Renault Sa Unsp/Adr

Ladies and gentlemen, good morning and good afternoon. Welcome to Renault Group's Q3 2025 revenue presentation. This conference call is broadcast live and recorded. It will be made available in replay on our website. I will now hand over to Duncan Minto, Renault Group CFO, to begin the presentation, which will be followed by a Q&A session. Duncan, the floor is yours.

Thanks, Florent. Good morning, good afternoon, everyone. Thanks for joining us today. I'm pleased to be with you here to present our Q3 revenue and the sales performance. So in Q3 2025, Renault group revenue amounted to 11.4 billion euros, up 6.8%. At constant exchange rates, it was up 8.5%. Automotive revenue stood at €9.8 billion, up 5% or 6.8% at constant exchange rates. Mobility services amounted to €23 million, up €9 million compared to the same period last year. And mobilised financial services continued strong growth, with revenue up 18.4% to €1.6 billion. so as usual let's drill down into the automotive revenue evolution automotive revenue stood at 9.8 billion euros in q3 that was up 6.8 percent as i said at constant exchange rates with a negative forex impact of 1.8 points this impact was driven mainly by the devaluation of the argentinian piso the turkish lira the Brazilian RIE and the Korean Won. The second part, the volume effect, was a strong positive by 3.2 points in the quarter, as the 9.8% growth in group registrations was partly offset by a higher destocking of the independent dealer network over the quarter in Q3 2025 against Q3 2024, but we'll come back to this in a second. Looking first at the registrations, the 9.8% growth worldwide in Q3 translated to more than 529,000 registrations. I think the point to note is international sales were up 14.9% and European sales up 7.5%. In Europe, passenger car sales grew by 10.9%, outperforming a market up 7.5%. LCV sales have shown a meaningful improvement sequentially for us, but yet remain 7.1% below the Q3 2024. Overall, all brands were up, which is quite remarkable. Renault, Dacia and Alpine. Certainly a highlight in the current auto industry context. Renault Group continued its acceleration on electrification. Renault Group's electrified vehicle mix in Q3 grew by 10.8 points to reach 44% of its sales. The Renault Group EV sales more than doubled, reaching 13.5% of sales, and HEV sales grew by a strong 25%. Looking at the Renault brand, electrified vehicles accounted for 60% of the brand sales, up nearly 10 points compared to last year. Renault's EV sales surged by 85% thanks to Renault 5, the B-segment EV leader in Europe, and Scenic, the C-segment EV leader in France. The EV mix reached more than 20% of Q3 sales, up 8.7 points. Hybrid sales rose off a strong base by 4.4% thanks to Sambios, the best-selling Renault hybrid, to reach 37.9% of brand sales in total. Renault was the second brand for hybrid sales in Europe. Dacia's hybrid sales more than doubled, now accounting for nearly 21% of its Q3 sales, up 9.1 points compared to Q3 2024, thanks to Duster and Bigster. As regards our commercial policy, we kept our focus on value over volume. In Q3, retail sales accounted for 63.8% of group sales in the five main European countries. This is 20 points above the market average. Sandero, Duster and Clear were in the top 10 retail sales in Europe. and residual values remain globally stable for both Renault and Dacia brands at the end of September 25 compared to last year. I remind you there's a 5 to 11 point positive gap above our main competitors in the five main European markets for passenger cars. Quick zoom on the Renault brand. Continued progression in Q3 25. Global sales were up 6.6% at just over 361,000 units. In Europe, the brand grew by 1.8% thanks to a 5.5% PC growth and an LCV performance, as I said, showing signs of recovery, but still down. Growth was especially high in Germany and in Spain. And Clio is the second best selling car across all channels in Europe. In international markets, Renault grew in its strategic regions, posting a 14.2% increase overall. In Latin America, the brand rose by 6.8%, thanks to Cardian. Further momentum is expected from the upcoming launch of Boreal in Brazil in November. In South Korea, Grand Collier supported the brand's growth by 54.7% year-on-year. And in Morocco, Renault achieved 42.6% growth with 9,258 vehicles sold, again supported by Cadian's success. Turning to Dacia, worldwide sales were up 16.2% with 165,000 vehicles sold. The brand posted solid growth in most European markets with outstanding performance in Germany, Spain, Belgium, Luxembourg. Bigster is the second best-selling C SUV in Europe on the retail market, with 22,353 units sold during Q3 and more than 55,000 orders taken since launch. Sandero remains the best-selling vehicle in Europe, all distribution channels combined, with 66,233 units sold in Q3 and over 218,000 sold since January. Year to date, in terms of standing in the European market, Dacia gained one place and ranked second on the European podium for retail sales. Turning to Alpine, we recorded more than 2,300 registrations in Q3, with now both A290 and the A110. A290 is now available in most of the brand's countries, with 1,845,000 registrations over the period. Since its launch in the UK this summer, the UK registered a strong start of sales for A290. A110 maintained a solid momentum with 500 registrations. The orders of the current generation of A110 will close in the coming months before of the next generation, which will be 100% electric. Lastly, Alpine will soon open orders for the A390, its new electric sports fastback, which will be out at the end of the year. So that's the zoom on the brands. I'd like to move to the inventories on the next slide. Total