Daimler Truck Aktie

Good morning, ladies and gentlemen. This is Marcus Poppe speaking. On behalf of Daimler Truck, I would like to welcome you to our Q1 results global conference call. We are very happy to have you with us today, Karin Radstrom, our CEO, and Eva Scherer, our CFO. Karin [indiscernible] introduction directly followed by a Q&A session.

The respective presentation can be found on the Daimler Truck Investor Relations website. Please note that this conference call will be recorded. The replay of the conference call will also be available as an on-demand audio webcast in the Investor Relations section of Daimler Truck website.

I would like to remind you that this teleconference is governed by the safe harbor wording you will find on our published results documents. Please note, our presentation contains forward-looking statements that reflects management current views with respect to future events. Such statements are subject and uncertainties.

If the assumptions underlying any of these statements prove incorrect, then actual results may be materially different from those expressed or implied by such statements. Forward-looking statements speak only to the date on which they are made.

Before we start, let me give you a quick reminder. Following the signing of Definitive Agreements in June 2025 with a target to integrate Mitsubishi Fuso and Hino into ARCHION Holding company, the Mitsubishi Fuso subgroup was reclassified as discontinued operations and assets and liabilities held for sale starting in Q2 2025.

Effective January 1, 2026, the Trucks Asia segment was no longer reported separately. And for capital market communication, we focus on continuing operations for business development, unit sales and profitability. Our investment research activities as well as free cash flow and liquidity are presented on a combined basis, including both continuing and discontinued operations. With closing on April 1, 2026, our shares in the Mitsubishi Fuso subgroup were transferred into shares in ARCHION and as a result, are reported as an at equity participation from Q2 onwards.

With that, let's jump into the results. Karin and Eva will walk you through how the first quarter came together. And after that, we'll be open things up for analyst questions followed by the media. So Karin, please, over to you.

Thanks, Marcus, and good morning also from my side. As you may have seen, we had a first quarter which was on the soft side with low volumes in North America and continued tariff impacts. At the same time, we are seeing really strong order intake and remain very confident as we look ahead for the remainder of the year.

So, with that, let me have a look at the key figures for the quarter. For the group, we generated EUR 10 billion in revenue with an adjusted EBIT of around EUR 500 million and a net profit of EUR 149 million. Our balance sheet remains strong with net industrial liquidity of EUR 7.1 billion.

Furthermore, we continue to deliver on our strategy to become a more profitable and a more focused company with three topics to mention. Firstly, with the completion of the integration of Mitsubishi Fuso and Hino Motors into the newly established ARCHION Corporation on April 1, we enabled that new company to unlock synergies, benefit from scale across products, technologies and operations.

As communicated, we will gradually reduce our ownership to 25%, generating a total cash inflow from the transaction between EUR 1.5 billion and EUR 2.0 billion. Within the next 12 months, we expect the free float to reach at least 35%, which is an important prerequisite for a prime market listing in Japan.

Secondly, in addition, we announced in March that Toyota intends to join cellcentric as an equal shareholder alongside Daimler Truck and Volvo Group. This represents a meaningful step forward for hydrogen technology. It brings together three global industry leaders with complementary strengths and improves our ability to accelerate innovation and scale fuel cell systems.

This partnership underscores our strong confidence in hydrogen as a core pillar of zero-emission transportation, while at the same time, we maintain a disciplined approach to efficient capital allocation.

Thirdly, given the current conditions in the electric commercial vehicle market in North America, we're adjusting our spending accordingly. We agreed with our Amplify Cell Technologies joint venture partners to defer the installation of manufacturing capacity. Limited construction will continue to ensure that joint venture remains well positioned for the future while maintaining flexibility as the market [indiscernible].

Due to the delay of production start and ramp-up, we recorded a noncash partial impairment of EUR 200 million in equity result from Amplify in accordance with IFRS rules, which is reported as an adjusting item within EBIT. We had originally planned a contribution to the joint venture in a low triple-digit million range this year. So overall, we will see a positive cash flow impact.

Continuing with the look at the Industrial Business, revenue came down 14% year-over-year to EUR 9.1 billion and adjusted EBIT was down 55% to EUR 460 million. The primary reasons for the decline was the lower profitability at Trucks North America, where we saw very low unit sales along with significant tariff headwinds. We continued managing our overall cost base effectively and further reduced SG&A expenses. Research and development investments were also lower in the first quarter, but we expect higher spending for the remainder of the year.

Now to the orders. Incoming orders -- which rose by 50% to 114,000 units shows that we have a great momentum with our products. Feedback, especially on our Actros L with the ProCabin remains very positive. At the same time, unit sales were down 9%, totaling around 69,000 units for quarter 1, resulting in a book-to-bill of 166%. Overall, cancellation rates remain low even with the heightened economic uncertainty related to the Middle East conflict.

Turning to our zero-emission portfolio. We sold around 700 battery electric trucks and buses in the first quarter, up by 26%. In North America, the Class 8 market totaled 50,000 units in the first quarter of 2026, representing a 23% year-over-year decline, reflecting historically low order demand in 2025 and in line with our expectation of a slow start in 2026. Our market share stood at 37.7%, making us again the clear market leader. Based on our strong order share, we expect our market share to improve as the year progresses.

In Europe, the heavy-duty market expanded by 11% to approximately 80,000 units, largely driven by Poland, the Netherlands, Spain and Germany. Against this backdrop, our heavy-duty market share increased a lot from 14.2% in quarter 1, 2025 to 18.3% in quarter 1, 2026, reflecting the strength of our competitive product portfolio and the successful launch of the Actros L at the beginning of 2025.

As a result, we further reinforced our leadership position in Europe's medium- and heavy-duty segments, achieving an overall market share of 18.5%. In zero-emission vehicles, we led the market again, capturing 33% of the European heavy-duty segment in the first quarter of 2026. While the overall adoption in Europe is still low at around 2% of truck registrations, this underlines our strong competitive position as the transition continues.

I'll now hand over to Eva, who will walk us through the segments.

Thanks, Karin. As you mentioned, market conditions varied across regions. So let's start with a closer look at what it all meant for Trucks North America. At Trucks North America, revenue came down 29% year-over-year to around EUR 3.8 billion, following a historically low demand environment in 2025. Excluding a negative foreign exchange impact of roughly EUR 450 million, revenue was lower by 21%.

Adjusted EBIT came in at EUR 209 million, leading to an adjusted return on sales of 5.4%. Unit sales fell 25% to the lowest first quarter level since 2010. Positive pricing and disciplined cost management helped mitigate the impact but could not fully offset substantial tariff headwinds and the pronounced volume decline. With an order intake of over 59,000 units, up 86% year-over year and 13% sequentially, our growing backlog gives us confidence for the remainder of the year.

The overall industry is showing discipline, and our customers are replacing their aging fleets despite continued macroeconomic uncertainty and higher fuel costs. Freight rates have improved by more than 20% year-over-year as freight capacity has exited the market. We are now seeing the full impact from Section 232 truck tariffs, resulting in a combined low triple-digit million-euro net tariff impact in the first quarter. Our application under the U.S. content program and the review of MSRP credits are still pending with no confirmed impact on the effective rate at this time. Despite these factors, performance remains very solid and demonstrates resilience.

Mercedes-Benz Trucks generated revenue of EUR 4.6 billion, a 4% increase year-over-year with an adjusted EBIT of EUR 233 million, resulting in an adjusted return on sales of 5.1%. Order intake was strong, reaching around 49,000 units, representing a 33% increase compared to quarter 1 2025 and 4% sequentially. In Europe, profitability benefited from a strong sales performance and the strict implementation of cost-down Europe measures. This was partly offset by duplicate aftersales operation costs related to the ramp-up of the global parts center in Halberstadt, along with slightly negative net pricing. Moreover, the prior year quarter benefited from a mid-double-digit onetime warranty effect.

In Latin America, volumes increased slightly, driven by strength in Chile, Colombia and Peru and market share gains in the medium-duty market in Brazil. Profitability declined year-over-year, driven by a more challenging market conditions in Argentina. In India, volumes increased strongly in line with the market, supported by favorable mix.

Revenue of Daimler Buses was at EUR 1.2 billion, a 7% decline year-over-year with adjusted EBIT of EUR 107 million and a strong adjusted return on sales of 8.6%. Order intake reached around 5,900 units, representing a 25% decrease compared to quarter 1 2025, driven by the weaker markets in Latin America. However, still resulting in a book-to-bill ratio of 119%. The strong European business keeps its positive momentum.

Unit sales declined by 20%, mainly due to a weak market environment in Latin America and Mexico, where we primarily sell bus chassis. At the same time, our higher-margin integral bus business in Europe slightly increased year-over-year. Even with strong performance in Europe, positive pricing and FX support, we could not fully offset the volume decline in the chassis business. However, despite lower volumes, we delivered a strong profitability, highlighting the improved resilience of the bus business.

Adjusted EBIT for Financial Services decreased year-over-year from EUR 55 million to EUR 39 million, driven by higher loss allowances and foreign exchange headwinds. As a result, adjusted return on equity decreased from 7.3% to 5.1% in the first quarter. A prolonged freight recession in North America, tariff-related impacts and increased fuel prices due to the Middle East conflict have continued to weigh on customer cash flow. As a result, a growing numbers of customers are experiencing tighter liquidity in their business, also in Brazil and Mexico, which has translated into higher cost of risk as we are taking a prudent approach to provisioning. In North America, it will take time for higher freight rates to improve fleet margins that have been severely diminished after years of market downturn. Moreover, we are not adjusting for costs resulting from our ongoing restructuring initiatives to position our Financial Services business for improved returns in the future.

Free cash flow of the Industrial Business of around negative EUR 400 million was significantly lower than in the previous year, mainly driven by lower earnings and additional inventory buildup due to higher order intake. This was partly compensated by higher prepayments received from customers, increased trade payables and lower income tax payments. At the same time, our balance sheet remained very strong. Net industrial liquidity at EUR 7.1 billion after deducting the negative free cash flow and a cash outflow of around EUR 50 million resulting from the share buyback program we initiated on March 16th.

Now turning to our guidance. To date, we have only seen a limited impact of the Middle East conflict on truck demand and global supply chains. However, further developments will largely depend on the duration of the conflict and are likely to vary in severity across regions. The longer this situation remains unresolved and oil prices remain elevated, the higher the likelihood of inflationary cost pressures, supply chain disruptions and softer truck demand. As of today, macroeconomic leading indicators point to a more resilient outlook in North America compared with a more cautious sentiment in Europe. As always, our guidance does not factor in potential impacts from supply chain disruptions or adverse macroeconomic developments, particularly those related to the Middle East conflict. It also assumes that the current USMCA tariff framework remain in place.

We continue to expect the North American heavy-duty market to land between -- 250,000 and 290,000 units with a pickup in the second half of the year supported by replacement demand. For the EU30 market, we expect a range of 290,000 and 330,000 units. All segment level guidance KPIs for 2026 remain unchanged.

For Trucks North America in quarter 2, we expect unit sales to be around 50% above first quarter levels, with profitability at the upper end of the full year guidance corridor. This does not consider a reduction in tariff exposure in the second quarter. Based on our strong order intake and our expectation of a lower effective tariff rate under the U.S. content program in the second half of the year, we expect to deliver a full year return on sales adjusted at the upper end of our 6% to 8% guidance corridor.

For Mercedes-Benz Trucks, we expect group sales to increase sequentially by around 15% in the second quarter, in line with further market improvement in Europe. Profitability is forecasted at the lower half of the guidance corridor. For the full year, we confirm our 6% to 8% return on sales corridor with a strong improvement expected in the second half of the year. For Daimler Buses, sales are expected to be around 30% above quarter 1, and profitability is expected to be at the upper end of the guidance corridor. We also confirm our full year guidance corridor of 8% to 10% return on sales.

Taking into account lower cash contributions to Amplify Cell Technologies, we expect to be at the upper end of our full year free cash flow guidance and forecast a strong recovery already in the second quarter.

Thank you very much, Eva. Thank you very much, Karin. So that concludes our presentation for quarter 1 results. Now it's time to move into the Q&A portion of today's call. As usual, we will start with questions from analysts, then move on to the media. Both sessions will be recorded and made available on request.

Good morning, ladies and gentlemen, and welcome to the Q&A part of today's Q1 results global conference call. [Operator Instructions]

So good morning. I think we start with Nicolai Kempf from Deutsche Bank.

It's Nicolai from Deutsche Bank. Slow start in Q1, but well flagged, and we appreciate the comments on Q2. If we start in North America, very strong orders in Q1 that seemed to slow down a bit in April. And have you any color on that? Was this because of lead times getting longer? Was a bit of slowdown because of the higher diesel prices? So any color on this would be appreciated. And then moving to Mercedes and maybe to Europe, you've mentioned a bit more cautious indicators on the macro side. Can you just remind us what are the moving parts here going forward? And why is Mercedes going to improve in H2?

Thanks, Nikolai. Karin here. Maybe starting with North America. As you said, very strong order intake in Q1, I think, at 86%, better quarter 1 compared to last year. And in terms of April order intake, it was a bit more stable from -- moving on from March, but we're happy with the order intake in April. In terms of Europe, as we move into Q1, we also see an improvement on the volume side. So that should help to boost the result of the Mercedes-Benz Truck segment for Q2. Eva, anything -- otherwise.

Yes. I think maybe I'll shed some light on Mercedes. Overall, explaining a bit further on quarter 1 and then also how you can expect the year to develop. So I mean, just to recap a little bit also what we went through during the speech. So we saw a 4% increase in revenue for MB year-over-year. We saw that order intake was strong. And as anticipated, as you said, slower start into the year. And we do see that we have profitability in Europe moving in the right direction. This is supported by cost down Europe and also improving volumes, which will then also be a factor coming into quarter 2. Now in quarter 1, we did have temporary cost headwinds. I mentioned it, operational ramp-up of our spare parts distribution center in Halberstadt and some slightly net negative price/cost impact.

What we also saw in quarter 1 in MB that we had some temporary inefficiency in our industrial setup related to the relocation of the Atego cabin production, so medium duty to Turkey, and that resulted in additional rework costs as we ramp that up. But this is something in the next quarters that will get better.

And then we see, as I mentioned also in the speech just now, we had a lower profit contribution from Latin America here, Argentina being the main factor. And when we look at this now coming into quarter 2, we see that it will gradually ramp up into the second half of the year. You saw that we're guiding for Q2 in the lower half of our full year guidance corridor for Mercedes-Benz Trucks, but then you will have higher volumes come out and also some of these headwinds easing over the second half of the year, and we're very comfortable with our full year guidance corridor.

So next question comes from Klas Bergelind, Citi, please.

So can I just confirm on the margin guidance here for North America at the upper end in the second quarter. This doesn't include any benefits from MSRP or the preferential tariff agreement. So this is mainly the higher operating leverage quarter-on-quarter and a better mix from Cascadia.

And linked to this, given the solid margin here for the second quarter, it seems like you can reach [indiscernible] the higher end of the range of 6% to 8% for the year without these tariff benefits, at least on my math, with the tariff benefits coming on top. Is that how to think about it?

Klas, thanks for your question. Obviously, a very good one and not unexpected. So you're right, based on what you concluded that quarter 2, and I said it also just now, there -- is no reduction of the effective tariff rate considered in quarter 2. So it's really the run rate that were coming out of quarter 1 that will also then translate into the quarter 2 profitability. We have a significant volume effect coming in with 50% higher unit sales. And then obviously, that brings us to the upper end of the full year guidance corridor in quarter 2.

Now when it comes to the lower effective tariff rate that we believe we can get under the U.S. content program and then also MSRP credits. Maybe the first one for lower effective tariff rate. We have not received confirmation there. But we're still confident that we will get a relief there. But first of all, we are not exactly sure how long it would take. And then we have to see based on our application, what will be accepted. So that's a bit unpredictable. But what you can say is that the assumption in our full year guidance is quite conservative for a tariff relief because we're being cautious there.

And on MSRP, I said last time that we had considered a mid-double-digit million amount for this in this year. We have taken it out now. We still believe we will get it, but it could take a bit longer because we see that it's moving very slowly. We still don't have the calculation method, so we couldn't even apply for any credits there for the U.S. assembly. And so there, this could move into next year. So generally a bit more conservative assumptions there on the tariff side. And as you did the math, we're trending quite well there when it comes to profitability based on run rate.

Very good. My second one is on Mercedes-Benz and the orders. We had this move incentive in Brazil, which has seen truck orders surge. I'm trying to understand how much of this is the better orders that you delivered? How much is driven by the Brazil incentives that we understand will start to roll over after May versus the European better momentum, Actros L, et cetera. Just so we understand how much we need to give back from the Mercedes-Benz better orders into the second half?

Klas, Karin here. I can take that one. So actually, we have a little bit different structure from some of our competitors in Brazil as we're a full liner, and we deliver both the extra heavy, semi-heavy and the medium-duty segment. So actually, if you look on our order intake in Brazil, it has remained rather stable quarter-to-quarter. And the growth that we are seeing is coming very much out of Europe and some of it also from India.

Next question comes from Alex Jones from Bank of America.

Maybe first on pricing. If you could comment on what you're seeing particularly in Europe, where you cited negative pricing this quarter and also North America whether the strength in order intake gives you any potential to make a decision to further increase pricing through the year?

