considerable organic price improvement year over year. Is it something that that organic growth is something that you plan to retain over the year or it goes down gradually but not negative, probably comes down to zero? That's my first question. The second one is just on inventories and where would you want to be by year end, especially because you have these launches in the second half. Would we see again a buildup of dealer inventories towards the end of the year? And then finally on the cash or rather the cash returns. Just wanted to confirm if the payout target of 35%, is that dependent on the share sale of Nissan that you make? Because if I look at the current share price of Nissan, that's probably not supportive for the further share sales. So I just wanted to confirm whether you can do it organically from your free cash flow or you need any benefit from the Nissan share sale.

Sure. Thank you. Thanks for the question. So, look, on the first question on pricing, as I said, you know, about 80% of the pricing is FX-related this quarter. You're absolutely right. What we do is we manage compensation for FX at the bottom line level, not at the top line level. Because, you know, as you know, we have a good deal of localization, in particular in Argentina and Turkey, so we don't have to offset 100% of the FX impact at the top line level. And so we can afford to do some compensation while keeping the cars as competitive as possible. So that's the way we manage it, sort of a balance between maximizing the profit side but remaining competitive so that we don't kill the volume. We do have some organic pricing in the first quarter. You're absolutely right. And we'll continue to have some. But I think gradually it's going to evolve towards a bigger portion dedicated to covering effects and keeping price stability. on the organic portion. Again, while sometimes doing the same thing as what I mentioned on Clio, Capture, and Espace, repositioning the products a bit lower, if we can afford to do it, while increasing the margins. On inventory levels, you know, again, our rule of thumb is to have two months of order book, two months of inventory, and so that's kind of how we manage it on a go-forward basis. So we're going to try to keep the inventories as low as possible. We have some launches, or a lot of launches coming up, so that typically comes with a little bit more inventory in the dealerships, demo and things like that, but we're going to keep it low, right? So you shouldn't anticipate big inventory movements compared to last year. We're not going to go back to 600,000 cars or anything like that, for sure not. And then on cash returns, the 35% payout does not depend on Nissan's dividend. So our dividend policy now you should see it as disconnected from Nissan. So the proceeds coming from Nissan shares, I would say, is upside from a cash generation or a cash deleveraging perspective. Our commitment is 35% payout on the net income that's generated by the group. Okay. Thank you.

Thank you, Thierry. We now have another question from Thomas Besson, Kepler Chevrolet. Thomas, please, could you open your mic?

Yes, thank you very much. I just took advantage from the fact we have more time. Two quick and simple questions. You sold Nissan shares to Nissan for the time being, so it's great because you get credited. Is there flexibility to the 633.1 million shares you have that now are representing more than 15%? So could there be an incremental transfer of part of these shares to the bucket of shares that you can sell going forward to limit your ownership at 15% at the end of the process. The fourth question. And the second question, I heard you a few times talk about the cost reduction process, your accelerating, helping you reposition some of your cars in terms of pricing, et cetera. Could you talk about one key element of that, which is the relationship of Renault and other car makers with suppliers? I mean, I've been looking at this business for a long time, but I've never seen such a a gap between what automakers are talking about and what suppliers are still hoping for. So in 2024 basically do you expect suppliers to bring productivity gains to your savings or do you anticipate that you're going to have to help them further in their fight against inflation and their ability to eventually restore margins when they

Yeah, thanks for the question. So Nissan to Nissan. So our Nissan share sales to Nissan. Yeah, we've been – it was good to be able to do the first two tranches with Nissan. And as you mentioned, it has a relutive effect, which is positive for us. But we're not stuck to that type of process, number one. So we have full flexibility to go sell some shares to other people. provided some obvious, I would say, restrictions. We're not going to sell to a competitor of Nissan or anything like that. But we have full flexibility. And the commitment is 15%. That's it. So we'll go down to 15%, not more, not less. On the cost reduction process, look, I think, you know, the... The purchasing team is doing a great job in the negotiation with suppliers. We had a lot of discussions last year for compensation on some of the overcosts that occurred over time and things like that. And those discussions are not completely over, but they're mostly behind us. So this year we will have net productivity coming from the suppliers. So it will participate to the cost reduction activities that we've got this year, absolutely.

Thank you, Thierry. And we now have a last question from Aria Gassinier from Barclays. Aria, please, could you open your mic?

We can't hear you.

Aria, please, could you open your mic?

I think we lost...

yeah so if we have no further question i think this is now the end of the call um so as always all the team is fully available to answer your question

Yeah, thanks to all of you for joining this morning. You know, it was great to have the discussion. As you may have seen already, we'll have Dacia Days for our investors and analysts on June 17th and 18th in the presence of Luca and Denis Levotte in Romania. It will be an opportunity for us to showcase the strength of the Dacia brand and the key role it plays for us financially and the role it plays in our revolution. So look forward to seeing some of you there. Have a good day. And I have no doubt that I'll hear from you again and that you'll hear from us hopefully very, very soon. So thanks very much and talk to you soon. Have a good day.