inventories, this is the sum of group and independent dealers, at the end of September stood at 538,000 units, up just 8,000 units versus June. The inventory increase at group level is partly offset by a destocking at independent dealers in line with the regular seasonal patterns. Looking at the impact on our volume bucket in the revenue, this quarter destocking at independent dealers was minus 98,000 units, you can see on the slide, stronger than the destocking effect experienced in the same quarter last year, which was only 72,000 units. Therefore, this impacted negatively our volume effect in the walk-down of revenue. We continue to implement a strict discipline in the management of our total inventories. We did slightly adjust our production output in Q3, as we do traditionally, and we'll continue to do so in Q4 if needed. This will be done while maintaining a high utilization rate of our industrial facilities. Looking forward to Q4, the group expects a restocking of independent dealers, but one well below that registered in Q4 2024. Let's move on to our sales to partners. This is the next part of the walk-down. This has a positive effect of 1.6 points on revenue in Q3 2025, driven by programmes with our partners and the impact of the integration of ARIN IPL in the consolidation perimeter. This was the facility we bought in India. As a reminder, on August, we completed the acquisition of this facility we now have 100% of the Chennai plant previously held at 51% by Nissan. Now let's have a look at the next box, which is price, product mix and geo-mix effects. As expected, the price effect was slightly negative in Q3. This is mainly due to a highly challenging environment with continuing and strong commercial pressure, especially noted in Europe. On international sales, the negative currency impacts were partly offset by price increases. But as part of our value over volume policy, we maintain, in our pricing approach, a strong focus on residual values, which is a key competitive factor for the Group's longer-term performance. The product mix effect was positive at plus 0.9, driven by the performance of both Renault and Dacia models, mostly Bigster and Renault 5. I'd like to note they delivered on our expectations in terms of mix impact. The lower product mix effect compared to the previous quarters is mostly explained by the annualization impact of the phasing of product launches. When we look back after one year we have Sambios, Scenic and Duster which entered in the comparison base this time last year which naturally reduces the year-on-year impact. Product mix in Q4 should be higher benefiting from a stronger contribution of Bigster and Renault 5 and the ramp-up of Renault 4. Geographical mix stood at plus one point notably explained by lower sales in Brazil in Q3 2025 This was due to a focus on the most profitable channels, combined with a high comparison base in the quarter of the previous year. Now let's turn quickly to mobilised financial services. I mentioned the strong growth. The contracts production slightly increased on Q3 2024, but it's the average performing assets that improved by 5.3% at €59.5 billion, mostly thanks to the increase in average selling prices over the last years. All in all, mobilised financial services revenue were up 18.4% to 1.6 billion euros, mainly driven by both interest rates and the average ticket price I just described. So review of the revenue done, let's turn to the outlook for the full year. In 2025, the auto industry as a whole is challenging, but we have built strong fundamentals on which we can leverage. We have a very disciplined inventory management, allowing flexibility in our production base while maintaining the high utilization rates of our plants. Our order intake was a high single digit growth in Q3, that's year on year, with a positive momentum both on passenger cars and on light commercial vehicles. We continue to focus on value over volume. It's a core fundamental. embodied by our exposure to the retail channel mix and I say once again we are 20 points above the market average. This is an advantage obviously as regards the group's margin profile. Finally, in terms of residual value, the strong competitive edge remains. We stand 5 to 11 points above our main competitors in the European markets. Can't forget product. This year was intense in terms of launches and facelifts. We've already seen the first benefits of Bigster, available in both ICE and hybrid. The vehicle was launched in Q2 and is demonstrating day after day commercial success. Renault 4 arrived at the end of Q2, with a real launch happening in September, and we have also launched the facelifts of both Espace and Austral. This will not stop here. We continue in Q4. We have three new vehicles for Renault. Renault Quid E-Tech, Renault Boreal for International, and the new Renault Clio 6 for European markets, which we will see the first deliveries in Q1 2026. And last but not least, the Alpine A390, which will arrive right at the end of the year. These launches will further support the commercial dynamic of the group, which is very positive, as you saw in the Q3 registrations. So, looking at the outlook, we confirm our guidance today for 2025 with a group operating margin at around 6.5% and a free cash flow between 1 billion and 1.5 billion euros. We remain very focused on reducing our costs and continue to work on what we can control. Our top priority is to deliver on our updated full-year guidance. And in parallel, as you know, we are working on the next strategic plan, which will be announced in Q1 2026. So this concludes my presentation. Florent, thanks everyone to your attention, first of all. And then with Florent and the team, we're ready to take your questions.