And then second question, just on the order strength. Are you seeing any customer feedback to suggest there's already an impetus given higher fuel prices to replace trucks a little bit quicker? Or is that really still too early for you to see in conversations or certainly in the numbers?

Thanks for your question, Alex. I'll take the pricing one first. So on the MB side, it was slightly net price/cost negative. Actually, what we do see is that over the course of the year this will improve, and we expect a net positive price/cost impact on a Mercedes-Benz Truck segment level for the full year.

In North America, obviously, tariff effects are significantly higher this year and our tariff surcharges are not compensating the tariff costs fully. And so we have a net negative price cost, and we do expect that to remain for the full year. However, we do see from a pricing perspective that pricing itself is improving. And we also do see that as we go into the year, looking at the good order momentum, potentially, there is also some room for improvement there. We are reviewing this every quarter when it comes to pricing and related also to tariff surcharges.

You asked then also on the demand side in North America. So we do not really see so much of this that customers replace trucks earlier. We generally see that there is a renewal need in the market as there has been a very long freight recession ongoing in the third year now. I mentioned that freight rates have improved 20% since the start of the year and also over 20% year-over-year. So a significant improvement that is helping.

We also do see that this is supported by capacity exiting the market and also really stronger requirements being followed up on English language proficiency of drivers, this non-domiciled CDL topic being tackled. And that is what is supporting now really the freight rates and results ultimately. On the demand side, we believe there's still potential for that to further pick up going forward.

Next question comes from Daniela Costa at Goldman Sachs.

Actually, two questions. But starting out with the U.S. and with EPA, just wanted to get a little bit more clarity on like how your strategy to adapt for that is? I guess your order book might be significantly filled for '26. So maybe soon we'll be talking about filling '27. Have you decided what you're going to do with pricing there? And then I'll ask an unrelated one afterwards.

Daniela, Karin here. Yes, we are still waiting [Audio Gap]

Daniela, can you hear us?

Only now. I think you went blank.

And do you hear me, Daniela?

Yes.

Yes. So I was saying that EPA has confirmed that EPA 27 will come, but we still don't know exactly how warranty and some of the other legal topics will be playing in, which means it's still quite difficult to know how to set the pricing. However, we are, I think, very confident that we will have very competitive pricing and that we have a good technical solution to be compliant, which should help us very much going into '27.

Thank you. And my second question was just more regarding how do you think about China strategy over the long run, just an update of where you stand there. We see some of the Chinese peers being a bit more active on exporting. We also see some of your peers talking about having a presence there to maybe leverage it outside of China. Just an update on where do you stand there?

Yes, I can take that one. So we have a joint venture in China with Foton called BFDA. We have been negotiating quite a long time on the way forward. And let me say, I was hopeful to solve it earlier. I think I said in our Capital Markets Day to come back at the beginning of the year. But we're still negotiating all options on the table. So I'll definitely come back as soon as there's something to tell. I think I'm learning that sometimes it's better not to stress to get to a solution, but to come out with a really good one in the end.

In terms of Chinese competitors in various markets, of course, we know them. We see them. We have seen them for many years, but now they are in some markets pushing more. I think we've shown in the bus market, where they have been present even in Europe over the last 10 years, that we're able to fight back and to show very strong performance also against our Chinese peers. And I think you see it in the result of our bus business. So I believe the same goes for the truck side. We have to keep playing on our strength, bringing very good products, keeping close customer relations, and having a very good network to ensure the total cost of ownership and the uptime of our vehicles.

The next question comes from Michael Aspinall from Jefferies.

Just two. So one in North America. We heard that there were some pricing notices given to customers in the U.S. in March. Just wondering if those orders would be delivered in 2Q? Or would they more likely come through later in the year?

Michael, you said some pricing that has been given to customers in March. Could you explain what you mean?

Yes. We just heard from some customers that some pricing notices came through in March. And I was wondering if pricing is a significant component in 2Q in North America for the margins, or if that would come through later, given when orders are taken.

Yes. So as I said, I mean, obviously, with the good order situation, our ability also to look at tariff surcharges has improved a bit, but this is mainly relevant for orders in the second half of the year, not in Q2.

Got it. Yes. Cool. And then the other one, you announced the site of a new manufacturing plant in the Czech Republic, I believe it is. Can you just talk about how important it is in reaching that position to reduce freight costs in Europe in the years to come?

Yes. It's in line with what we announced at our Capital Markets Day. So our aim is to have around 25 -- moving from 45% to 25% of our assembly capacity in Mercedes-Benz in Europe, and to bring cost down by EUR 3,000 per truck from that assembly plant.

The next question comes from Lewis Merrick from BNP Paribas.

I think last quarter, you spoke of reaching the top end of your guidance for North America was dependent on receiving favorable tariff treatment. Based on your earlier comments, is that no longer the case today?

Yes, I alluded to it when I answered the question from Klas, Lewis, but happy to explain it a bit further to make it clear. So yes, we said that in the last quarter, but obviously, you also see now that our run rate is developing quite well. And already in the second quarter, with the volume effect of 50% higher unit sales, we expect to be at the upper end of our full-year guidance corridor. And so we still, for the full year, assume that we will get a better effective tariff rate, so a lower one, especially related to the 232 truck tariffs. However, the assumption that we have considered there is a more conservative one. I mean, as you can imagine, there are a lot of moving pieces on this, and we will know once we hear back from the U.S. administration. And this is where we are right now, and we'll keep you updated.

But it's fair to say that if you were to receive that favorable tariff treatment, you could see upside to that North America guidance?

Maybe we'll discuss that in a couple of months once we have heard back from the U.S. administration.

Okay. And just one follow-up. On the price of the key inputs, whether it be energy, steel, aluminum, these all increased. Do you have an estimate of the total cost headwind you expect in 2026 from raw materials?

Yes. So obviously, it's a very volatile situation, and I mentioned it also in the speech that we have to closely monitor the development in the Middle East, and the impact really depends on how long the current situation persists. Strait of Hormuz will be open again, and so on. But what we have done is we have taken some amount into our forecast and as a result, also into our guidance when it comes to include raw material costs, logistics costs, fuel costs, and so on.

However, we have not considered the impact of potential supply chain disruptions, the potential implications on demand, because, as Karin also said, our orders are still developing well in Europe as well as in North America. So a prolonged situation in the Middle East that would prove to be challenging. That's something that we have not considered in our guidance. And of course, we have a risk scenario that we have evaluated as part of our opportunity and risk management that we always do.

The next question comes from Akshat Kacker from JPMorgan.

Akshat from JPMorgan. A couple of questions, please. The first one on order intake trend in Europe. Have you seen any slowdown or any changes to the strong order intake that you saw in Q1 in the month of April or the start of May, please?

And the second one is on R&D spending. You talked about below trend R&D spend in the first quarter. Could you just remind us of your expectations for the full-year R&D spend, please?

I can take the first one, and then I hand the second one to Eva. So, on order intake in Europe, it stayed, I would say, quite strong also in April, maybe slightly down, but still on a good level. And then on R&D, just a second.

Yes. R&D, I'll take over. So it was a bit lower in the ramp-up in quarter 1, but we still believe that we will have slightly higher R&D expenses over the course of the year compared to prior year. And as we have also previously explained, we really see R&D expenses peaking this year and next.

The next question comes from Harry Martin at Bernstein.

So the first question I have just about the ramp-up of volume in the North America business, 50% up Q2 versus Q1, but then also through the year. I wondered if there were any risks to this ramp-up? Do you have the staff for the lines of the suppliers that you have set up to match that speed? Or is there any risk to that volume expansion?

Thanks, Harry, for your question. So we do have everything lined up, obviously, already for quarter 2. Our production program for quarter 2 is already fully booked. Q3 and Q4, we're filling up nicely. I would say that's an absolutely healthy seasonality that we see there. We're used to ramping up and down, and that's what we're also doing now. So I would say we're well prepared to match that speed with one caveat, which is obviously the situation in the Middle East that we have to watch out for. At the moment, we do not see any constraints there. But as I said, we have to monitor that very closely.

Great. And then I wondered if I could get an update on the autonomous business, the Torc Robotics status. I guess, both the current technology and where we are in the rollout, but also, there were headlines through last year about potentially opening about business outside capital. So I wondered if we could get an update there.

Sure. I can provide you with that. I would say the team continues to make good progress. We have a really important milestone at the end of the year to drive on-highway with the driver-out with our production intent hardware. So I think that's one of the strong benefits we see with Torc that we already have hardware that we're ready to scale, and not prototypes. We're still planning for an SOP in early 2028. And there's nothing that the team is doing that makes me doubt that, while for sure, you know it's uncertain when you deal with new technologies.

We think we're in a strong position with the Freightliner Cascadia. It's the best autonomous chassis in the market, and we also feel that there is a lot of interest from competitors of Torc for that chassis. And also in that particular segment where we believe autonomous will start to scale, we have a very strong market share because it's with the big fleets on the highway where we have the Cascadia.

In terms of how we will move on with the company, I think we're fully intent on funding that and making it a success, while for sure, we also always look for options for value creation.

Next question comes from Hemal Bhundia at UBS, please.

One of your peers mentioned that the parts business was a bit softer than expected. I'm curious on how you're seeing your aftermarket business develop in Europe and North America, and I'll follow up with my next question after.

Yes. So on the service side, we saw a low single-digit growth year-over-year. We think we will improve over the course of the year. So I talked a lot about breaking the curve. I would say we have not yet broken the curve in terms of our service growth, but I think we have a lot of great initiatives in the pipeline. In the U.S., we're working with AI to improve pricing. We're opening up some new retail stores to better reach the second and third owners of our trucks, which is a segment where we've had relatively low market share.

And then as already mentioned, in Europe, I mean we made just recent announcements, we opened on retail inland I think we announced yesterday or the day before that we bought a dealer group in the U.K. So we're establishing our first own retail in the U.K. And then as Eva mentioned, Halberstadt, which is currently a bit of a challenge with the ramp-up, as you can imagine, with 300,000 parts moving into 170 countries. But once we get that under control, which I think will happen over the next months, definitely, we are optimistic about the potential to grow the service business even more.

Very fair. And I recall that you mentioned that there were some bottlenecks in the vocational side of the bodybuilders. Could you give an update on how this has developed?

Fairly stable, I would say. So we still see that. But generally, the vocational business is developing as we expected -- believe that we can see significant growth there in the next couple of years, also in market share.

So our last question comes from Frank Biller at Landesbank Baden-Wurttemberg.

So it's a question about zero-emission vehicles. Here, we saw strong deliveries here, book-to-bill ratio of 1.5 here. What is your expectation for the full year, given the higher diesel prices? Is it going steadily upwards? Or is it a bit more coming down because of the U.S. business here? And the other question is on this autonomous driving again. I've seen the cost went down to EUR 71 million compared to EUR 81 million in the quarter. Have we seen the peak already? Or will it go upwards with the start of production?

Frank, I can take the ZEV question. So actually, we don't see that diesel prices going up directly drives the adoption of zero-emission trucks. And the main reason being that infrastructure is still a bottleneck. So actually, we do see with some of our customers that the total cost of operation for electric trucks, depending on the use case, of course, is quite positive, especially for those who drive a lot on the Autobahn, where you also have the significant advantages from the mouth for an electric truck versus a diesel one.

But due to the still very slow ramp-up of infrastructure, and it's actually both the public infrastructure along the highway, but also for customers who want to establish infrastructure at the depot, it takes too long with the permitting processes and getting the electric connection to the grid. So that's actually the main bottleneck, which is very unfortunate considering this would be an opportunity, really, where it should and could have taken off more.

Yes. And on the cost ramp-up, no, we haven't seen the peak already. So it's a fairly stable development that we're expecting this year, also compared to last year, when we look at the full year ramp-up of costs.

That concludes the first part of this Q&A session for investors and analysts. I would now like to hand over to Andy Johnson for the second part, where all participants from the media can ask their questions. Now, as usual, IR remains at your disposal afterwards. Have a great day. Thank you, and goodbye. Over to you, Andy, please.

Thank you, Marcus, and welcome, everyone, to the media portion of our Q&A session today. Before we start our media Q&A session, some housekeeping remarks. As you probably have guessed by now, this call is conducted in English. So please be so kind to ask your questions in English as well. The operator will now explain the procedure for registering your questions.

[Operator Instructions]

Thank you very much. We will now begin our media Q&A session. The operator will address the questioners by name. Please be so kind to also briefly unmute yourself with your full name and your media advert. Take your time, and please ask your question slowly and clearly. And with that, operator, let's go with our first question.

The first question comes from Robin Willer from DPA Deutsche Presse-Agentur.

This is Robin Willer from DPA Deutsche Presse-Agentur. Hope you can hear me. In your press release, you state that the financial results were primarily impacted by lower profitability at Trucks North America. Could you please explain this in more detail? I mean, what were the main factors here? And can you quantify them precisely, for example, how significant was the headwind caused by the tariffs? And what factors outside of North America influenced net profit, looking at the loss on equity method investments? Could you also please explain that?

Robin, Eva here. Thank you for your questions. So the important thing about North America is that it was really the lowest volume quarter that we have seen since 2010. So this was really a historic low, so a significant volume effect in there. And in addition to that, we have the highest tariff effect in quarter 1 that we have seen so far because the 232 truck tariffs are fully considered there. In quarter 4, it was only two out of three month. And so the overall tariff effect, including all tariffs, reached a low triple-digit million amount, just to give you some idea here.

And then we had an adjusted effect, which you also see in our numbers, that was EUR 200 million for a partial impairment of our stake in Amplify Cell Technologies. Karin mentioned that in her speech. So there, we have decided together with our joint venture partners that, considering the environment in North America concerning zero-emission vehicles, we will delay the buildup of manufacturing capacity in that joint venture. It's a battery cell manufacturing joint venture, and that caused, based on IFRS accounting requirement, a partial impairment of our book value.

However, we will have a positive free cash flow effect out of this because we did consider in our initial planning a low triple-digit million amount in cash. Injections into this joint venture, which we do not expect anymore and that then also brings us to the upper end of our guidance corridor for the full year when it comes to free cash flow.

The next question comes from Ilona Wissenbach from Thomson Reuters.

So, Ilona Wisenbach from Thomson Reuters. I didn't get it now, Eva. Was this low 3-digit million amount tariff effect only for the first quarter? Or was it for the full year? That's one question and another one after that.

Yes. The first one is, it was only for the first quarter.

Okay. And how is it for the full year? Is it not -- able to calculate?

No, this is what we pay now. But then, as I also said during the speech, we have applied for a lower -- or for a relief under the U.S. content program. And there, we do then expect a reduction of the effective tariff rate that we pay under the Section 232 for the truck tariffs. So that is where we do believe in the second half of the year that there will be a reduction, but we cannot quantify it yet because we have applied for that relief with the U.S. administration, but we have not heard back.

So quarter 1 and quarter 2...

Sorry.

And the latest announcement of President Trump, do you think it changes anything, because the 25% apply anyway already to trucks?

Yes. So I mean, generally, we do not ship assembled trucks from Germany into the U.S., and that's our current understanding of this new tariff rate that was announced on May 1. But obviously, we continue to evaluate the changes in the tariff framework.

Okay. And the second question was about the zero-emission trucks in the U.S. You see that the market there is more difficult. And I wonder why you support actively the legal action of the Trump administration against the climate change rules. I think you faced criticism for that also today at the Annual Shareholder Meeting. I mean, adjusting to a weak market is one thing, but actively supporting to stop selling zero-emission trucks is another thing, and I don't understand it.

Yes, I can do this one. So it's absolutely not to be interpreted like we are against zero-emission trucks in the U.S., and the challenge we have is that California has one legislation when it comes to zero-emission trucks. And this has been challenged by the federal legislation because they are saying that the California legislation is not right or not valid. And therefore, it's more of a technical step that we are suing to understand which legislation we are to be following in the Californian market. So its -- that's the explanation on that.

In terms of zero-emission trucking in the U.S., I think we can say with confidence that we have been very committed. We had started a group-wide battery platform project to be able to scale zero-emission trucks in the U.S. However, with the change in legislation and now I'm back on the federal level, a lot of environmental legislation was -- pulled back, which we had anticipated, which means there is no demand for zero-emission trucks in the U.S. at the moment because the customers simply cannot make the costs come together to be competitive with diesel. And for that reason, we had to announce last year that we stopped our platform project, which we had started. So that's the background on that topic.

All right. That looks like it for our media questions today. Thank you, Robin and Ilona, for your questions. Everybody else joining us, thank you very much for joining us today. Thank you, Karin and Eva, as well. Now, as always, the IR and communications team remains at your disposal to answer any further questions you might have. So please don't feel or don't hesitate to reach out to us.

A recording of the session will be available later today on our Daimler Truck website. We are looking forward to staying with you in contact with you today, and have a great day. Stay healthy. Thank you, and goodbye.

Good morning, everyone, and welcome to the 2025 Annual Results Conference of Daimler Truck. Thank you for joining us. I'm Andy Johnson, Global Head of Communications for Daimler Truck.

And before we get started, let me briefly outline what is ahead of you today. First, we will deliver our presentation of the 2025 results as well as the outlook for 2026. After that, we will move into the analyst Q&A session and finally, the media Q&A session.

And now I will hand over to Marcus Poppe, who will guide you through the presentation and analyst Q&A.

Marcus?