Thank you, Duncan. And so the first question will come from Jose Asumendi from J.P. Morgan. Can you please open your mic?

Good morning. Thank you, Florian. Thank you, Duncan, for all the comments. Very clear. Just three quick questions, please. When you look at the free cash flow guidance and your confidence to achieve the free cash flow, I would like to understand what drives a little bit the lower end and the upper end of that free cash flow guidance. And are there any factors that you're thinking could drive that swings basically lower end and upper end? Second question, can you give us please an update on where we stand on selling the stake in Nissan and monetizing that asset? And then three, I believe there's a strong opportunity to have strong product mix positive into 2026. Can you address which vehicles could drive this momentum into 2026?

Thank you. Morning, Jose. Thank you for those. So yeah, the free cash flow guidance has a lower and an upper end. Obviously, we have a stronger EBIT in H2 than we did in H1. But I guess more of the volatility within the range, as you can imagine, is working capital. So we had 900 million negative impact in H1, and we expect a good part of that to unwind. Not all of it, as we don't want to push the working capital. I think it will unwind a bit this year. We'll also continue to unwind a little bit the working capital in 2026 as well. And as you know, it's very much driven by the steady invoicing process that we need to have throughout the month of December and also the production levels and the impact of the payables we have on that. So what we strive to do is adjust production early when needed and not build up stock. So we did that in Q3. And if need to, we'll adjust again in Q4. But it's more the working capital that explains the lower and upper end of our expectations on working capital. The selling stake in Nissan, as you know, there's nothing new here. So still continue on the same strategy we have before in terms of the structure of our shareholding and those held ready for sale. But as you can imagine, the concentration short term has been left on Nissan to do and execute their turnaround plan, which has started well. And so we will follow up with that as time goes on. In terms of product mix in 2026, does anyone want to comment?

I mean, we've obviously got a strong Q4 coming, but... No, I think in product mix, we will have a full year for Big Star. We'll have also the end of the phase-in, phase-out from Master with a full lineup, which will help us also. We'll have a full year for Symbios. And I would say more generally, we are, as you... As you noticed in the presentation of Duncan, we are growing up on this full hybrid lineup, which is quite good in terms of product mix on each segment and for each car.

Thank you.

Thanks, Jose.

The next question will come from Mikael Foundoukidis from Odo BHF. Mikael, the floor is yours. Please open your mic.

Yes. Hi, everyone. Good morning. Two questions on my side. First, maybe as a follow-up to Jose's question on product mix, could you tell us about the potential impacts of this, let's say, lower product mix on profitability for H2, if it has one significant, and maybe a bit of magnitude on the improvement that you expect in Q4? Is it fair to assume, let's say, something between Q3 and Q2 levels? Second question on order intake. You said it's down to 1.6 months, but it's due to higher expected forward sales in Q4. So could you give us some color on absolute figures? Is it flat, lower, or maybe higher versus end of June? Thank you.

Okay, Michael. Thanks. So lower Q3, lower impact of model mix in Q3, because we're at 0.9 points where we're in mid 3.5, 3.7 in Q1, Q2. There is a strong comparison base in the past, as I said. with the launches that we'd had last year what i would like to tell you is that um the mix we're expecting um coming from i guess one of the most key products such as bigster was spot on where we uh we expected and i can see those orders in the portfolio so that will also drive a growth in Q4. I think you're right to say Q4 should be somewhere between what we saw in Q2 and Q3. So I don't have any particular problems with your expectations in that front. In terms of order banks, so we have 1.6 months of sales in bank. As you correctly state, yes, that figure is obviously forward-looking, you know, orders we have today divided by forward-looking sales and it's the forward-looking sales part that's growing. I think we need to, you know, remind you that in Q3 our order to take was actually up on last year, so that's Obviously, not all those orders are going straight into the portfolio because we're also delivering. As you saw, registrations were up 9.8%. The commercial dynamic is strong. I think you're quite right. We have a forward-looking sales expectation, which is strong. off the proven track record we did in Q3. And order take was up over last year, both in passenger cars and in light commercial vehicles, to be honest. So it's high single-digit growth.