Thank you, Andy, and welcome, everyone. I'm Marcus Poppe, Head of Investor Relations. Today, we will take a closer look at how Daimler Truck performed in 2025 and how we are positioning the business for the year ahead.

To start us off, it's my pleasure to welcome Karin Rådström, our President and CEO; and Eva Scherer, our CFO.

Karin, looking at 2025, how would you assess our overall financial performance?

Well, thank you, Marcus. Also good morning from my side. Great to be here. Well, 2025 was quite a year. The markets were shaped by geopolitical tensions, changing trade policies and a steady stream of uncertainty. But I'm really proud that through all of this, one thing remained constant, the strength and resilience of Daimler Truck.

For the group, we delivered EUR 49.4 billion in revenue, with an adjusted EBIT of EUR 3.8 billion. Our Industrial business achieved 7.8% return on sales even against the backdrop of this ongoing uncertainty and volatility. And with EUR 1.8 billion of free cash flow in our Industrial business, we closed the year with a very strong net industrial liquidity of EUR 7.7 billion.

These achievements are not accidental. They show that our strategy is already working and that we are strengthening the fundamentals of this company. We are becoming more agile, more robust and more focused.

Thank you, Karin. So staying with the theme of resilience, what were the main value drivers for our Industrial performance in 2025?

So at the Industrial business level, revenue decreased by 10% year-over-year to EUR 45.9 billion, and adjusted EBIT declined by 21% to EUR 3.6 billion. The primary reason for this was the downturn in Trucks North America, where we had both a weak market and faced tariff headwinds. However, there were also areas of strength. Daimler Buses achieved a double-digit return on sales, and we also continued to manage our overall cost base effectively and reduced SG&A expenses. At the same time, we increased our investments in research and development, which is a strategic step to further improve our product portfolio and strengthen our competitiveness for the long term.

Our Service business delivered low single-digit organic growth with a clear overall acceleration for services in the second half of the year. Revenue growth was dampened by currency movements and some structural changes from the reorganization of our rental business, CharterWay and also the Fuso carve-out. Going forward, Service growth is an important part of our growth strategy, and we have many running initiatives that will increase our momentum over the coming years. For example, a new advanced pricing tool for the North American market that utilizes data analytics to assess competitive positioning, volume potential and the life cycle value across the entire parts portfolio.

And at Mercedes-Benz, we are ramping up our own retail strategy, which is progressing as planned. Over the last 2 years in MB, we've opened 8 new commercial vehicle centers across Europe, 3 of those in Germany. And in 2025, we invested EUR 25 million also on upgrading existing sites, like, for an example, the expansion of the Würzburg location, and we also continue to work on truck dedication. So I think we're doing a lot. And in addition to these organic initiatives, we're also doing acquisitions. We've signed our first contract, so we will start to step up on the spending on the retail side in 2026.

Just to finish the bridge, the positive other effect is mainly attributable to the full impairment of the equity carrying amount of our joint venture in China in 2024, which leads to a favorable comparison year-over-year.

So thank you, Karin. Before we turn into market developments, can you walk us through how unit sales and order intake developed in 2025?

Yes, sure. I can do that. At group level, our book-to-bill ratio reached 101%, which reflects a good balance between incoming orders and deliveries. Unit sales decreased 8%, totaling around 423,000 units for the year. At the same time, incoming orders grew by 2% to approximately 425,000 units. In the fourth quarter, order intake was really strong with 52,000 units for Mercedes-Benz and 52,000 units for Trucks North America. And it's also good to see that this positive trend out of Q4 has continued since the start of the year. If we turn to our zero-emission portfolio in 2025, we sold 6,700 battery electric trucks and buses, up from around 4,000 in 2024.

Thanks a lot for that overview, Karin. So against the backdrop of our overall performance, Eva? How did the key end markets evolve over the course of 2025?

Thank you for the question, Marcus. And first of all, a warm welcome from my side to everyone. So in North America, the Class 8 market came in at 258,000 units in 2025, representing a 16% year-over-year decline that reflects a year shaped by economic uncertainty and a prolonged freight downturn. Despite this environment, our Class 8 market share held firm at 39.6%, underscoring our leadership in the market.

In the heavy vocational segment, we maintained a stable market share compared to 2024. However, ongoing congestion at body builders limited our ability to capture additional share. Western Star is growing absolute volume, outperforming the market and building a strong pipeline of unregistered units currently at body builders awaiting upfits. As this backlog moves through the system, registrations will begin to reflect the growth already evident in our production. Looking ahead, we are confident that we can expand our position toward our Capital Market Day target of more than 35% market share by 2030.

In Europe, the heavy-duty market declined 6%, totaling 296,000 units. Our momentum saw a meaningful improvement towards year-end with a 15% recovery in the fourth quarter compared to quarter 3 and plus 4% versus the fourth quarter of 2024, backed by our competitive portfolio and strong customer demand for the Actros L, our European heavy-duty market share climbed from 14.2% in the first quarter to 18.8% in the fourth quarter, delivering a 17.1% full year share. We also reaffirmed our European leadership in the medium and heavy-duty segment, with 17.7% market share. Our zero-emission lineup strengthened this position even further, capturing 38% of the heavy-duty electric truck market in 2025 and around 50% in the fourth quarter, making us the clear leader.

Thank you, Eva. Now Karin, maybe shifting gears from markets to execution, which products and platforms define us in 2025?

Yes. Well, happy to talk about that. We're really proud about our trucks and buses. Starting with Europe, we are driving the transition to zero-emission transport, which Eva just talked about, with a portfolio that's really performing great in the market, not the least our long-haul truck, the Mercedes-Benz eActros 600, but also the eActros 400 and our electric city bus, the Mercedes-Benz eCitaro. These vehicles show that the technology is ready, and we see the customers responding. So we have great products, and we are prepared to deliver at the speed of right when the markets are ready. However, the transition is still too slow, mainly due to the lack of infrastructure.

We've also upgraded our conventional portfolio. Eva mentioned the launch of the Actros L featuring the ProCabin, where we have optimized the aerodynamic design to reduce fuel consumption by up to 3% versus the previous generation. And as also mentioned, this truck has really helped us gain market share and momentum in the market.

At the same time, we started series production of the Fifth Generation Freightliner Cascadia, the newest evolution of the most successful Class 8 truck in North America. And together with our strong Western Star vocational lineup, we are reinforcing our leadership in the world's most important commercial vehicle market.

In India, we launched our new BharatBenz heavy-duty trucks for construction and mining. Even though Daimler India Commercial Vehicles has only been in the market since 2012, we are an established brand with big growth opportunities, both in India as well as in the export markets.

In Brazil, we introduced our all-new Mercedes-Benz Axor, a heavy-duty truck for up to 68 tonnes. And this truck filled a gap in our portfolio, which helped us increase our market share in Brazil from 22% in 2024 to 26% in 2025.

Defense has also become a high-growth strategically critical segment for us, and we are winning important tenders. For instance, our contract with the French Army to supply 7,000 Zetros together with our partner, Arquus for the next 10 years and the order for several hundred Arocs for the German Bundeswehr.

Back at our Capital Market Day, we set a target of reaching EUR 1 billion of revenue in the defense business in 2030. And today, I'm proud to say that we expect to reach that target already in 2028. So we are already ahead of our plan by 2 years.

So to summarize, our product momentum is really strong across all regions and segments.

Excellent. Thank you, Karin. With that in mind, Eva, let's take a closer look at how this translated into the performance of Trucks North America.

Absolutely. Happy to dive into that, Marcus. So at Trucks North America, revenue fell 21% year-over-year to EUR 19 billion, resulting in an adjusted EBIT of EUR 2 billion. Even in a very tough U.S. environment, however, we achieved a strong adjusted return on sales of 10.7%. The results were pressured by a 26% decline in unit sales, driven by the ongoing freight recession and uncertainty surrounding the introduction of tariffs. Delivering double-digit profitability in such a challenging market is a testament to the remarkable team in North America.

In 2025, the overall net tariff impact, including Section 232, was around EUR 250 million. Unfavorable foreign exchange developments added further pressure on earnings. We offset part of this pressure through decisive pricing actions, supported by model year updates and disciplined efficiency measures, including a reduction of around 3,000 positions across the workforce.

Without the tariff impact, our return on sales would have been around 12%, which is a clear demonstration of how resilient our business can be even in a sharply down market.

Thanks, Eva. I agree. Very strong performance indeed. So Karin, let's now look at Mercedes-Benz and Daimler Buses. How did these segments perform in 2025?

Yes, sure. Starting with Mercedes-Benz Trucks, which delivered a robust performance. Revenue was EUR 19.7 billion, a 4% decline year-over-year, with an adjusted return on sales of 6.2% and adjusted EBIT of EUR 1.2 billion. In EMEA, profitability benefited from a stronger volume development in Europe and the accelerated implementation of our cost down Europe measures. The 2024 impairment of the Chinese at-equity joint venture carrying amount also contributed positively to year-over-year profitability.

At the same time, we had temporary production inefficiencies during the ramp-up of the new products, namely the Actros L with the ProCabin and some selective price decisions that weighed on margins. We also increased our R&D investments to advance our product portfolio.

In Latin America, profitability declined slightly year-over-year due to the continued economic uncertainty, a drop in the extra heavy market and negative foreign exchange impacts. In India, volumes increased slightly compared to 2024, while performance remained challenged by mix effects and ongoing pricing pressure.

Overall, Mercedes-Benz Trucks continued to perform with discipline, resilience and a clear focus on strengthening the business for the future.

Daimler Buses delivered a strong performance in 2025, achieving revenues of EUR 6 billion and an adjusted EBIT of EUR 599 million, resulting in a very strong adjusted return on sales of 10%. This is all-time high for Daimler Buses and a reflection of a lot of really hard work over the last years.

The European market saw significant growth, supported by robust demand for both coaches and zero-emission city buses. Brazil performed slightly above 2024, while in Mexico, results remained below the prior year, mainly due to prebuy effects from Euro VI and a broader economic slowdown.

Adjusted EBIT increased 39% year-over-year, exceeding net revenue growth. Strong net pricing, favorable sales mix and the exceptional performance of our teams were the key drivers of this very strong result.

Thanks, Karin. So let's round things off by looking at Trucks Asia and Financial Services. Therefore, Eva, how did we perform there?

Yes. Let's do that. In 2025, Trucks Asia delivered revenues of EUR 4.8 billion, with an adjusted EBIT of EUR 212 million and an adjusted return on sales of 4.4%. The Asian market environment continued to face challenges. reflected in persistently soft demand across major markets, particularly in Japan and in Indonesia. Overall profitability declined slightly. Higher volumes, mainly driven by the Middle East as well as market share gains in Indonesia and net positive pricing were more than offset by unfavorable mix and substantial foreign exchange effects. Continued aftersales growth and SG&A cost discipline helped to strengthen resilience.

Our Financial Services value over growth strategy is taking shape. Adjusted EBIT significantly improved year-over-year from EUR 133 million to EUR 181 million. Despite 12% lower new business volume and elevated cost of risk stemming from the ongoing volatile macroeconomic environment, this favorable development was driven by increased interest results, supported by higher interest margin. We have been successfully diversifying our portfolio geographically, countering adverse foreign exchange and credit risk headwinds.

Our overall result was positively augmented by the realization of transformational and efficiency programs targeting cost savings, especially in headquarters in Germany and North America. As a result, adjusted return on equity increased year-over-year from 5% to 6.1%.

Thanks, Eva. So having covered the business performance, now let's focus on cash flow. So how did we close 2025 from a cash perspective?

Yes. Sure. Let's have a look. I'll start with a big picture. Free cash flow of the Industrial business amounted to around EUR 1.8 billion, which is in the upper half of our guidance range, driven by strong cash generation in the fourth quarter. Compared with 2024, cash was lower, largely reflecting the earnings pressure at Trucks North America and higher inventories during the ramp-up of our Parts Center in Halberstadt, Germany for Mercedes-Benz Trucks.

At the same time, our balance sheet stayed very strong. Net industrial liquidity ended the year at EUR 7.7 billion, even after roughly EUR 1.5 billion in dividends and about EUR 600 million in share buybacks. This keeps us comfortably above our EUR 6 billion liquidity threshold and gives us a very solid foundation as we move forward.

Thank you, Eva. So let's change perspectives. At our Capital Market Day last summer, we committed to providing regular updates on cost down Europe. So this feels like a right time to review where we stand. Karin, what's happening at Mercedes-Benz? And how is the program progressing?

Yes. I think with good momentum, we have strong performance in 2025. With cost down Europe, we fundamentally transform our European business, to make it more competitive, more resilient and more fit for the future. And we are fully confident in our own potential to lift profitability to a fundamentally higher level by 2030. And I think the progress we've already made underscores this commitment. In 2025, we delivered more than EUR 100 million in net savings, which actually puts us ahead of our original plan and demonstrates strong momentum behind the initiatives.

So how did we achieve these results earlier than expected? Well, first, as we shared at last year's Capital Market Day in Charlotte, we reached a comprehensive agreement with the General Works Council, covering all key elements of the program. With this foundation in place, we were able to roll out cost-saving measures quickly across all the functional areas.

Second, we saw some strong contributions from operations, sales and IT that each delivered a bit more than we expected, double-digit million euro savings. Operations delivered improvements through energy saving initiatives and longer company car leases as an example. Sales increased their efficiency with the rollout of the concept of lean truck operating centers. And in IT, we phased out legacy systems and optimized license management.

Third, we maintained very strict discipline in staffing. We used natural fluctuations and strict replacement policies to progress faster at workforce adaptations in Germany, and that also supported the savings. So with this positive momentum continuing, we are targeting for 2026 at least EUR 250 million of total net savings for cost down Europe.

Thank you, Karin. So we also reached a major milestone last year with the ARCHION agreement. So Eva, can you please talk us through what that means for Daimler Truck as we head into 2026?

Yes, we definitely reached a major milestone. And Mitsubishi Fuso and Hino Motors will be integrated into ARCHION as of April 1, 2026. This setup gives the new company, ARCHION, the scale and flexibility it needs to unlock additional synergies.

What does this mean for us in practical terms? Together with Toyota, we plan to gradually reduce our ownership to 25%, generating a total cash inflow between EUR 1.5 billion to EUR 2 billion. Within the next 12 months, we expect the free float to reach at least 35%, which is an important prerequisite for the prime market listing in Japan. As a result, both our 2026 guidance and our quarter 1 figures will no longer include Trucks Asia as a stand-alone segment. Instead, ARCHION will be reflected as an at-equity investment, keeping our reporting clean and fully comparable.

Thank you both for the overview of 2025. We have covered where we're coming from. Now let's talk where we are headed. So Eva, could you briefly outline what investors should expect regarding our capital allocation in 2026?

Yes, I will do that. With our strong cash generation in the fourth quarter and the expected proceeds from the Fuso-Hino merger, our balance sheet remains very well capitalized. Reflecting this solid financial position, we intend to propose a stable dividend of EUR 1.90 per share, and we'll initiate our previously announced share buyback program in March.

Thank you, Eva. So turning to 2026, what are we aiming to deliver? And how do you see the markets evolving as we turn into the year?

Yes, let's take a quick look at our market assumptions for 2026. In North America, we expect the heavy-duty truck market to come in between 250,000 and 290,000 units. The lower end of the range would imply that the freight recession persists. Reaching the upper end would require a combination of higher freight rates and transport volumes alongside stronger EPA '27 related prebuy activity.

In the EU30, we expect the market to land between 290,000 and 330,000 units. The lower end assumes no meaningful improvement in economic activity. The upper end reflects tangible effects from German infrastructure stimulus, with positive impulses for the Eurozone more broadly.

At Trucks North America, we see unit sales coming in between 150,000 and 170,000 units, supported by a modest market recovery and higher dealer inventory following destocking in 2025. From a profitability standpoint, the improvement in volumes is largely offset by a significant tariff headwind. For 2026, we currently assume that our application under the preferential tariff treatment program will be approved over the course of this year. Based on this outlook, we forecast an adjusted return on sales of 6% to 8%. The lower end of the range assumes no relief from current tariff levels, while the upper end reflects a reduction in the effective tariff rate, driven by an increase in certified U.S. content in our vehicles.

We are actively engaging with policymakers, and we are using every mitigation lever that is available to us. At the end of the day, we're confident in our ability to manage these challenges as the year progresses.

As we look at the first quarter's profitability, we are approaching the lower end of our guidance range, reflecting the impact of the 232 truck tariffs as well as sequentially lower volumes. As we move forward through the year, we expect these effects to normalize, supported by our ongoing mitigation actions.

At Mercedes-Benz Trucks, we expect unit sales in 2026 to come in between 150,000 and 170,000 units, supported by a recovery in the European market. We also expect profitability to improve, with a targeted adjusted return on sales of 6% to 8%. This improvement is driven by strict cost discipline and contributions of at least EUR 250 million from cost down Europe, helping to offset additional R&D investments. In terms of first quarter profitability, we are approaching the lower end of the guidance range based on lower volumes.

For Daimler Buses, we're guiding unit sales in the range of 25,000 to 30,000 units. We expect European long-haul markets to remain at a high level, while the Brazilian market is likely to come in below 2025 due to ongoing political and economic uncertainty. The Mexican market is expected to remain subdued as the broader economic downturn continues. From a profitability standpoint, we expect an adjusted return on sales between 8% and 10%. For the first quarter, profitability is expected to be below that range, mainly due to seasonally lower sales volumes.

And for Financial Services, we expect an adjusted return on equity of 6% to 8%, supported by higher interest income and lower cost of risk as well as further efficiency measures.

At group level, we're targeting an adjusted EBIT between EUR 3.2 billion to EUR 3.7 billion. Industrial business revenue of EUR 42 billion to EUR 46 billion and an adjusted return on sales of 6% to 8%. For the first quarter, profitability is expected to be below that range. Including the expected cash in from the strategic Fuso-Hino transaction, we expect free cash flow to come in between EUR 2.7 billion to EUR 3.2 billion. As indicated at our Capital Market Day last year, we confirm a total expected cash inflow of EUR 1.5 billion to EUR 2 billion from the Hino-Fuso integration over time. Since the listing price of ARCHION share and timing of our sell-down is yet uncertain, we have included only EUR 1.5 billion in our 2026 guidance.

Excellent. Thank you, Eva. So now a quick legal reminder from me. Our guidance does not factor in potential impacts from supply chain disruptions or adverse macroeconomic developments, particularly those related to the Middle East conflict. It also assumes that the current USMCA and tariff framework remain in place.

So before we open the lines for questions, do you have any closing remarks?

Yes. Well, maybe something. I want to say that I believe our outlook really reflects our commitment to structurally improve our profitability levels, run an efficient balance sheet and invest into the future of our business.

Yes. Thanks, Eva. I would say I agree. I think we closed the year in a way that sets us up in a good way going forward in 2026. '26 is all about execution. We know our priorities. We're committed to delivering on them for our employees, for our customers and also, of course, for our shareholders.

Thank you both. So that concludes our presentation for the 2025 results. We'll now move into the Q&A sessions. As usual, we will start with questions from analysts, then move to the media. Both sessions will be recorded and made available on our homepage. Stay tuned. We will get started in just a minute.

Good morning, ladies and gentlemen, and welcome to the Q&A part of today's annual results conference. I would like to remind you that this Q&A session will be recorded on Daimler Truck's request. The replay of the conference call will also be available as an on-demand audio webcast in the Investor Relations section of the Daimler Truck website. A few practical points. [Operator Instructions]

We will now begin the question-and-answer session.

So good morning, ladies and gentlemen. The first question comes from Nicolai Kempf from Deutsche Bank.

It's Nicolai from Deutsche Bank. And first of all, well done for a very strong Q4. My question would be on the U.S. market. And we have seen very strong orders over the last month, and we are also halfway into March. Do you see this trend continuing? And are you happy with the pricing of the orders you got over the last months? And if we stay in the U.S., a bit more question for the short to midterm. You've mentioned tariffs. It's going to be a big headwind again this year. Are you looking to increase the U.S. production capacities this year?

Nicolai, thank you. I'm Karin here. I can take the first part of the question and then maybe you, Eva, take some of the second parts. So yes, as mentioned, we have seen an uptick in order intake starting at the end of last year and also continuing into this year. I would say we are cautiously positive because even though it's a big improvement from a couple of months ago, if you look at our historical average, it's still below that average.

So let's monitor how it looks in the next couple of weeks, but it looks, for the moment, like a quite good trend. We also see that the -- what we call the -- the freight rates, sorry, blackout. The freight rates have also slightly improved at the beginning of the year. I think they're up 9% year-to-date, but still, if you compare historically on a low level. So cautiously positive.

Yes. Nicolai, I'm going to take your other questions, Eva here. So you asked about pricing. Obviously, we talked about it also already at quarter 4 that with the market being weak, we saw in quarter 4 when the Section 232 truck tariffs were introduced that we could not add additional tariff surcharges because we believe that our customers and the market couldn't digest it at that time. We still haven't done that to date. But obviously, we have some model-year pricing effects that we have, small single digit coming into 2026.

And as Karin said, the order momentum has been really positive, and that continued into quarter 1 up until today. So obviously, we're going to monitor that closely and probably the probability of increasing pricing slightly or potentially increasing tariff surcharges over the year has increased due to the positive order momentum. But obviously, for that to happen, the order momentum also has to now continue. And we also see what's happening in the world with Middle East and so on. So we're obviously very wary of that, and we monitor it closely.

Also about orders, I want to mention, when we look at our market share within the orders in North America, we're also very happy with that. Now looking at going forward, U.S., Mexico and the production footprint. What we do see there is, obviously, we've always been very flexible with our footprint, and we always adjust it as it makes sense. And as we navigate this new tariff environment, of course, we will always shift around production to get to the best possible outcome also from a cost perspective.

So we are very flexible there, and we are managing that as we go through the quarters. There is not full clarity yet also when it comes to certain credits on U.S. assembled trucks, these MSRP credits of 3.75%. It's not exactly clear yet how they will be calculated. That will also probably impact the production footprint to a certain degree, but we believe we're managing it well, and we will navigate it as we go through the year.

Thank you very much. So next question comes from Michael Aspinall from Jefferies. Please.

Michael from Jefferies here. Maybe starting back on North America. Your margin in 4Q was quite strong at 7.2%. I'm just thinking how we can think about that 4Q rate, which would have seemingly included 2 months of the 232 tariffs and quite low volumes in the context of the guide, of 6% to 8% and higher volumes?

Yes. Michael, thanks for your questions. So I think we have to really look at what's included in our guidance. And as I said during the presentation just now, we have quite a big range still of what the tariff impact could be, and we're managing this range within the 6% to 8% profitability guidance. As I said, the 6% assumes that basically we stay in line with the current tariff effect from the 232 truck tariffs and the 8% is that we would get this preferential tariff treatment accepted by the U.S. administration with a higher U.S. content of Mexican assembled trucks being qualified and then a lower effective tariff rate.

We're pretty confident that we're going to get this, but it's not confirmed yet, which is why we want to be consciously a bit cautious with our guide. But this is why the 8% is getting that U.S. content increase through and the 6% is more the current rate. But at the same time, of course, volumes also play a role, and we have been saying that the order momentum has been improving quite a bit over the last couple of months. So we believe if it continues, that would also give us some tailwinds, also when it comes to then operating leverage and also tailwinds for our return on sales.

When we now look at the volume effect, obviously, we have a positive volume effect as a basis for our full year guidance. But yes, a lot of that is really eaten up by the significantly higher tariff effects that we're having. And then it really depends what exactly will be the increase in tariffs year-over-year, we said it was EUR 250 million net for 2025, with only 2 months of the 232 truck tariffs being included. So if we manage it in a way we think we can with the, as I said, higher U.S. content.

And then on the credit side, I also mentioned that when I answered the first question, there's a bit of a range of that as well. That could also help us and then being more at the higher end of the range. And of course, we will not be limited by the upper end of our guidance range. We will always make sure that we get to the best possible result by the end of the year.

And just one last sentence, quarter 1, as I said, we will have lower volumes sequentially and then the higher tariffs effect because of 3 months of 232 instead of 2, which will then lead to a bit of a lower margin than what we had in quarter 4, and we're basically approaching the lower end of the guidance range there.

Okay. Great. I mean 4Q and 1Q sounds like good starting points for the year. So that's good. It looks like you mentioned also actually that you took share in the North America order book, which seems logical given kind of pricing and tariff dynamics. Would it be fair to say that, that probably continued in 1Q '26 with you not kind of increasing tariff surcharges at this point?

Yes, we are comfortable with our order share, and that has continued positively into the year. Also when we look at the mix in quarter 4, we had a bit more medium-duty orders. And now in the first month of Q1, we saw more heavy-duty orders. So Freightliner Cascadia orders come in, which is obviously then a good sign also for our production program and for our margin dynamics as the year progresses.

Thank you. And the next question comes from Shaqeal Kirunda from Morgan Stanley. Please.

Shaqeal Kirunda from Morgan Stanley. On the topic of the freight recession, spot rates have clearly moved up, but this has been due to supply side reasons, whilst freight volumes are still quite weak. So are you seeing this in the utilization data? And is there a risk that underlying demand for manufacturing from industries, such as housing and construction is still not strong enough to maintain order momentum?

Yes. I mean we saw it a little bit. We do see that the demand is very much driven by the supply side. As I said, it is a better trend than what we've seen for some time, but looking historically, still not a very strong market. And when we look at what drives the GDP growth at the moment in the U.S., it's mainly private consumption and AI investments. So that's not maybe the factors that mostly drive the need for freight. But yes, it's, yes, cautiously positive, still not an extremely strong outlook for the U.S. market.

And at 270,000, the market outlook for North America Class 8 is for slight growth. But at the midpoint, Trucks North America indicates 13% year-on-year growth in volumes. So can you please help us bridge the gap there? Is it mainly medium duty that's coming back? Or are there market share trends to consider?

Yes, Shaqeal, happy to do that. So when we obviously look at the market forecast, and as you correctly said, it equals at the midpoint to 4.7% growth. And it feels like it contrasts a bit with our DTNA unit sales guidance of 160,000 at the midpoint, equating to 12.7% growth. But as you assumed, we do believe that we will be able to achieve medium-duty market share gains because we lost a little bit there last year. We also discussed it last year during the quarters that the price pressure was there a bit higher, and we were not willing to discount too much. But we do see that the market is in a more healthy state now, and we believe that we can regain share, and there's also dealer restocking going on. And then obviously, also on the revenue side, we have a currency effect in there that you have to consider.

Thank you. So the next question comes from Daniela Costa at Goldman Sachs. Please.

I just wanted to ask on 2 things, but one is actually just following up from this. Can you talk a little bit about production plans, whether you're stepping up production in Europe or in the U.S., maybe as a follow-up to this last point? And then I wanted to ask you just on the confidence to -- now you're saying you're going to restart the buyback. After the results, I guess you kind of paused it. The situation in the U.S. Is it the situation on the U.S.? Or more clarity and confidence on those relief of the tariffs? Or is it just the demand? Or it's just because you now know the date when you're getting the inflow of cash from Trucks Asia? Maybe just giving us a view on how you're going to think about the buyback going forward?

Daniela, Eva here. Thanks for your question. So yes, looking at the production program, given the positive order development of recent months, we are increasing the production program in Europe as well as in the U.S., obviously. On the buyback, we were discussing this last year where we said with the 232 truck tariffs having been newly introduced and then also that happening within a very weak market environment that we need some time to adjust to that new market reality, which is why we hadn't started the buyback last year. And now we don't have full clarity on the tariffs yet. But you can also see with our return on sales guidance for North America for this year, with the 6% to 8%, I mean, we put in kind of a floor with this 6%. And that gives us a better confidence level of our minimum cash generation that we believe we will get this year.

And then, of course, there's further upside to that, but we do know that with the contribution from North America, looking at how the business at Mercedes-Benz Truck is faring and then also taking into consideration the onetime cash in from the Fuso-Hino transaction, we believe that even if we would have to continue in the current tariff environment, with the current effective tariff rate, without an increase of U.S. content resulting in a lower rate, we can afford the share buyback comfortably. We're still maintaining a net industrial liquidity above EUR 6 billion. And that led to the decision that we will start now. The first tranche will be EUR 400 million. We do that within the next 4 to 6 months. And then at the same time, we have kept the dividend stable, as I'm sure you've noticed, and that is basically based also even in our worst-case scenario of the full year results that we're expecting for '26, we can cover that.

Would you rule out -- is it now a rule out that you don't need to build a U.S. plant? You can deal with it with your current setup and the flexibility you have?

It's a bit early to talk about this. As I said, we're still working also in discussions with the U.S. administration about how we navigate that environment. We're still awaiting some clarity, as I said, on this credits on MSRP. We're looking at that increased U.S. content, and we will absolutely do what makes sense and what adds value to our customers and our shareholders once we have that full clarity.

The next question comes from Akshat Kacker at JPMorgan. Please.

The first one is on North America. And I just wanted to touch on the demand that you're seeing in the vocational part of the market because that segment has been super strong in the last few years, driven by the CHIPS Act, U.S. IRA and arguably, the prebuy there started earlier. So could you just give us more flavor on the vocational side of the market in the U.S., please?

The second one is on MB Trucks. Very strong order intake. Again, can we get some more clarity on what markets are really driving that order intake at MB Trucks? And when we think about the division, obviously, you reported negative net pricing in 2025. Do you expect price cost for Mercedes-Benz Trucks to improve in 2026, please?

And the last one, a clarification on the Hino payment. You've talked about a total expectation of EUR 1.5 billion to EUR 2 billion, EUR 1.5 billion factored in your free cash flow guide. Could you help us understand that better? Is that all settlement payment, which is the EUR 1.5 billion, and then you expect proceeds from the IPO to come later? Or how should we think about the 2 different elements within that total payment?

Okay. Thank you, Akshat. Well, quite a few questions. We'll work through it, Karin and I. Let's start with vocational. I mean, last year, vocational was faring a bit better than on-highway, but it was obviously also weaker in a generally weak market environment. And now as we see a bit of a better order momentum, we also do see vocational following there. We don't see a huge spike in orders in vocational, but obviously, we hope that, that would happen as we now go through the quarters, also with hopefully a bit more construction activity in the United States coming in supporting that business growth.

And I think MB, Karin, you will take that one?

Yes, sure. So as you said, very strong order intake on MB towards the second half of the year and definitely also start of this year. I think it's a combination of a stronger market demand in general, but also very positive customer feedback on the Actros L with the ProCabin. So we introduced that product at the beginning of 2025. And we actually saw, I think we mentioned it in the speech as well, a market share uplift throughout the year. So starting the year around 14% and ending around 18%. So I think it's a testament to how well that truck is performing and that the customers appreciate it. And we think that's also part of what drives this positive momentum. For 2026, we expect positive net cost price development for Mercedes-Benz Trucks.

Yes. And then I will take the one on the onetime cash in from the Fuso-Hino transaction. So I cannot disclose any details about the deal dynamics because we have agreed that also with Toyota that we would keep that confidential. As I said at the Capital Markets Day and also confirmed today during the presentation, EUR 1.5 billion to EUR 2 billion is what we expect to get to a 25% shareholding, which is the shareholding that we're ultimately targeting.

And what I can say is we have included EUR 1.5 billion into our guidance. So you can assume that we are very sure about bringing in this cash because otherwise, we wouldn't have done that because our guidance is definitely more on the conservative side there. So that, I can tell you.

And then when we look at the EUR 2 billion, when basically the rest of the EUR 500 million assumed will come in, we expect to achieve a free float of the new ARCHION share of 35% within a year because that's a prerequisite to be in the prime standard of the Tokyo Stock Exchange.

So that means there will be also an effect potentially in next year and not everything in this year. But again, EUR 1.5 billion, we have a high certainty and that's why it's included in the guidance.

Next question comes from Hemal Bhundia at UBS, please. Okay. We can't hear you, Hemal. Then we follow up with Alex Jones at Bank of America, please.

Two, if I can. First on the Mercedes-Benz margin. I think you did 6.2% last year. You're guiding volumes up 9%. You have EUR 150 million incremental cost savings, that's about 80 basis points. You just talked about positive price mix. So all of that is pretty positive. Can you talk about the offsetting factors, therefore, that mean the low end of the guidance range is below last year at 6% and that sort of 6% to 8% range. If there's anything else we need to bear in mind?

And then the second question on the U.S. content you've talked about. Are you able to give us any more detail on sort of the percentage of U.S. content you're sort of currently assuming and what you'd aim to get in your negotiations with the administration. And when you expect that clarification? I think Traton last week talked about the second half of the year. I'd be interested if that's the same for you?

Alex, thanks for your question. I hope I got it all right. Otherwise, please follow up. So what we have to say is we're guiding for more than 8% unit sales growth at MB. But what we have to adjust is that there is an increase of the units in India, which is about 6,000 units. And so overall, we also assume an expected market share growth at Mercedes-Benz trucks in Europe, which also brings in some units, and that's how we bridge basically the unit sales growth through the market growth. So we expect that unit sales will grow stronger than the EU30 heavy-duty market. So 8% versus 3% at the midpoint, just to explain that.

But you were obviously looking at the operating leverage, if I understand you correctly. So we have basically 2 factors that are going against the positive price cost and the efficiency gains from Cost Down Europe. And that is a weaker Latin American result because of macroeconomic factors, inflation and so on. So we do see that it will be a more difficult year. When we look at our global markets, most of them are slightly up, but Brazil will be down as per our projection. And then the other factor that's going again is our investments. We said it already last year at the Capital Markets Day, our investments will be peaking in '26 and '27. And this is really driven by Mercedes-Benz trucks, because the transformation towards 0 emission is going full steam ahead, and that's really the factor that we have to take into account here.

And sorry, the second question was the U.S. content. We will not give details on the percentage of the U.S. content, as obviously, as I said, we have applied for this preferential tariff treatment. It's still ongoing. But what we've also discussed before is that we have a powertrain that's being produced in Detroit, Michigan, in the U.S. that is then assembled in our Mexican assembly plants into the truck. So that's something that we can deduct. Also said that a powertrain from a value perspective is roughly half of the truck. And then that's where we currently are. And then we are applying for further U.S. content then also to be accepted as a deduction to this tariff rate of 25%. So that's where we are.

And then you asked when we'll get a clarification. Well, this can take a bit. From what we understand, it can take a couple of months until we know the outcome of this preferential tariff agreement. So we will have to see. This is a bit out of our influence.