Thank you.

Thank you, Michael. And the next question will come from Thomas Besson from Kepler Chevrolet. Thomas, the floor is yours.

Thank you, Florent. Good morning. A few questions as well, please. Duncan, can you remind us your target for inventories at year-end? I think you said there would be less restocking than last year, but is there a range target for inventories toward year-end, please?

Yeah, do you want me to go question my question? 525 to 550?

Yeah, if it's okay. Sorry?

525 to 550. Okay.

525 to 550. Thank you very much. Second question, your BV share has increased. a bit less than I think I was thinking. But at the opposite, I think your hybrid and HEV shares are doing very well. Do you still need to be somewhere between 19% and 20% for BEVs over 25, 6, 7 to comply? Or is the increase of your hybrid and HEV share allowing you to be below that just to get an idea of what you need to achieve in 26, 27 on that front?

um i think i'd say i'm comfortable on passenger car cafe compliance over the over the periods that you're talking about so the dynamic of sales on ev for us is strong the hybrids you know even the dacia side's doubling so it's the passenger car side of things i'm i'm not concerned about in terms of hitting the mix that were required No major skew needed. Once again, remind you that LCV is not the case. We provisioned CAFE in H1 to the tune of 98 million euros, so unless things change in the rules, I don't foresee pretty much any of the LCV manufacturers hitting a CAFE compliant over the period so let's stay positive on the fact that people might react to this and we may have some positive news on changes to regulations but we will not count on that and so we'll plan for the worst.

Thank you. On the bank, which continues to grow strongly, can you say a few words about two things, capital needs eventually and dividend potential for that? And I mean, the French press has reported some management changes there. Could you confirm and indicate whether as a CFO, you may become the new boss of that business or whether we should expect a new announcement on that front?

In terms of management changes or comments in the press, I won't comment on any individual situations. Let's just say that operations are under control and everything is maintained as normal. In terms of capital needs for the bank, we guided that You know, as you're well aware, the dividend from MFS was down this year due to the strong growth in the balance sheet and the requirement to have the capital reserves both for rating agencies and the ECB. And that should start to rise again to above the average 500, 600 million euros per year. be it probably next year or the year after. So I don't have any particular concerns. Obviously, we've got to clarify the FCA situation and provision in the UK. We'd provision 90 million for that. So that's the only one thing that we've yet to have clarity on.

Okay, thank you very much. Last one on OZOS. Can you just say a few words about what was there this time around, please?

others we have rebound in renault retail group activity so the activity of a wholly owned dealer network is the main uh part of it we have a little bit of after sales but uh okay great thank you very much thank you thanks thomas thank you thomas and the next question will come from henning costman from barclays um any can you please unmute your your phone Henning?

Yeah, good morning.

Morning.

Yes, good morning. Good morning. Thanks for taking the question. Duncan, I was just wondering if you could comment a little bit on how business has been going incrementally since H1. It seems to be getting a little bit tougher in Europe. You had called out that commercial pressure, of course, already at the H1 stage, and now we're seeing some more plant stoppages from some of your competitors. Some seem to be attributable to higher inventory, chip shortage. You just mentioned the UK redress scheme, of course. Perhaps you could comment on light commercial vehicle momentum specifically there if you expect to be on prior year level in Q4. But just overall, maybe how incrementally tougher europe environment has perhaps affected your confidence level for the four-year guidance is it is it the same uh are you you know almost more confident because you're now closer to the to the end of the year and have better visibility if you could just put a little bit context around the the incremental trading environment um that's the first question and um second question was just on the on the dividend if you could kindly confirm again that you're still planning to increase the absolute Euro dividend relative to the 220 of last year. And I had the third question on the UK redress scheme. I believe you just said you provisioned 70 million for that. If you could just confirm that number. I don't know if I heard that correctly. Thank you.