Okay. Understood. And just to follow up on that Mercedes-Benz margin point, the investments in R&D. Are you able to give us a sort of order of magnitude of the year-on-year increase there?

It's a high double-digit increase -- million -- high double-digit million increase.

All right. Next try with Hemal Bhundia at UBS. I hope you can hear us?

Can you hear me now?

Yes, we can.

Thank you for the color on North America. I just wanted to start with, you mentioned the EUR 250 million tariff impact in the quarter. Could you specifically separate that by Section 232 and the EPA tariff please? And I'll follow up with my next question after.

Hemal, thanks for your question. What I can tell you is that the Section 232 truck tariff impact was a bit higher than the EPA and 232 steel aluminum copper part. That I can tell you.

Understood. And I guess on free cash flow, when I exclude the EUR 1.5 billion Hino transaction impact, it is below FY '25. I appreciate there's a range that you've given, but is this because of lower margins or anything you'd mention on CapEx or working capital?

Yes. So I mean, I was answering Alex's question before about the investments being higher on the R&D side. That is also true for CapEx, obviously having an effect on free cash flow. What we also see there at Mercedes-Benz, we want to also use positive opportunities that we see right now in the market to acquire, for example, own retail location. That's an essential part of our strategy at Mercedes-Benz trucks in Europe to increase our service share. And there, we see that market pricing actually is also pretty good for brownfield opportunities, so we're using that. That has an impact on CapEx and cash flow. And then, of course, being in that environment generally because of the transformation of the industry where our investments are high. That is one impact. Then we have some cash outflows also from our Cost Down Europe program for severance payments where we booked the provision last year and those are the main ones there.

Great. And one final question, if I may. Anything you can mention on whether you've seen a change in order dynamics or conversations with customers since the start of the month given the geopolitical environment?

Not yet. Let's see. We follow it closely. Maybe just to give you some color, the least as such is for us representing with Mercedes-Benz around 1% to 2% of the overall group volumes. So we don't see it outside of the region, and the region is for us, relatively small as a market.

Next question comes from Harry Martin at Bernstein, please.

So I want to start again on the tariffs, apologies for that, but there's a few numbers that I think are still not completely clear to me. So in Q4, are you currently accounting for the 25% Section 232 tariffs on the import value and booking a receivable for the expected U.S. content impact. Is that receivable sort of a proportion of the total expected amount like Traton did? Or is there any difference there? And then just compared to the EUR 250 million impact in 2025, what is the assumption that is in the guidance for 2026?

Harry, thanks for your question. I was kind of expecting that one. I can tell you, no receivable has been booked in quarter 4. The way I see this is, obviously, we need certainty until we can assume a lower effective tariff rate. And we do not have a written confirmation by the administration that we can increase the U.S. content and that our preferential tariff treatment and the application of such is accepted. So we're taking the conservative approach. So what you see in quarter 4 is really the full tariff effect come in, basically, the 25% on a Mexican assembled truck minus the U.S. content, which currently is basically the powertrain, and that's what we paid and that's reflected.

And that's then also what's reflected in our quarter 1 soft guidance and then our guidance for the year. Again, the 6% would assume no increase of U.S. content and then the 8% would assume that we get an acceptance to deduct a higher U.S. content proportion, but nothing reported in the balance sheet taking a conservative approach.

Great. And then if I could just ask a follow-up on EPA27. I saw a press release from you yesterday about expanding the partnership with Cummins on the EPA27 engines, including in heavy duty. We've heard some in the market say that the Detroit engine is better from a NOx and EPA point of view. Should we read that expansion of the partnership with Cummins is that there are still a lot of customers who want flexibility. And more broadly, would you expect any gain in your captive engine penetration as a result of the EPA27?

Yes. So as you know, we deliver the Freightliner Cascadia Class 8 truck, both with the Detroit powertrain and with the Cummins powertrain. And on the medium-duty side, we're using Cummins. For the heavy-duty side, we have a 96% penetration on the Detroit engine. We expect that to stay like that or even improve as we move over to the EPA27 regulation.

The next question comes from Frank Biller at Landesbank Baden-Wurttemberg, please. Frank, can you hear us. We can't hear you.

Hello.

Yes, now we can hear you.

Okay. I have a question on the dividend payment. So your strategy is paying out a rate of 40% to 60% payout ratio. The question here is EUR 1.90 is above this target rate. And given the high inflow in 2026 from ARCHION, is there the possibility to a special dividend? That's my first question.

The next question is on autonomous driving. Can you give us an update on your latest developments here and the further progress? And one is on electrification BEV vehicles, good performance here in the last quarter. I noticed you stated that the margins of the electric vehicles are at the same level of combustion engines. Can you confirm this? Or has something changed here?

Thanks for the question, Frank. I'll take the first one. So yes, the dividend of EUR 1.90 with this one, we're exceeding the 40% to 60% payout ratio, but we're doing that because we ended the year with a really strong free cash flow and that leaves us with the net industrial liquidity at the end of the year of EUR 7.7 billion. So really comfortable level. And then as you rightfully said, we do expect a significant cash inflow from the Fuso-Hino transaction. We've considered EUR 1.5 billion in the guidance. We're very confident about it. I said that before and that's why we believe EUR 1.90 dividend is appropriate.

And also, we have just also announced that we now start with the first tranche of the share buyback. And we believe that's a really good combination. And what I can also say is that you can see that cash returns to shareholders are a priority for us, and we will keep continuing with a good balancing between share buyback and dividends. And then I think I refer to Karin for the autonomous driving question.

Yes. So we're making good progress on autonomous driving. At Torc, we keep hitting the different milestones that we have planned for. You might know we take a little bit different approach than some of our competitors. So we are focusing the team very much on getting ready for scaling and having production intent components and software, but this year, we are also working towards the end of the year to be able to demonstrate driver-out on public roads. So that's the big, big milestone for the team now, and they're making good progress. We are still planning for start of production on a bigger scale beginning of 2028. And I can do the one on electrification of BEV vehicles. So we still see a good margin on that business and it's on the same level as with combustion engines.

Good. So our last question comes from Anthony Dick at ODDO BHF.

The first one is the last one on tariffs. It's regarding the 3.75% MSLP offset. I just wanted to confirm you haven't booked or received anything relating to that as of yet. And if you could just give us a sense of how meaningful that could be for you and when you could actually start receiving some benefits from that. And the second one is on Cost Down Europe. So obviously, some good progress already in 2026. Just wondering in terms of how we should think about the sequence for the EUR 1 billion plus cost reduction targeted in Europe by 2020. Is that going to be linear? Or have you achieved some quick wins in 2026 and then it's going to be a bit more back-end loaded or gradual going beyond.

Thank you, Anthony. So first on the MSRP credits. So as I explained, we do not have full clarity yet because the process and the calculation method hasn't been published by the U.S. administration. But we do believe there will be a 3.75% offset on the MSRP value of U.S. built trucks to really help also mitigate the tariff burden on imported parts and components on U.S.-produced trucks. And because the details haven't been published, we also couldn't apply for this yet. So nothing is recorded in the balance sheet in any way on this, obviously. It's the same as what I also said when it comes to the increased U.S. content, we're taking a conservative approach there.

When it comes to the guidance, we have really considered a double-digit million impact there as a credit could be more than that, but that's something that we do not want to include before it's concerned because we believe the eligibility based on what we know now, will be limited to imported parts listed on the 232 MHDVP tariff commodity list. And so that it will not be the full MSRP value of the truck and then you take the 3.75%. And there will be publication of DOC's procedures to administer these import adjustment offset amounts, and then we will understand how the program will be operationalized. But as I said, very conservative assumption on this in our guide.

And then I think you had one more question, the Cost Down Europe. So what we have also said today, what Karin said is that we were able to bring in savings earlier than anticipated. So it was a faster implementation of measures, which we're happy about. It was also what we wanted, because in a market environment that was definitely weaker in 2025 there was a clear necessity to bring in as much as possible efficiency measures, and these are really -- these are net efficiency measures, what we also published for last year, the EUR 100 million that will now continue throughout the next couple of years.

And then we will be adding to that with at least EUR 250 million in this year, net. That's the important thing. And it will increase. So it's not now a step up and then it will flatten but we do believe it will continue to obviously go up. It will not all come in '29 and '30, and we will continue to try to accelerate the implementation of actions. And we will -- as promised, we will keep you posted. And at least once a year in the annual results conference, you will receive an update from us.

So we actually have one more caller. It's Klas Bergelind from Citi. Klas, go on, please.

I had some phone issues here. Most of my questions have been asked, but I just want to come back to Trucks North America and the margin outlook. Your starting point is 6% in the first quarter. And in the first quarter, you're saying that the order mix is now improving with more Cascadia, which I've have seen is for second quarter builds and the build rates should go up second quarter over the first quarter. I mean I can see you could already do the midpoint of your full year margin in the first half and then volumes can go up even more here in the second half, unless, of course, we have a big setback in macro. It just seems like the T&A guidance is pretty conservative looking at the margin. If you could comment on the mix impact on the Cascadia, it seems like the margin into the second quarter could reach almost high single according to my calculations.

Klas, good to hear from you. Thanks for your question. So about the mix, I just want to mention one thing when I talked about more Cascadias, I was talking about orders and in particular, now in the first months of quarter 1. So when we look at the orders that we received in Q4 last year, it was really more towards medium duty. So that effect you will see then more towards quarter 2 coming in, in quarter 1 it will be a bit of a weaker mix. And I also said we are approaching the 6% in quarter 1. So it could be a bit below the 6% also. And we'll see how it goes. We will do the best we can, obviously, to make it a positive quarter.

You're right to assume that our guidance of 6% to 8% for the year is more on the conservative side. That was a conscious decision that we took because we also saw how the market developed a bit different last year than we thought it would. And we could really see that this freight recession took much longer than we initially anticipated. So we want to not get too enthusiastic about the good orders that we've seen in recent months, also full well knowing that it could also be a bit different maybe in the next couple of weeks, and we want to be really sure that it's a sustainable trend, and it will continue into that direction. So we believe the 6% to 8% is the right approach for right now to guide us into the year. And if there is an upside to that, and we can get to a better point, of course, also then based on potential discussions on the tariffs. And we will be more than happy to update it. But for now, we see the 6% to 8% as a conservative realistic scenario.

Yes. Just to follow up, though. I mean you're saying the same thing as me that the first quarter orders with a better mix will be more built in the second quarter. So the mix should improve quarter-on-quarter, second over first, right, all else equal?

Yes, it should be better in the second quarter. I understood you in a way that you already thought that in the first, but now it will improve more towards the second.

Yes, that was my point.

Very good. I think that concludes our analyst Q&A. Thank you very much for all the good questions. And now I would like to hand over to Andy Johnson for the second part, the media Q&A. Andy, please?

Thank you, Marcus, and welcome, everyone, to the media portion of our Q&A session today. Before we get started, a few housekeeping remarks. As you know by now, this call is being conducted in English. So we kindly ask that you submit or ask your questions in English as well. Our operator will now walk you through our question procedure.

[Operator Instructions].

Okay. Questions are starting to come in. Thank you very much. Our operator will address each of you by name when it's your turn to ask your question. We ask that you briefly reintroduce yourself though, stating your full name, your media outlet before you proceed. Take your time. Please ask your questions slowly and clearly. And with that, operator, let's get it started.

The first question comes from the line of Benjamin Wagner from Frankfurter Allgemeine Zeitung.

My name is Benjamin Wagner from Frankfurter Allgemeine Zeitung. Once again, about the U.S.A. Can you explain once again the connection between the U.S. tariffs and your customers' uncertainty? Are customers holding off on purchasing, on buying your trucks because they are unsure how imports into the U.S. will develop? And I hope that I understood it right. You said that the order intake in the U.S. has stabilized. Why then do you expect declining return on sales in the U.S.

And second, 2 questions about Cost Down Europe. Within the Cost Down Europe program, you want to cut 5,000 jobs in Germany, how many jobs have you already cut in the year 2025. How many employees are currently on the so-called orientation platform. And are you planning to relocate production from Germany plants to Eastern Europe especially from Worth am Rhein?

Thank you for your question. Benjamin. So looking at the U.S., to explain the connection between U.S. tariffs and the customers' uncertainty. That was really an effect that we faced a lot last year because it was kind of our customers took the wait-and-see approach and the market was just very weak. I mean it was the -- we were going through the longer trade recession in recent U.S. history. And so obviously, if you have an environment that's anywhere weak with low freight volume, low freight rates and then you have tariffs on top of that, that significantly impacts order behavior. It has now gotten better in recent months as we've just also discussed during the analyst call in our presentation because now there's not full certainty on tariffs, but there's more certainty, and then we also see the freight rates recovering. And that overall helps to convince our customers to order more trucks and that we see in the positive order momentum in quarter 4, and that has also continued now at the start of quarter 1.

And then you asked why, despite this positive order momentum, we expect a decline in sales in the U.S.? Well, overall, we don't expect a decline in sales in the U.S. in '26, we do expect an increase as per our guidance. So this is in line with the order development, obviously, and also our return on sales. This is highly impacted by tariffs. As we've discussed during the analyst call and the presentation, we have a significant higher tariff impact in 2026 because of the so-called 232 truck tariffs that were introduced in November 2025. So we only had 2 months effect of this last year, and we have 12 months effect of this, this year. And as we assemble our trucks in the U.S. and in Mexico, that obviously impacts us. So we have a positive effect from a higher volume in the U.S. in '26, but the counter effect is then the tariffs and this is significant, so that leads overall to a lower profitability.

Yes. Benjamin, Karin here. On the Cost Down Europe topic, please understand that we do not comment how many people have left the company or exactly how many people we have on the so-called orientation platform. What I can tell you is that we are -- as we said also in the speech earlier, we did reach our targets in 2025. I think what's most important is to look on the bottom line here in terms of the impact for the company. And we have also now disclosed the target of EUR 250 million for 2026.

In terms of the head count topic, I think the big reductions we will see when we move in forward some years where we're doing some of the bigger outsourcing topics, but as I said, I think more important is to focus on the bottom line. In terms of where we will put our production in the future, I think it's also a little bit premature to comment. Worth is our by far biggest global production site for Mercedes-Benz trucks, will remain so in the future. With that being said, of course, in all our plants across Germany, but also globally, we always look at what's the optimal way to run the system. And we are conducting make or buy analysis also to what do we do in-house and what might be better that we do -- that the suppliers do for us that we buy sort of more parts from the suppliers.

The next question comes from the line of [ Tina Fuchs from SWR Sudwestrundfunk ].

This is [ Tina Fuchs from Sudwestrundfunk ]. I would like to ask a question concerning defense. Could you give us a little bit of an insight of the new geopolitical situation results in new products that you think of also new cooperations and new customers? Do you have more incoming demand from Army's in Europe?

And allow me also on remark being a journalist covering television, I find it rather sad and discriminatory that you do not allow us to make an interview with you and that you don't show your faces during the Q&A on a video while we are asking questions here. I don't think that is the equal opportunity for press media as well as electronic media. I'm really sad about that. Thank you.

Tina, Karin here. We take that feedback, obviously, with us. I just want to clarify that we have done these annual conferences completely without video historically. This time, we decided to try something different to have the presentation with video, but for analysts, investors as well as media, we have stayed with this method, and I think mainly honestly, because of technical reasons and it's a little bit simpler, but definitely we'll follow up with you to see if there is a better way to do it going forward.

Now moving to the defense question. I would say we started already some years ago to invest into our defense portfolio. I guess, looking back, you can say it was really good timing because it was before sort of the big defense spending started to take off. We work together with many different partners. To give you one example, we work with Rheinmetall to do the armorization of our cabs on certain models. Over the last years, we've also significantly expanded our product configurations based on customer demand, so introducing more versions of the Zetros as an example, which is one of our pure defense vehicles.

We have also increased and started working much more with different partners. Maybe to give you one very recent example because we announced it yesterday, partnership with Quantum Systems. And what we want to do together with Quantum is, first of all, explore with their software, how we can run our trucks more on platooning as a first step, but as a second step also autonomously. This obviously for safety reasons to not have drivers in every truck, but also because of the needing less people in the armies if you can do more traveling autonomous. So I think that's one example.

Another example is the recent win with the French military, where we work with Arquus where we are selling chassis and they are up fitting to the needs of the French Defense Ministry. And then across the world in different tenders, we work with different partners. As an example, the Canada tender, which was, I would say, are maybe a breakthrough into the defense business. We work with General Dynamics there. So yes, and we are definitely looking to increase the number of partnerships.

We now have a question from the line of Ilona Wissenbach from Thomson Reuters.

Ilona Wissenbach from Reuters. I have 3 questions. You were talking about better operative performance. But I wonder in what measure do you talk about because you expect no pickup in the margin versus last year with a guidance of 6% to 8%. Then the question on cost on Europe. Have you taken provisions for staff card for compensation programs and so on last year and how much this year? And the third question is about the Iran war. What effect do you expect? And what is the biggest risk?

Thank you, Ilona. I'll take the first one. So talking about our operational performance, what we mean there is we expect stronger volumes, and we will convert that into return on sales, obviously. And what you have to really take into account is significantly higher tariffs. I mean this is something that we can't impact. We only can impact what we can control. And there, we are improving our results through efficiency gains. For example, through Cost Down Europe, but also in North America, we are continuing to increase our efficiency and productivity and then the tariffs unfortunately go against that. So that's the explanation for that one. On Cost Down Europe, we have taken a provision already in quarter 3 last year, EUR 321 million. And so no, we don't expect an impact of a provision there this year.

Yes. And I can comment on the Middle East conflict. As mentioned earlier, it's too early to really estimate the financial effect. So we have not taken it in our guidance or outlook for the year. But maybe to give you a little bit more color. And we have, of course, some people in the region, mainly in Dubai. There, we are working with crisis management to keep everyone up to date and, of course, also continuously assess the safety and security situation.

Then on the supply chain side, we have obviously worked through that very carefully. We don't see any short-term supply chain disruptions based on the situation. As I already mentioned, in terms of our sales, it's a rather small region for us relative to other ones. So also there, expect limited effect. So I think the biggest risk from a company perspective, financially is more what happens with the overall global economy. Where does the oil price go? Where does gas price go? How do interest rates develop and what does that do for, let's say, the global economy. But as I said, I think it's a little bit too early to have a clear idea about that, which is why we have also not taken it into our guidance.

Can I ask about the tariff effect, again. Eva, did I get that right that you're not able to quantify it yet in numbers because it's so uncertain how all this apply -- applying for some reductions will work?

Yes, exactly. So I mean we disclosed it for last year. It was a EUR 250 million net impact. And for this year, we have this guidance range of 6% to 8%. And that assumes certain tariff scenarios in that range. And of course, internally, we do have a range there that we're working with. But as it's so volatile, it doesn't make any sense to discuss it now. But with that 6% to 8% range, you get a feeling for where we are trending.

The next question comes from the line of Alexander Jungert from Mannheimer Morgen.

This is Alexander Jungert from Mannheimer Morgen. I have 2 questions. The first one is again on the Cost Down Europe program. You said earlier that you are implementing the efficiency measures faster than planned. Can you explain what that means specifically for the Mannheim side? And second question, how would you describe the current mood among the workforce in light of the cost-cutting program? Next week is also the Works Council election.

Alexander, Karin here. So on your questions on Cost Down Europe, I mean, I did mention some examples of where we saw quite good development during 2025. And in operations, specifically, we talked about, for instance, energy savings. So I think that's one that carries also for Mannheim. Otherwise, it's a little bit difficult for me to give you the exact measures that we have done in Mannheim.

In terms of the mood amongst the workforce, I think this election period, obviously very important, and we follow it very closely. I think we see a little bit the same tendencies that we see in society overall. So a little bit more extremists on all sides of the spectrum, but of course, we follow it very closely, and we are -- yes, we will work with who gets elected, of course.

All right. Ladies and gentlemen, that looks like the last question in our queue. We do have time for one last question if anybody wants to submit it. All right. It looks like there's no more questions.

So thank you, everyone. Ladies and gentlemen, thank you for being with us today, and thank you, Karin and Eva, for answering all the questions. Now as always, our Investor Relations and Communications team remain at your disposal to answer any further questions you might have. A recording of the session will be available later today on our Daimler Truck website, and we are looking forward to staying in contact with you. With that, have a great day. Stay healthy. Thank you, and goodbye.

Good morning, ladies and gentlemen. This is Markus Poppe speaking. On behalf of Daimler Truck, I would like to welcome you on both telephone and the Internet to our Q3 results global conference call.

We are very happy to have with us today, Eva Scherer, our CFO. Eva will begin with an introduction directly followed by a Q&A session.

The respective presentation can be found on the Daimler Truck IR website. On our request, this conference call will be recorded. The replay of the conference call will also be available as an on-demand audio webcast in the Investor Relations section of the Daimler Truck website.

I would like to remind you that this teleconference is governed by the safe harbor wording you will find on our published results documents. Please note, our presentation contains forward-looking statements that reflect management's current views with respect to future events. Such statements are subject to many risks and uncertainties. If the assumptions underlying any of these statements prove incorrect, then actual results may be materially different from those expressed or implied by such statements. Forward-looking statements speak only to the date on which they are made.

Now I would like to hand over to Eva.

Thank you, Markus, and good morning, everyone, and thank you for joining our earnings call for the third quarter of 2025. As the results show, quarter 3 was shaped by a sharp downturn in North America and a slow paced recovery across European markets.

Industrial business revenue totaled EUR 10.6 billion, driven by 98,000 units sold. Adjusted group EBIT totaled EUR 716 million.

Adjusted return on sales for the Industrial business came in at 6.3% with earnings per share at EUR 0.57.

Free cash flow was EUR 24 million, bringing our net industrial liquidity to EUR 5.9 billion at quarter end. In a volatile global environment, we are focused on what we can control, improving structural efficiency through disciplined cost management and targeted resource allocation to have the best value proposition to our customers.

At our Capital Market Day in July, we outlined our path to becoming a more resilient and profitable company, and we are executing on this.

Product highlights in quarter 3 include the launch of the eActros 400 and the new BharatBenz HX series. The eActros 400 is part of a large electric truck portfolio extension based on the technology of our eActros 600 and further strengthens our market leadership in electric trucks.

We call it the second generation of our eActros. It offers more than 40 possible combinations of the basic vehicle, depending on the application and requirements for range, payload and comfort. The new BharatBenz HX series is tailored to meet specific needs in India's growing construction and mining segment even better, offering significant improvements in operational efficiency.

Another highlight is our new cooperation with ARQUUS, which aims to develop products and processes to better meet the needs of customers in the defense sector with Mercedes-Benz providing the trusted Zetros and thereby contributing to the future modernization of the French Army's logistics truck fleet.

Furthermore, we have signed an agreement with Otokar, which adds cost-effective manufacturing capacity to meet strong demand for the Mercedes-Benz Conecto city bus, further strengthening Daimler Bus' market position.

Let me now turn to the developments in our key markets in the third quarter. In North America, the Class 8 market totaled 200,000 units for the first 9 months, representing a 12% decline year-over-year. In the third quarter, the decline accelerated to minus 20% year-over-year. The drop reflects ongoing economic uncertainty and a weak U.S. freight market.

Our Class 8 market share held steady at 40% through September, confirming our leadership position.

In Mexico, the heavy-duty market declined 45% year-over-year. This was driven by the Euro 6 transition early in the year, compounded by economic weakness in quarter 3. In Europe, the heavy-duty market declined 8% year-to-date, totaling 217,000 units.

On the positive side, however, the third quarter saw 6% year-over-year recovery. Our European heavy-duty market share rose to 16.5% year-to-date and 19.1% in quarter 3. This represents an increase from 16.2% in quarter 2 and 14.2% in quarter 1.

We have steadily improved our position, supported by strong demand for the Actros L. This confirms that our product investments are paying off.

Let's take a closer look at unit sales and order intake in the third quarter. At group level, the book-to-bill ratio was 96%. Unit sales fell 15% to 98,000 units, while incoming orders declined by less than 1% year-over-year to 93,900 units.

At Trucks North America, unit sales dropped 39% and incoming orders 29%, reflecting the sharp contraction in the U.S. market. Considering tariff uncertainties, our effort to accelerate deliveries in quarter 2 ahead of potential tariff changes amplified the sequential decline in unit sales.

On a positive note, our current order backlog covers the 2025 unit sales guidance.

At Mercedes-Benz Trucks, stronger order intake is now converting into higher unit sales, up 8% year-over-year in quarter 3.

Volumes rose compared to the third quarter, but were lower than planned due to continued ramp-up issues in our plant in Wörth, Germany as well as a more muted market environment in India and Brazil.

Despite tariff uncertainty and a slow paced recovery in Europe, EU30 orders rose by 56% for Mercedes-Benz vehicles with strong demand for our Actros L, leading to a book-to-bill ratio of 102% in Europe. Orders in Germany improved slightly by 5% for Mercedes-Benz vehicles.

Latin America unit sales rose by 10%, a 6% decline in Brazil due to a weaker heavy-duty market, high interest rates, inflation and political uncertainty was offset by stronger sales in Argentina and market share gains in the medium-duty segment in Brazil.

Order intake for Latin America increased by 6%. In India, unit sales rose slightly despite a market shift towards the 16 to 19 tonne segment, where we have a lower presence and quarter 4 sales pushout due to the VAT reduction, which became effective on September 22, 2025.

Trucks Asia delivered around 26,000 units in the third quarter, an 8% decrease year-over-year. This decline was driven by weaker sales in Indonesia. Order intake rose 12% year-over-year, mainly attributable to growth in Japan and Indonesia.

Daimler buses unit sales fell 4% year-over-year, mainly due to a weak Mexican market. Order intake was down 12%, driven by softer demand from Brazil.

Let's look at our ZEV volumes. In the first 9 months of 2025, we sold over 3,800 battery electric trucks and buses, up from 2,100 units in the same period last year. Order intake for zero-emission vehicles remained flat at around 4,200 units.

Our zero-emission vehicle data highlights that the transition to zero emissions depends not just on the right vehicles, but also on achieving cost parity with diesel and a robust charging infrastructure, areas where stronger government support is still needed.

The transition has faced headwinds in both the U.S. and Europe. Adoption in the U.S. has slowed significantly and progress in Europe remains below expectations. On a positive note, our zero-emission vehicle range continues to resonate with our customers, achieving a 56% share of the European heavy-duty market in September and bringing our year-to-date market share to 33%, making us the market leader in electric trucks.

Now let's have a look at our financial performance for the quarter. At group level, revenue declined 13% year-over-year to EUR 11.5 billion and adjusted EBIT fell 40% to EUR 716 million.

From a segment perspective, Mercedes-Benz Trucks and Financial Services contributed positively, while Daimler Buses and Trucks Asia saw modest year-over-year declines. Trucks North America profitability dropped over 60%, driving a 42% year-over-year decline in the Industrial business EBIT to EUR 668 million in quarter 3.

Trucks North America revenue declined 33% year-over-year to slightly below EUR 4 million -- to slightly below EUR 4 billion leading to an adjusted EBIT of EUR 257 million and an adjusted return on sales of 6.4%.

In addition to lower fixed cost absorption, the profitability was affected by higher R&D spending and expenses related to capacity adjustments. The tariff impact was in a double-digit million range in the third quarter. Pricing remained positive in quarter 3.

However, the product mix generated a headwind with fewer Cascadia and Western Star vocational trucks and a higher medium-duty share with lower captive powertrain penetration. Following significant production adjustment, our dealer inventory was reduced by approximately 15% in the third quarter, in line with the overall industry decline.

This normalized inventory will benefit us once the market rebounds. Mercedes-Benz Trucks revenue rose 3% year-over-year to almost EUR 4.9 billion with an adjusted return on sales of 6.5% and adjusted EBIT of EUR 319 million.

While a significant improvement was anticipated in the third quarter, stronger-than-expected demand for the Actros ProCabin, combined with ongoing supply chain constraints have continued to limit our production volumes.

In EMEA, profitability improved on higher volumes, a favorable mix and a release of previously accrued bonus provisions, partially offset by increased R&D spend and selective pricing measures.

As expected, in a competitive European market, we remained focused on executing the cost reduction initiatives that we outlined at our Capital Market Day in July. In Latin America, business was impacted by a 7% market decline in Brazil, driven by a significant drop in the extra heavy on-road segment and a mix shift towards medium-duty vehicles with lower contribution margins.

Volumes in India rose slightly year-over-year. Looking ahead, we expect demand to pick up following the implementation of a more favorable tax rate as many customers had delayed purchases in anticipation.

Trucks Asia reported an adjusted EBIT of EUR 67 million in quarter 3 with an adjusted return on sales of 5.7% on revenues of almost EUR 1.2 billion.

The market environment in Asia remains challenging with persistently low demand in key markets such as Japan and Indonesia. Despite weaker volumes and unfavorable regional mix and FX headwinds, the segment delivered a solid performance by maintaining strong prices and exercising SG&A cost discipline.

While we expect stronger new vehicle unit sales in the fourth quarter, Trucks Asia's profitability will be impacted by increased headwinds from FX and significant seasonal increase in R&D expenditure.

Daimler Buses delivered another strong quarter, reporting an adjusted EBIT of EUR 137 million and revenues of over EUR 1.4 billion, resulting in an adjusted return on sales of 9.8%. The segment maintained its market leadership across its core markets, including EU30, Brazil and Mexico.

Adjusted EBIT was slightly lower year-over-year as quarter 3 2024 included a EUR 26 million gain from the measurement and sale of a noncore shareholding -- EUR 26 million gain from the remeasurement and sale of a noncore shareholding.

Quarter 3 performance was supported by a favorable mix and strong net pricing. Adjusted EBIT for Financial Services rose year-over-year from EUR 39 million to EUR 48 million. The improvement was resulting from stronger portfolio margins and lower SG&A. These gains more than offset FX headwinds and elevated cost of risk, which remain driven by the ongoing freight recession and macroeconomic uncertainty in North America. As a result, adjusted return on equity increased from 5.7% to 6.5% in the third quarter.

Now let's look at our quarter 3 cash performance. Working capital had a negative impact of EUR 121 million, driven by higher inventories at Mercedes-Benz due to ramp-up challenges in our German assembly plant, initial stocking at the new Halberstadt distribution center and the after effects on the North American production network following the fire at our Cleveland plant.

Net investments in property, plant and equipment and intangible assets totaled EUR 415 million.

As a result, cash flow before interest and taxes for the Industrial business was EUR 202 million. After deducting EUR 156 million in cash taxes plus interest, pension contributions and other items, free cash flow for the Industrial business came in at EUR 24 million.

On an adjusted basis, free cash flow was EUR 116 million. Net industrial liquidity was at EUR 5.9 billion at quarter end, unchanged from quarter 2.

As in previous years, we expect cash generation to be concentrated in the fourth quarter. Let's turn to the key drivers for the remainder of 2025.

Our guidance for the 2 major regions remains unchanged. We continue to expect the North American heavy-duty truck market to land between 250,000 and 280,000 units and the EU30 market between 270,000 and 310,000 units.

All segment level guidance KPIs for 2025 remain unchanged. Since November 1, we've been operating under a new tariff environment. Some specifics remain unsolved and a full evaluation of the implications will require more time.

For Trucks North America, we remain confident in our ability to mitigate the impact of additional tariff costs for 2025 and expect to land at the lower end of both the 2025 unit sales range of 135,000 to 155,000 units and the return on sales corridor of 10% to 12%.

In the fourth quarter, we expect Trucks North America unit sales roughly in line with third quarter levels, but profitability to be sequentially weaker due to an ongoing unfavorable mix, a fading pricing tailwind, increased tariff costs and seasonally higher R&D and SG&A expenses.

Full year profitability for Mercedes-Benz Trucks is expected to land at the midpoint of the 5% to 7% guidance range. We expect quarter 4 unit sales for Mercedes-Benz Trucks to be approximately 20% higher than quarter 3, contingent on timely resolution of current supplier challenges.

Quarter 4 profitability is expected on quarter 3 level. Trucks Asia profitability in quarter 4 is anticipated to be lower than in the third quarter due to further FX headwinds and seasonality in R&D expenditure despite higher quarter-over-quarter unit sales.

Daimler Buses is expected to deliver a significant sequential increase in unit sales in quarter 4, with profitability slightly above quarter 3 levels.

For Financial Services, we expect adjusted EBIT in the fourth quarter to be on a similar level as in the third quarter.

We confirm our group and Industrial business guidance. Given the heightened uncertainty stemming from the tariff situation in the U.S., we have not yet started our recently announced share buyback. We intend to start the buyback program once we have better visibility, and we remain highly committed to a shareholder-friendly capital allocation policy. As you can see, numerous dynamics are currently at play, many of which are externally driven. That's why we are focused on what lies within our control, enhancing efficiency and delivering value to our customers.

Our first -- our results for the first 9 months show that we are on the right track.

That concludes our presentation. Thank you for participating. We are now happy to take your questions.

Thank you very much, Eva. Ladies and gentlemen, you may ask your questions now. [Operator Instructions]

The first question comes from Nicolai Kempf from Deutsche Bank.

It's Nicolai from Deutsche Bank. Two questions and both related to North America. First one, you probably saw the Class 8 order intake for October and pointing into the right direction.

And as you stated, due to the production cuts last month, inventories are coming down. So do you see a bottoming out of this market? And the second one is on tariffs, and I will refrain from asking for a specific number. But just high-level thinking here, are you considering to adjust your final assembly given the tariffs, so moving more assembly to the U.S.?

Nicolai, thank you for your questions. Two very valid ones. So let me take the first one. So order intake, and maybe let me start also a bit with how the Q3 orders developed over the months in the quarter.

So July, August were on a fairly similar level, but then September was quite a bit better than that. And October was then also a bit better than September sequentially. So we do see a positive trend continuing. I mean I have to say it's in a very low market environment that we're operating right now, but we do see that it's slowly picking up.

And I also did say during my speech that, that obviously also leads to the fact that our inventories are coming down because we have adjusted our production program now throughout the last couple of months.

So we do see that in dealer inventories. What we see, as I said, 15% that's what came -- that's how it came down over the course of the quarter.

Within that, we see that there was about a 20% reduction on the on-highway side and then 15% roughly on the vocational side. So on the on-highway side, we actually see even a higher reduction in dealer inventories, and that's now a fairly normalized situation.

So we're getting out of these high levels. And on the vocational side, it's also pretty normal that it takes a bit longer to reduce further because we obviously are relying there on body builder capacity, which has gotten better, but there's still a small congestion that we see there.