Okay, Henning. No, I said 90. Maybe I wasn't clear. 90 million euros is what we provisioned for that and so we will be reviewing that as the details come out in the coming months. Your first question bundled a lot of things together. You talked about commercial pressure in Europe, which is, yes, clearly tougher than we thought. We didn't plan that things would get better, but there's certainly more pressure out there. You talked about inventories, but I think maybe you were referring to some of our competitors. So to avoid any inventory build-up, we did actually trim some of the production schedules during Q3. We like to be reactive on that front. And because of the factories really turning at a high capacity, it's not so much of an issue for us. You also put in there chip shortage. So I know we've had news from several fronts in the past few days on that, but nothing that's impacting our production schedules as I can see today. I mean, we learned a lot during the electronic component shortage. in previous years and in terms of tracking what's going on at first level of suppliers, suppliers supplying suppliers, working on optimizing the stock available within the system or even resourcing, which can take a couple of months. we're able to manage with the current visibility we have today on that LCV our momentum so we stayed down previous year and as I think we discussed together it was the propulsion the rear-wheel drive part of the LCV mix on master which is coming on now The order takes up. So when I said high single digits for order take in Q3, LCV was actually higher than passenger cars. So I think we're building the orders on that. We might actually see all of those deliveries this year. They might come into next year as well. And also on the partner business, excuse me. I want to answer your question saying yes, things are tougher in Europe. Yes, we've seen lots of things from our suppliers. Yes, supply chain is disrupted. Not seeing the impact on our production outlook. And once again our registrations were up 9.8% in the quarter and we saw strong order intake, high single digit with LCV higher than that. So the confidence is obviously as we get closer to the end of the year and that order book is in hand. Bigster, I know you and I talked about being one of the bigger drivers on H2 profitability versus H1. That was as expected in Q3 and we have the order book in hand to be able to deliver in Q4. Dividend guidance in the past had been about payout ratio. So dividend will be a topic which we will discuss with the board of directors and we will announce in February next year. So no change in dividend policy to date.

It's all really clear. Thank you, Duncan.

Okay, Henning. Have a good day. You too. Did I say 90 million? Sorry, the FCA, I think was the last part of your question. 90, not 70. Sorry.

Yes, thank you. Thank you, Henning. And we'll take the next question from Stuart Pearson from Oxcaps Analytics.

Yeah, morning. Thanks for taking my questions. So a few just to follow up with Duncan. I mean, firstly, just on that competitive situation in Europe on pricing. Just looking at it, is it fair to say that pricing in Western Europe is running something like negative 2% to 3%? And if so, you're aware of the most tense areas of competition. Secondly, just coming back to the emissions side, obviously, notice this week the Nissan... is now pooling with BYD. And just very quickly, does that affect your outlook into 26 at all? Were they ever paying you any kind of pooling agreement or any plans to before? Can you perhaps go a little bit more slowly on EV than you otherwise would have done now that you don't have to carry Nissan, who's the service away from their targets? I don't know if that affects you at all. I'm kind of linked to that. Plug-in hybrids, I mean, it's not really been a segment that's been particularly important in the European mass market, but obviously the Chinese not facing tariffs there. In the last few months, They've really pushed, right? Cherry, you might have noticed, they're almost 20% of the UK plug-in hybrid market in September. So I wonder if you think that could become a more significant segment. If I'm not incorrect, I don't think you have any product offer in that powertrain now. So I wonder how agile you could be to actually bringing those to market if actually that does take off. And then just the final one, if I can, just as you look ahead to the strategic plan, Um, next year, and I guess renolution, um, to overly simplify it, a lot of it was about the product side. Obviously it was cost stuff going on as well. Um, but I wonder looking at Volvo this morning as well, what costs played a significant role in what they delivered. Um, is it fair to say the next strategic plan could have a much greater focus on, on cost efficiency than renolution? And now you've had your feet under the table for a little while. Do you see significant potential still there at Renault, given that we've had a lot done on the cross side in that organisation over the last 10, 15 years? Thank you.

Okay, thanks Stuart. Pricing, I think if you said Western European markets were down 2 to 3, I think that's a bit strong. Probably less than 2% in terms of negative price impact, I would say. And maybe I'll answer your other questions and then let maybe Fabrice or Catherine comment if they want any further on that.

Regarding plug-in hybrid? No, no, on pricing. Ah, in terms of pricing. I would say that in terms of pricing, what we see now in Europe is quite stabilization, and we are controlling our viable marketing expenses at the same level of what we did in Q3, and this is how we will manage the level of pressure until the end of the year. Perhaps we'll find some opportunities, even though to increase some prices on some very targeted segment of our countries. It means we are zero up in terms of pricing strategy. Regarding plug-in hybrid, perhaps. Okay, please go ahead. I think if you take the plug-in hybrid segment share in Europe at CAA until the end of August, they are around 8%, 9%. It means it's still a small segment. We have one offer with Rafale, which is a very interesting product because it's a car which is at the same time a plug-in hybrid and hybrid when the battery is empty, which means a very low level of consumption. What we see on the small segment is that the customers are more oriented on either full hybrid solution, it means non-pluggable, or on EV. And we want to manage our diversity, that's why even though we have the technology, we prefer to focus on on one hand full hybrid that's what we do commonly between renault and asia and on ev with the launch of the new cars like r5 and r4 and this allow us to be at a level of co2 which is manageable i would say versus the future target

So we do have the technology. Horse has it.

So if we need, we can decide to push the button. But I would say that at this level, let's focus on our hybrid technology, which is growing a lot and which is a good lever in terms of volumes and profitability. We have a good residual value on those cars, which is not for sure the case for most of the plug-in hybrids you see in the market.

You had a question on CAFE. I don't think we've had any impact of Nissan signing with BYD in terms of pooling. It wasn't in our plan. So in terms of CAFE compliance, once again, I think it was to Thomas's question, on the passenger car side of things, quite comfortable on the outlook, like commercial vehicles, obviously. bit of a lost cause of anyone being compliant to think at this stage in time. Strategic plan. So product was the center of renolution and also the positioning of the brands. I think the brands have really grown and have their own unique positioning now at this point in time, which is another way of looking at it in terms of residual values. Before saying yes, cost will be a part of the next plan, product will also remain at the center of the next plan, be very much focused on core business. But I do think we will have work to do on cost as well and efficiency. As time's getting tough, we need to be able to ensure that we control our fixed costs, that we maintain that solid break-even point to ensure that if there are any disruptions in the market that we don't have to take an axe to our product lineup or suddenly change the plans going forward. So we will continue to focus on a break-even point, cost reduction, and that's what I guess leads to the strong return on capital employed that we've had. And variable costs is also stepping up. As you've seen this year, I think we said we were just under 400 euros per unit in H1 and we're seeing a stronger dynamic in H2. And that's something I can confirm today that that's well on track.

Great. Thank you, guys.

Thank you, Stuart. And the next question will come from Stephen Reitman from Bernstein SG. Stephen, can you unmute, please?

Yes, good morning. I have two questions, please. First of all, could you bring us up to speed on the transition to LFP that you're doing on your BEBs? I understand you've already, have you already launched on them again? And when will you be able to offer LFP offerings on the Renault 5 and Renault 4? And what impact would that you think it would have on pricing, your ability to price those vehicles? And secondly, could you comment on the competitiveness of your Turkey plant, particularly in the light of the further devaluation of the lira, particularly regarding exports to Western Europe?

Yeah, so maybe on obviously the Turkish plant is one of our most efficient plants and devaluation is a short term gain for exports. Obviously, we do have to pass on some cost increases afterwards for all of the non-Turkish lira sourcing that suppliers have in that. So there's a little bit of a delay on those. On LFP, we have the transition next year to 2026. So it's pretty much across the whole of the BEV lineup. Fabrice, do you want to say anything about that?

We already began now with the new spring. which is giving more competitiveness and more autonomy also for our customers. And we will go on next year with our BEV segment and Megane also. I think this is very interesting because that's a solution which will enable us to gain more cost, better cost, more competitiveness, and at the same time, more autonomy for our customers.

And just if I may add on the Turkish Lira, just for the reminder of everyone. So we had a negative impact on the revenue and it was a positive impact on the margin so far. Moving forward, we do expect the impact on the margin to be less of a positive. because we have increased our sales in Turkey. And this was one of the main drivers in terms of performance on international sales in Q3. So this is something to keep in mind. So thank you, Stephen. And so the next question will come from Pushkar Tendulkar from HSBC. Pushkar, the floor is yours. Can you please open your mic?

Pushkar, can you hear us? Hi. Hello, can you hear me? Yeah, yeah, it's good. Yeah, hi. Hi, good morning. So just, Duncan, a couple of questions on, maybe related to the guidance, but some of the indications that you had provided on the first half call, which probably then feed into your full year guidance as well. One was about the second half volumes being better than the first half. Now that you have, we have got, At least three to four months forward. How is that looking in terms of progression? The other was about cost savings. The indication was that price mix enrichments versus cost savings would be a net positive for the full year and also for the second half of the year. If you can provide any color on the development on that front. And the third one is just a clarification. The 90 million that you mentioned in terms of in terms of provisions that will be booked in the second half or that has already been provisioned for in the first half.