And also, our own vehicle stock has decreased as a result of the reduction of our production program where we now are in a normalized environment. And we are from a production program because of the order development in quarter 3, now fully booked with our planned production program for quarter 4, and we are now filling quarter 1, which is obviously not filled yet, and we have some work to do there.

Now let's come to your second question, the tariff implication. And of course, we're talking here about the implication of 232 that has been implemented as of November 1.

We have said before that we have a fairly high level of flexibility among our assembly plants in the U.S. and in Mexico. But I cannot tell you at this point whether we will be making any adjustments and if how we would make them because as I also said during my presentation, we need to understand the details of the new tariff scheme a bit better.

So what we obviously know is that we're paying the 25% now as of November 1 for the assembled trucks when we bring them across the border from Mexico into the U.S. and we only pay for the value of the assembled truck minus the U.S. content. So that is the situation right now.

But then there are obviously a lot of details within that when it comes to deductions and credits. So when it comes, for example, to a 3.75% credit on the selling price of trucks assembled in the U.S., and there are a couple of questions we are still having.

So we are obviously in close discussions with the U.S. administration in order to understand that better and also to, of course, discuss mitigation measures. And as part of mitigation measures, we will always look at how we utilize our flexible production network.

And of course, we also look for further efficiencies on our side and how we can deal with that situation. But it's really a bit early to tell because it's going to take us some more time to understand how it all comes together and what the final implication will be.

We have worked for quarter 4 now with an assumption of what we believe the impact will be. And as I said during my presentation, we are confident that we will be able to compensate the quarter 4 impact within our guidance.

The next question comes from Klas Bergelind from Citi.

Eva, Klas from Citi. So just coming back on the tariff comment that you expect to be able to offset the effect with countermeasures during the outlook period. But obviously, the implied margin for Trucks North America into the fourth quarter is now around low single digits.

So effectively, are you saying that within the guidance? Because obviously, in absolute terms, your tariff impact from November and December must be sort of 5% to 6% on my math. If I understand that better, Eva, I will start there.

Klas, thanks for the question. We're having a bit of a bad connection. The last part, I didn't quite understand the -- in absolute terms part about the tariff impact. What was that?

Yes. So what I meant is -- I hope this works now. What I meant is to get to a low single-digit margin for Trucks North America implied by your low end at 10%, so low single digit for the fourth quarter margin, that would imply that you have a quite big tariff impact that you can't compensate for. I hope you can hear me.

Yes. So I mean, of course, in the quarter 4 guidance, the tariff impact is implied. And we have now -- and we talked about this, I think, in previous quarters, we have a tariff surcharge that we're currently using.

We do not intend to increase this in the course of quarter 4. So that means the impact from the surcharge is as per our previous planning for quarter 4, but now we have higher tariff costs coming in. So of course, the net impact is bigger.

I said before that we expect net tariff impact for this year in a low triple-digit million amount, which is mostly reflected in the second half of the year with the highest impact in the quarter 4.

And this is excluding EUR 232 million and then EUR 232 million comes on top now. And yes, this will be a tariff impact now without mitigation, obviously, in quarter 4 because we have just 2 months there.

And then, of course, now we're, as I said, working on understanding it all better and see how we will react to it and looking at production footprint and of course, also looking at like what do we produce in the U.S., what do we produce in Mexico, how we can navigate that in the best possible way going forward with the stipulations that we have now in the new regulation.

My second one, and I hope you can hear me, is on the guidance for the year. You are reiterating the guidance for the year, but if Mercedes-Benz is 6.5% fourth quarter, Trucks North America, low single digit and Trucks Asia going backwards, I mean the absolute EBIT level, it looks to be at the low end of your guide around EUR 3.6 billion. I just want to sort of understand if you're guiding towards the lower end because that is what I get to.

Yes. So the profitability, we're towards the lower end for the year. Revenue, you can expect around the midpoint. And then the sales, they're between the midpoint and the lower end, the unit sales, and that's where we expect to be.

Perfect. Absolute final one. On orders in Trucks North America, strong in September, but obviously, the mix is tricky. I think you're alluding to that October was also better than September. Is that -- do you think, Eva, any sort of prebuy ahead of Section 232, November 1? Or yes, what -- how do you understand the order trend?

No, I do not see a prebuy effect implicating October. What we see is, obviously, October, November, these are the periods when some of our customers are also starting then to really order for the next year and planning their capacities. But we do see that happening much less than in previous years because in the past, we also had capacity constraints on the OEM side, and this is clearly not the situation right now because we're in the longest freight recession that the American market has seen in a long time. It's going on for more than 3 years.

Historically, usually a freight recession ended after about 1.5 years. And so what we see now, obviously, on the OEM side is the capacities are there. So our customers do not really see the necessity to now already order for the next year in a significant manner. So it's still -- again, it was a positive development in quarter 3, much better than quarter 2 sequentially and October is continuing a positive trend, but it's not a spike or anything that would indicate a prebuy.

The next question comes from Michael Aspinall from Jefferies.

Michael from Jefferies here. I'm just wondering if you've had many conversations with customers about how they're thinking about potentially higher prices in the context of your total cost of ownership advantage with the eCascadia?

Thank you, Michael. I actually had a lot of discussions with our customers during the course of last week because I was at the ATA exhibition and conference in San Diego last week, and we had a lot of discussions.

So what I can say, what our customers are saying is they believe we are the best in the market. That's why they like to buy from us because we have the reliability. They see the total cost of ownership advantage overall to be there because it's also for them not only about fuel efficiency, where we're doing well, but it's about the dealer network where we have the strongest in the United States.

It's about spare parts availability. It's about service quality that our dealer network provides and then, of course, quality of the truck that they can rely on.

And so they're really saying is market has been extremely weak. So they're obviously suffering from this really long freight recession, but they are committed to us. And that is something that became very clear. What we also need to say that, obviously, because of this freight recession and the situation in the market, the ability of price increases at the moment is fairly limited until the market really picks up.

And that's something that we need to take into consideration because we have really demonstrated our pricing power over recent years. And we can see that also in quarter 3, we had a net positive price effect in North America. In quarter 4, that will obviously turn a bit because of tariffs, but generally, a really good price position.

But now when it comes also into the next year, we do hope, of course, that the market will pick up. And I know we said that a year ago also, but it should -- at one point, we should see a turnaround.

But we do not expect to see it at the moment in quarter 1, and it will probably happen more towards the second half of the year. And with the return of the market in the U.S., then, of course, also pricing will be a different situation again.

At the moment, as I said before, when I answered Klas' question, with capacities being there on the OEM side, it's always a bit different. But generally, we believe we are well positioned with the eCascadia and the eCascadia Gen 5, which just came out, which is well received by our customers.

Great. One more for me then, and it won't surprise you that it's on tariffs. There's been some details of the tariffs announced, but whenever I speak to dealers or anyone else, there are always kind of mentions of negotiations.

Are you able to give us any indication as to if you believe the current state of tariffs is the final state of tariffs that will exist kind of -- I mean, I guess as I'm asking, it sounds like a silly question.

Well, Michael, I didn't bring my crystal ball today. So I'm afraid I don't have an answer. I really wouldn't want to make a prediction on this one right now because I guess nobody knows.

One last one then, can you help us with the U.S. content of trucks you're bringing across from Mexico?

Yes. I mean we talked about that, of course, before also that we're bringing the full powertrain is coming from Detroit. So that's for sure something that we can deduct from a Mexican assembled truck, and then we also have some other U.S. components and material, and that's how we're looking at it right now.

The next question comes from Shaqeal Kirunda from Morgan Stanley.

Shaqeal from Morgan Stanley. Can you please tell us a bit more about the mood of North America customers? Like we discussed, ACT order data is improving sequentially but remains on low levels.

Are customers more positive than they were 3 months ago? Or is it just seasonality? And then can you remind us on the cancellation policies and delays? Once orders are placed, how easy is it for customers to push those out in case they change their mind?

Yes. How is the mood? Maybe slightly better. So obviously, one of the questions I asked most last week was when do you think we will see a recovery? And most of them are saying that they hope in the second half of next year, but also acknowledging that we expected that a year ago, the earliest recovery that somebody sees is maybe towards the end of quarter 2.

Quarter 1, I haven't really heard much positivity around. So it's still a wait-and-see mood, and we really need to see freight rates getting to a better level there in order to, I think, really see a changed mood and momentum. So yes, nobody is excited about the market. I can tell you that much. And a lot of players in the market are struggling because of that.

On your question about cancellations, the one thing is how it is -- how is it contractually and how do you then maintain it? And I mean that's also how we managed it this year.

So we have obviously firmly placed orders, but with our large customers, especially in the United States, we also work in the way that they reserve production slots. And then it doesn't make a lot of sense to say you reserve it and now you have to take the trucks because it's about long-term customer relationships that we want to have.

And we are the OEM in the North American market that's has the most mega fleets and large fleets in the customer base. And so the customer relationship is most important for us.

But also when now over the last couple of months, we've seen some cancellations, it wasn't excessive. So I think that's really not the main problem we have that it's cancellations. And it's also not, as I said, that we're getting an excessive amount of orders now for next year because our customers know we have an order cycle of 6 to 8 weeks. So at the moment, the capacity is there, you're getting a truck.

And then can you please tell us about European order trends? I mean I understand we're probably still growing year-on-year, but should we be concerned about sequential declines? And then some of your peers expect the German infrastructure expenditure to kick in by year-end. Do you also see this? And then any update on cost down in Europe, if possible?

Sure. So yes, European order trend. I mean, in Europe, it's getting better. I mean, I think you saw that with our numbers. Also, we had now a positive book-to-bill also in Europe again, which we're happy about, but it's still not on a really good level.

So we have been waiting for this recovery in Europe also for a long time now. And Germany, yes, I mean, we were already very excited in quarter 1 that now it should hopefully happen also with the governmental announcements of infrastructure spending, defense spending.

We don't see it yet in Germany from what I'm hearing, nobody is. But yes, it should come at one point. And let's hope that in next year and beginning of next year, we see a bit of movement there.

Right now, we don't yet. So we really see Germany order intake with a moderate development, but we really don't see that decisive turnaround yet. And I mean, Europe overall improving slightly sequentially from an order perspective. When I go a bit through the European market, we see a strong order intake in France in quarter 3. So there's higher demand.

Spain is also seeing really, really positive order development. We had an exceptionally strong order intake in Poland in quarter 3 and also in the U.K. So this is where we really saw positive impulses. So it's sequentially better, but not a decisive turnaround at this point.

And then next year, we do hope that we will see a recovery, and we will give you an update then in March when we also give you our outlook for 2026. On cost down Europe, we're progressing well. I mean we gave you, I think, a lot of detail at our Capital Markets Day.

So in all the different areas where we have set our targets, we have now really on a detailed level, defined the measures and the action items, and we're working them through bit by bit. And we are on track to deliver what we said at the Capital Market Day also for 2026, which is a positive impact of a low triple-digit million range for the year. So this is all going as planned, and we're happy with the progress.

The next question comes from Akshat Kacker from JPMorgan.

A couple of them, please. The first one on the Mercedes-Benz Trucks bridge. Could you just explain the factors that are driving all the movements there? Volumes are up on a year-on-year basis. I see gross profit contribution is down. There's another bucket that is up EUR 80 million in the quarter.

You've also talked about some strategic net pricing actions. Could you just help us understand that Q3 margin better? And why are we expecting Q4 margins to be flattish on Q3? That's the first question.

The second one is on CapEx and cash restructuring assumptions as we go into 2026. At the CMD, you've talked about a pickup in CapEx for next year. Could you just give us your updated thoughts on CapEx and cash restructuring for '26, please?

Sure, Akshat. Thank you for your question. So let's look at the Mercedes-Benz Trucks bridge first. Maybe first, you were talking about this others items, the million. So what we do have there. I mean, these are mainly valuation adjustments for provisions that we have booked there.

But overall, when you look at the moving parts in quarter 3 of Mercedes-Benz Trucks, I mean what we obviously see is that we do have cost effects from these ramp-up challenges in our plant in Wörth, Germany because that comes with a lower efficiency if you have missing parts, you also have some issues with quality from supplier parts and really getting a production process running at an efficient level and you have to do rework.

So that costs you something. And then we have parallel activities in our old spare parts center and then the new spare part center in Halberstadt, Germany, where you have an impact. And so this is something that will also accompany us during the fourth quarter, but we also had that in the third quarter. R&D, we did have an effect, obviously, in quarter 3 of higher spending versus prior year quarter, but we also will see then a seasonally higher quarter 4 spending in R&D, which is something that we also had. And then there was a positive effect in quarter 3, which will not duplicate in quarter 4, which is provision releases.

So as you see, the year is a bit weaker than we planned because markets are not very favorable right now. And that means that also incentive provisions could be released to a certain degree. So we took them down to the current forecast projections. That's something that we will not see duplicating in quarter 4.

So in quarter 4, at Mercedes-Benz Trucks, we have a bit higher volumes, but we do still see some mix effects, and we do see that we have these reworks that will still be affecting our productivity and a higher R&D portion that is then leading to a profitability, which will be on a very similar level in quarter 4 compared to quarter 3.

And then the second part of your question was about CapEx and cash next year. So as I presented also during the Capital Market Day, we are seeing a peak in CapEx expenditure in the next 2 years, and that is still what we believe. And then from a restructuring perspective, we do see next year that we will have -- I mean, this year, it was the consumption of our restructuring provision that we booked in quarter 2 is very, very limited. Next year, that will be a bit more, but we will then update you in our annual results conference as what the premises are for '26 in detail.

The next question comes from Daniela Costa from Goldman Sachs.

I have 2 points. The first point is a follow-up on some of the tariff-related debates. But based on what you said, I guess, you're not putting an extra surcharge and you haven't decided on CapEx plans yet.

So as we look into the first half of '26, is there still enough time to do a full compensation? Or should we say that like first half '26 anyways, we should be at sort of materially lower profitability and then compensation will take into effect later?

And also, does that have -- what happens to Section 232 has any bearing on how you think about the buyback cadence?

Thanks, Daniela, for your question. So no, it's really too early to say what the effect of 232 in the first half of the year will be. And we are obviously -- the first step is now understanding exactly what all the stipulations in the 232 regulation mean.

And again, we're also talking to the U.S. government when it comes to that to understand it better and of course, also talking about mitigation and so on.

Once we know it, then we can talk about our pricing assumption, potential surcharges and so on. I mean I said before that, yes, in a low market, where there is enough capacity also, it's -- there are limits to how much you can do with pricing. But again, we're having that discussion. Once we understood what the impact is, then we will look at potential pricing topics and when we could do something and what the implications would be.

It's really too early to talk about that. I mean what I can say is, yes, I mean, we're not intending to push through potential full 232 effect to our customers. I mean we're also seeing, and I mean, I talked to you about that the net impact of tariffs for this year, excluding 232 is a low triple-digit million effect. That's -- we've obviously passed on a portion of this to our customers and a portion of it you see in our results. So that's the way to think about tariff effects.

And then when it comes to share buyback and implications on explaining CapEx and so on, obviously, we're also -- when we do our budget right now, and we're currently finalizing our budget planning for the next year, it's going to take us another month, 1.5 months or so.

And there, of course, we also look at CapEx and we look at the target there for next year. Whole picture comes together with our market assumptions because volume plays a decisive role, as you can see this year with significantly lower volumes, especially in North America, that will then give us a better overview of where we are on free cash flow generation for next year.

And what I said about the buyback is, obviously, we need to understand what 232 means exactly. And then we will look at the projections for the next year, and then we will decide on the start of the buyback at this point in time because obviously, it doesn't make sense to start the first tranche of a buyback because you have to also define on the value of the first tranche and the speed of the buyback.

And for that, you need some visibility as to how the next couple of quarters are going to look like. And once we know that, obviously, we will update you.

And the follow-up just on Mercedes-Benz, both sort of for the European and for Brazil. Like, of course, the deliveries you guided significantly up, but I guess that's because of the supply chain or the trucks you didn't deliver because of supply chain issues.

But if we think about sort of production rates, are you considering them moving forward up, down, flat, sort of what's the production plan, I guess, that's a bit different to what the deliveries path will look?

Yes. I mean, in Europe, it's not moving up because we do expect to sell off quite a bit of also new vehicle stock in the fourth quarter, which is something that we usually do because we have a shutdown over Christmas of our German plant.

And then, of course, we will also -- we will catch up from that ramp-up issue topic with the supplier parts. And that will then also, of course, also contribute to cash flow with the reduction of raw material and unfinished goods. So that's one portion of the cash contribution we expect in quarter 4.

But then the other one is obviously that we sell new vehicle stock that has built up in Europe because we don't see that development there that we saw in North America that inventories also with our own stock levels are down significantly now.

So that is the movement there, and that's why the production program in quarter 4 is a bit lower for that reason. And in Brazil, it's a bit lower because of market. So we do see a weaker market in Brazil. Overall, we are holding up quite well. We're winning market share, but the market overall, as I said during my speech, is weakening in Brazil.

The next question comes from Harry Martin from Bernstein.

The first one I have is just on the U.S. competitive position and pricing. I saw that the Class 8 market share went below 40% in Q3. What would you put the main driver of that being down to?