So FCA is already provisioned in the first half. The second half volumes better than the first half. So I think you've seen the 9.8% registration growth in Q3. So as you say, Q3 is behind us, Q4 is ahead. And so confirmed that will still be the case for the full year. We did trim a little bit of production in Q3, but as we do constantly over time. Cost savings. So I talked about the cost savings just a couple of seconds ago. In terms of the variable cost, excluding any external factors which are also positive on cost at the moment, as maybe come back to the Turkish lira deflation. And also raw materials, a bit of a tailwind as well. But if we exclude any of those, we were trying to go for 400 euros per unit cost reduction on the variable side, full year. We did slightly less than that in H1. And my expectation was to do more in H2. I confirm that that's still on track. So we have good visibility, good traction on that front. And then you wrap that into saying price mix enrichment and cost. On H2, we said it would be positive and maybe positive on the full year. As you've seen, and as we've discussed, the pricing environment is a little bit worse than we expected. So that's putting pressure on that one. But we're upping... cost reduction actions in other areas across fixed costs the only one thing we had a we had a warranty recall which puts a bit of pressure on that bucket as well but we've upped fixed cost reductions in other areas and the strong diamond dynamic on variable cost is definitely there so all in all I think will probably be flat positive well flat in h2 and slightly negative for full year so that's one of the factors that got worse while our management of the things we can control in terms of costs uh stepped up and then thank you yeah volumes cost savings and 90 million was booked yeah

Good. And so the next question will come from Harald Henrikse from Citi. Harald, the floor is yours.

Morning, guys. Just two slightly longer-term questions. One, you've mentioned a couple of times the negotiations now with the European Commission. Can you just talk a little bit about what you are hoping for or expecting from those talks? Any sort of specific demands or anything that you can give us regarding those negotiations? And then secondly, both with the changes in the CEO, the new CEO changed quite a lot of the headline management in the group. The strategic direction seems to be very much business as usual. What other changes do you think you can identify for us? What has changed with the two of you at the top of Renault changing this year that you want to identify for us that will help Renault going forward?

Okay, thanks, Harold. On the European Commission, so I think as you would understand in some of my comments, the We have a hope short term that the rules will change on light commercial vehicles because it's a segment which has been a strong profitability base for European manufacturers and it's really a European business. while fleets that wanted to go electric and could go electric have already there and we've got our offer which is competitive on Kangoo traffic and we've recently launched on master obviously we do have and we've taken the big investment to do a full EV offer with Flexivan which we expect will be out towards the latter half of next year so in terms of putting the product on the market and making the offer available to customers, we're doing it. The demand is not responding in the same way, so I think we need to collectively re-look at that. But once again, while I remain positive on the fact that that will change, we're not counting on it, and so we had to provision in H1, and we will do until the rules change. I won't necessarily comment further on more longer term, but on the passenger car, I think the wall of 2030 in terms of hitting the CO2 targets, if we have to do it just in one year alone, will be a challenge for many manufacturers. We positively accepted the sort of bank and borrow scheme over three years, which came out for 25, 26, 27. So let's see what happens for the future on those. In terms of CEO, so he obviously came on end of July. He's not someone who's new to the company. He's been here for several years. He built the Renolution plan with Luca and the team. So we had some... New management announcements, which I think are coherent with what we need to do going forward. Fabrice here, obviously, with Katrina, in terms of CEOs of Renault and Dacia respectively, but working closer together in terms of coordinating the offer and the lineup and how those two brands remain in their strong positioning. That's something I think has been a benefit and we're seeing that in the construction of the midterm plan we're doing right now. I think if I was to focus on one thing, it would maybe come back to, I don't know who asked the question, it might have been Toma earlier. It was on cost, it wasn't, but in terms of we've seen a very strong new product offer The brands are now very clearly and distinctly positioned. We have strong residual values. We're selling well with the bank off of that. It's making our offer competitive. We had a big focus on cost reduction on the EV side with Ampere. So we were striving to get that business down to breakeven this year. We probably won't be far. But I don't think that's the key point. I think the key point is looking between one series of cars and the next. To be able to take 40% of the cost base out. There was a little question earlier on LFP. It was Steven Reitman, I think, that said it, but it's, you know, the battery is a huge element of the cost of the car and this technology change does allow us to be more competitive in margin. than it would on the NMC that we have today. But on top of that, I do think we need and we will have a heightened focus on fixed costs because we need to protect our break-even point to ensure we have continuity in the rollout of our strategy. So I think there would be the focus points. It'll be very much a strategic plan, which is controlling capex and R&D. We won't be going past 8% in terms of over-investing. focused on the core business. And in terms of growth outside of Europe, we're starting to see it now. I mean, you know, growth in Europe was 7% in Q3, more than double that for international. And we've made the investments necessary in India. And with the purchase of RNIPL, we have Latin America, which we have a GD partnership, which we've just concluded. and we also have Korea. So it's utilizing the asset base we have to ensure we can foresee growth in the outlook of the plan.

Thank you, Duncan. Just a quick follow-up, if you don't mind. Just getting questions here on the EV and trying to get to 20%. Just remind us the latest that you're talking about on the EVs, the Renault 4, Renault 5, profitability relative to the range. You're saying ampere is now very close to break-even. Obviously, if we start adding volume, that margin will go up further. How do you see that dilution from your perspective? Sorry, but thanks.

No problem. Certainly we have in terms of we've got three challenges in terms of growth because obviously EV is increasing and we're not yet at parity for margin between EV and ICE. Come back to my point, just answering you in terms of variable cost reductions that have to come in over time. So As we will see growth in EV, it's dilutive because that's the case today and we have to get to those kind of levels of cost reduction before we get to EV parity. The second one, I guess, is you've seen if I link to the business we have, which you've seen a growth of in Q3 in terms of partner business. So as we've signed partnerships with our European production base, that's what you're seeing coming off now. But with India, you'll also see our revenue grow as we sell more to Nissan, as we're producing two new vehicles for them, one in 26, one in 27. And we'll also be selling and distributing Gillibrand in Brazil. Partner business is great for Roche because we're not actually putting any additional assets in, but we do have a dilutive margin on that compared to the rest of the core business. So, you know, there's three different challenges in terms of dilutive business, international as a whole, EV and partner. And the answer to that is cost. And the good news on that is the return on capital employed.

Great. Thank you very much. Thanks, Harold. And the next question will come from Philippe Uchois from Jefferies. Philippe, can you open your mic? Philippe, do you hear us? Bonjour, Philippe.

Hi, it's Philippe Bourgeois-Jeffries. A couple of questions for me. I think one you already answered, but I want to clarify. So you're now talking about a strong fourth quarter, which explains why the book to sales is a bit lower than we've seen recently. Does that optimism on the fourth quarter include LCBs and potentially LCBs going into positive territory in terms of volume, is my first question. And the other one is... I've seen in the press that France and Spain apparently are against delaying the 2035 deadline. And I'm just kind of confused right now between what the industry wants to achieve, what governments want to achieve, and if you can comment about where that political decision is coming from at country level and how it is aligned or not with what you're expecting from negotiating with the EU in follow-up with Harold's earlier question. And if you feel there is a common view between the German side and the French side of this industry when it comes to discussing with Brussels. Thank you.

Thanks, Philippe. I'll try to avoid any political battles, but I think you've got the answer to your question and the alignment across Europe between the different countries. But it's not changing in any way, Philippe. air position and so we were prepared for you know 2035 the strategy doesn't need to change on our front because of that my comments earlier were more on some of the shorter term challenges for cafe in terms of lcv very short term and maybe the 2030 change in lcv which is a big step down as you know So it's maybe more flexibility on that front that I'm expecting. You said that you noted we'd have a strong Q4 in our discussion today, but we'd expected a strong Q4 when we talked to you back in July as well. So registrations are up 9.8%. So yes, as you quite rightly point out, the order bank as a mass divided by the forward-looking sales looks lower at 1.6 but uh the order take being up um high single digits in in q3 is is confirming our outlook on that would you would you venture to say lcd could be positive in the fourth quarter right i mean the q3 was better than the first half and i don't think so

Philippe, in Q4 the ELCV market should decrease again after a rebound in Q3 which was mainly explained by easy comps related notably to GSR2 effect and some tax incentives in the Netherlands and probably some tactical push also from some players in the market. In this context, the Renault brand should outperform the market, underpinned by the strong order intake that Duncan just mentioned, and notably on master because of the improvement in the diversity availability. But we still expect LCV to be a negative territory in Q4 in Europe. Thank you very much.

Thanks, Philippe.

Well, thank you all. This concludes our Q3 revenue call. The team remains available if you have any questions. And see you soon. Thank you.

Thank you very much. Have a good day.