But also PACCAR said into next year, they're looking forward to moving away from surcharge pricing. So does this become a competitive disadvantage for you if you're adding a 232 surcharge and the players with domestic production are not going to be doing that competitively anymore?

First, Class 8 market share. Thanks, Harry, for your question. So what we see also when we look at now the orders of the last couple of months, we see our Class 8 market share holding steady, which is good.

We did see for a couple of months earlier in the year that ours was a bit weaker, but that was mainly due to mix because, as I said before, we have -- our customers are the mega fleets, the large fleets, and they've been ordering a bit less than the smaller and medium-sized fleets.

So it was a bit customer structure on the on-highway side, but we do not see that we're losing market share in Class 8, and we do believe we are well positioned competitively.

And about tariff surcharges, just to repeat what I said already, it's too early to talk about tariff surcharges for 232 because we first need to understand the impact, and there are a lot of discussions and evaluations happening.

And so that's really not something I can comment on. At this point, we've had a surcharge for 2 quarters now, and this is still there. And everything else we're currently evaluating.

And then the final question that I have is on next year's outlook. The current consensus has double-digit EBIT growth for 2026. So I wondered how you feel about that? And also what market volume you would need in the U.S. and Europe to be able to hit that level of growth next year?

Harry, I understand that, that's a very important question to ask, but it's really too early. As I said, we need a couple more weeks to finalize our budget, our market assumptions and all the moving parts before we can comment on the 2026 development.

The next question comes from Alex Jones from Bank of America.

Two, if I can. The first, just back on Mercedes-Benz volumes. You talked about your Q4 guidance being contingent on supply chain resolution. Can you give us an update on that and how confident you are that, that does get solved in Q4?

And then perhaps the second question on Torc, I think press reports during the quarter suggested you were seeking a partner for that business. Can you give any comment there and what you would be looking for in a potential partner, whether that's sort of a strategic help to scaling the business or more from a financial perspective?

Thanks, Alex, for your questions. So let's start with Mercedes-Benz Trucks volume being contingent on solving supply chain issues. So we do have [Audio Gap] in place. We had the last review 2 days ago. And I think there are good chances that we will get that solved during the course of quarter 4.

Of course, it's also always depending on our suppliers. And I mentioned that one reason is also that we have a higher demand for the Actros L with the ProCabin than what we expected and which capacities, then we also reserved for that on the supplier side, which is obviously great that our customers appreciate our new product so much.

And you also see it in the significant market share recoveries over the last couple of months in Europe. So this is really a product that's being well received. And now we obviously need to get the production up and running because we also want to be prepared then, of course, for hopefully better markets also next year.

But again, we have action plans in place, and we're getting through step by step. So that we can figure that out by the end of the quarter, and we're on a good path. I have to put in one disclaimer. It is obviously also dependent on the Nexperia topic not hitting us. I mean that's something that affects everybody in the market. So far, we've been able to manage it quite well.

I think everybody is doing a lot of broker buys, and we're used from the last supply chain crisis and how we can deal with that. And we have also strengthened our supply chain. And at the moment, production is running smoothly.

But obviously, this is also something where we just need to be looking at, and it's a watch item. On your second question, Torc, I mean, I can't comment on media speculations.

What I can say is we are progressing well with our virtual driver software and we do have trucks on the road in Texas, still with a safety driver in, but we are really moving forward step by step, and we've seen good progress over the last couple of quarters. We're hitting our milestones.

And then there are various options for how we will continue with that business, but we do believe we have a great value proposition because we do have Torc as an independent subsidiary that works on the virtual driver.

And then we have in our North American business, the part where we have developed an autonomous-ready Cascadia, so a redundant chassis as we call it. And we also see that this is very competitive product right now where we're ahead when it comes to the technology. And that's something where we believe we are well positioned then once the autonomous market starts and once the technology is ready for a market release, we are well positioned on the vehicle side and on the software side and then having, of course, our customers and the market access that, that will put us in a very favorable position.

The next question comes from Miguel Borrega from BNP Paribas.

First one, just on Mercedes-Benz. I wanted to understand how do you see a 20% increase in sales quarter-on-quarter, but flattish profitability, especially it's a bigger quarter, more operating leverage, perhaps even a better mix with more trucks coming from Europe. Order intake has been very strong lately. So what is the headwind there?

Yes. I think I answered it already. So we did have a positive impact in quarter 3, also coming from provision releases from an incentive perspective. And then overall, the mix is actually not really better in quarter 4. I mean there are always a lot of moving parts in a global business that is Mercedes-Benz Trucks.

And we do also see that pricing is obviously not easy in these markets. We're winning back share. We're being disciplined in pricing. But of course, in a difficult market environment, we already had negative net pricing in quarter 3 that will continue in quarter 4. We have seasonally always a bit higher spending levels in quarter 4 with the cost ramp-up in really all areas. And so that's where we see that coming from.

And then going back to North America and a little bit more broadly and if we take a step back, given the setup of tariffs at the moment, if we had a favorable market, if volumes do ramp up perhaps in '26 or '27, do you think the midterm guidance for margins of 10% to 14% is still possible? Or do you think the business setting will change so significantly that you may now operate on a different margin range?

Thank you, Miguel. So that's now really looking further into the future. What I can say is what we have presented at the Capital Market Day, this is our target level, and that's what we stick to, and these are targets for 2030. And of course, with a different tariff environment now, we need some time on mitigation.

So that's where, obviously, on a short-term basis, you will see an effect. But we do believe when we look at it on a 5-year basis, structurally, we're well on track. And we do believe that we have a lot of potential as we outlined in our Capital Market Day.

Yes. I just wanted to understand the margin coming down from 12% to 6% and even lower in Q4. How much of that has been driven by obviously lower volumes, your volumes are quite weak?

And how much will be the impact of tariffs going forward? So if we shave, I don't know, 5 percentage points from a weaker market and 200 basis points for tariffs, we can kind of give us the range for a new margin setting. But I just wanted to understand if the 14% is still possible even with the tariffs.

Yes. I mean, again, when it comes to the future, I think I explained how we think about that. What I can tell you about quarter 3. I mean, the tariff impact was a double-digit impact.

And the rest, I mean, obviously, also came from a mix effect, but mainly volume. So that gives you probably an idea. I mean we are operating under significantly lower volumes now in the second half of the year than in the first half of the year.

The next question comes from Hemal Bhundia from UBS.

Hemal from UBS. Just could you remind us the levers that you have available to you in Q4 in achieving the industrial free cash flow target? I understand Q4 is seasonally strong for industrial free cash flow, but any specifics you would like to call out? Is it more driven by inventory or profitability?

Yes. Very good question, Hemal. Thank you for that. So the free cash flow increase in quarter 4, the biggest increase versus the first 3 quarters of the year is coming from Mercedes-Benz Trucks, and that's something that we see every year.

So we always see that year-end Sprint with a very strong seasonality. And it's mainly coming from inventory reduction. Of course, there are always also some movements in receivables and payables, but by far, the biggest chunk is coming from inventory reduction.

And within that, and I said it already, it's a reduction of the new vehicle stock because we then also have the shutdown over Christmas. And then it's a reduction of raw materials and unfinished goods because that's where we have very high inventories right now because of the ramp-up issues because we need to get the trucks really finished and out of the door and delivered to our customers, and our customers are waiting for it.

So when we talked before about confident are we going to achieve also our sales and profitability targets in quarter 4 during these supplier challenges in Mercedes-Benz Truck, well, our customers are waiting for the trucks. And this is the biggest motivation we have to get it solved.

Understood. And on my second question, on Mercedes-Benz, you mentioned selective pricing. Is that more so much on a geographic basis? Or is it by a certain customer type?

It's something that we see in Europe because of the market weakness. So we do see that in India and also in Brazil, we still have a more positive pricing development. But in Europe, obviously, it's a competitive situation right now as the market has been down for a while.

The next question comes from Frank Biller from LBBW.

The one question is just maybe you can confirm the dividend payout ratio of 40% to 60% of net profit. That would be helpful. And the other question is on electrification. So there was a huge increase in the third quarter coming from the order intake.

Was there a special topic from the pricing side that you have such a big increase? And what is your expectation for the next years to come? Is it speeding up? Or is it more slowing down in these circumstances?

Yes. Thank you, Frank, for your question. I'll take the electrification one first. So why is the order intake so good? Because we are pretty sure that we have the best product in the market with the eActros 600. We also now launched the eActros 400.

I said that we are the market leader in heavy-duty electric trucks. In Europe now, we had more than 50% market share in the third quarter. I think that speaks very clearly for the quality and customer benefit of the eActros.

And we do see that our customers see this as a strong advantage and the customers that are buying the truck, they also see already total cost of ownership benefits if they are operating in countries in Europe where they have a toll advantage from a road toll perspective and where they have the access to the charging infrastructure, for example, when they have their own chargers and distribution centers because the public charging infrastructure is really still lacking.

And that's what's holding us back. We do believe we've really demonstrated that we did everything we can do by having a very competitive product, and we also see that our price is at the right level.

So this -- there's nothing that we're seeing where we're under price pressure, but we see that our pricing is value-based for the eActros, and this is also being accepted.

But now the infrastructure topic is the biggest one because if our customers cannot charge their trucks for the routes that they're using, then they also cannot order one. And that is something where we do need now also governmental support, and that's something that we're lobbying for also in the European Commission level.

So that's where we have to see how the development will ramp up, but we see that if customers buy a truck, there's more than a 50% chance that it's an eActros and not a competitor product. So that's good.

On the dividend payout ratio, yes, 40% to 60% is our ratio. I mean, we're not religious about it. And obviously, we will look at the dividend policy once we have closed the year, and then we will give you.

But it's very important to us that we have a strong capital allocation policy. We do generally believe that also stable dividends are important, but we'll give an update once we have decided on dividend payout for next year.

Maybe on the margin side from the electrification. So margins are still positive, but lower than combustion engines, right, yes?

No, they are not. So when we look at it on a percentage basis, so gross profit in percent of revenue, it's a very similar level. And then, of course, the absolute margin contribution is higher because the price of an electric truck is still quite a bit higher than a diesel truck.

The last question comes from Nick Housden from RBC Capital Markets.

Just one left for me. I was wondering if you could just provide us with an update on the vocational market in North America. It's obviously been quite a nice counterweight during the on-highway recession. So just wondering how you're seeing that market heading into 2026.

Thank you for your question, Nick. So the vocational market has been holding up a bit better over the last couple of quarters than the on-highway market. And I mean, obviously, not as strong as last year, which was an extremely strong year for vocational, and we're gaining market share. The Western Star product range is extremely well received.

So we do see that we continue on our trajectory of gaining market share towards our target of 35% market share in 2030. So we are on track there. Of course, also a weaker market for vocational this year than last year, but it's holding up better.

So ladies and gentlemen, thank you very much for your questions and for being with us today. Thank you very much, Eva, for answering the questions on this, I would say, quite extensive call. After a short break, the Q&A call for media will start 9:20.

Now as always, Investor Relations remain at your disposal to answer any further questions you might have. We're looking forward to staying in contact with you. Have a great day. Thank you, and goodbye.

[Break]

Good morning, everyone. This is Thomas Hövermann speaking. Thank you for taking your time, and welcome to this conference call on our third quarter results of 2025. Here in this call, I'm welcoming Eva Scherer, CFO of Daimler Truck.

Before we start with this media Q&A session, as usual, the following notes. This call is conducted in English. So please be so kind to ask your questions in English as well. The operator will now explain the procedure for registering your questions.

[Operator Instructions]

And we are already having the first question, Markus Klausen.

My name is Markus Klausen from Dow Jones. I have 2, if I may. The first one is on the planned share buybacks. Could you give us a rough estimate when they will start in the first or possibly the second half of next year?

And the second question is about the margin forecast for this year. Is it fair to assume that the return will be a little bit more on the lower end of the range given the weak performance in North America? I believe you already mentioned this in the analyst call, but the connection was not optimal.

Thank you, Markus, for your question. Yes, I can confirm the second part with the margin outlook for this year. So it will be more towards the lower end of the range. That is correct. And the first one on the share buyback. I can't give you a timing yet.

But as I said on the analyst call also, we are currently finalizing our budget planning for next year. We are working on understanding all the stipulations within the new 232 regulation. And once we have clarity on that, that's when we can give an update on the share buyback. And that's why we haven't started yet because we don't have that clarity yet.

Next one on the line is Benjamin Wagner [indiscernible].

Yes. Benjamin Wagner, [indiscernible] Frankfurt. Can you give us an update on the Cost Down Europe Savings program? And with a special question, how many of the 5,000 jobs you want to cut have already been cut? And how many of your employees have already moved to the so-called orientation platform?

Thank you for your question. So what I can say is we are on track with our time line for the Cost Down Europe program, and we're working through the actions step by step. And we are to achieve a low triple-digit million saving amount there next year, as we have also indicated during our Capital Market Day. And on details about headcounts, we do not comment.

Next one on the line is Ilona Wissenbach.

I have a question about the EU CO2 regulation. The truck makers asked the EU for less stringent CO2 rules. And also Daimler was warning about draconian penalties coming up otherwise and noting that those foreseen now are 10x higher than those for cars.

I would be interested what is draconian? Have you assessed and how far you reached the targets and how high the fine would be you still have to face? And environmentalist groups are concerned that if this is watered down that the OEM may be less ambitious to offer e-trucks and perhaps it would also have a dampening effect on demand.

Thank you for your question, Ilona. So first of all, based on our planning, we can achieve the targets in 2030 because we have the portfolio that enables us to transition to zero emission. And this is clearly demonstrated by our market share.

As I said during my speech today, we have more than 50% market share in electric heavy-duty trucks in quarter 3. We are the market leader here in Europe. So this shows we have done our homework. We have spent a lot of money in R&D in order to develop the products needed in order to achieve the CO2 targets. But what we cannot influence is the availability of infrastructure.

So that's where we're really asking for support because we need to ensure that our customers can drive the trucks where they need to go based on their route planning, and we need to make sure that then for them, the total cost of ownership works.

And that is something where there is some work to do, and we do not see the ramp-up in infrastructure progressing as fast as we need it. And so we are -- what we are wanting is really a link of infrastructure availability with the penalties because otherwise, you're penalizing the OEMs without enabling our customers to run the trucks.

And with draconian penalties, I mean, you mentioned it, if you talk about 10x the passenger car penalties, of course, these are huge amounts. And this is why we do believe now is the time because we still have a couple of years to go until 2030 to really make sure that we put everything in place, but that it's also clear that ultimately, when the infrastructure is not there, we should not be held accountable if we have done our homework as an industry and have invested billions of euros into our electric truck portfolio.

And perhaps if I may, can you a bit elaborate more on the Nexperia chip situation? You said during the analyst call, the production is not affected and you manage it quite well yet. How is the situation? I think you are also depending on Tier 1 suppliers and -- or do you not need that many of those standard Nexperia chips?

Yes. I mean we need the exterior chips as everybody in the industry, I think. But in trucking, we need less than in the passenger car sector. But of course, also for us, it is a big topic. But our production is currently not affected. And then, of course, we're working on mitigations. We have secured broker buys, and we do hope that we'll get through the next couple of weeks until hopefully, also there will be -- that the situation could potentially be resolved, but we're doing what we can as everybody is and production is running right now and secured.

But it's really a situation where week by week, you are working on getting the parts of -- of course, also working very closely with our suppliers, but we're also doing broker buys ourselves to provide our suppliers with the chips because it's just whatever you can get your hands on right now, that's what you do.

And we have learned a lot during the last supply chain crisis, and we do have good access when it comes to the supply chain. So everybody is supporting and everybody is cooperating closely to avoid an impact, but we do not have obviously full visibility. It's a week-by-week thing.

We have now Alexander Jungert in line, Mannheimer Morgen.

This is Alexander Jungert, Mannheimer Morgen. Just one short question. You were talking about the weak business in the U.S. Are there any effects on sites here like Mannheim or Wörth?

Thank you for your question, Alexander. I mean, we do have some component supplies from our German powertrain sites into the U.S. And I mean, of course, a low market overall is impacting also our German powertrain plants. But I mean, this is all already considered in the production programs that we have now set up for the quarter 4.

So it looks like that there are no more questions. All right. Ladies and gentlemen, then we have already reached the end of today's conference call. Thank you for participating. The recording of the session will be available later today on our Daimler Truck website. If you have any further questions, please do not hesitate to contact the Daimler Truck Communications team. We wish you all a good day. Goodbye.

Good morning, ladies and gentlemen. This is Christian Herrmann speaking. On behalf of Daimler Truck, I'd like to welcome you on both telephone and the Internet to our Q2 results global conference call. We're very happy to have with us today, Karin Radstrom, our CEO; and Eva Scherer, our CFO. Karin and Eva will begin with an introduction directly followed by our Q&A session.

The respective presentation can be found on the Daimler Truck IR website. On our request, this conference will be recorded. The replay of the conference call will also be available as an on-demand audio webcast in the Investor Relations section of the Daimler Truck website.

As always, I would like to remind you that this telephone conference is governed by the safe harbor wording you will find in our published results documents. Please note, our presentation contains forward-looking statements that reflect management's current views with respect to future events. Such statements are subject to many risks and uncertainties. If the assumptions underlying any of these statements prove incorrect, then actual results may be materially different from those expressed or implied by such statements. Forward-looking statements speak only to the date on which they are made.

With this, I would like to hand over to you, Karin.

Thanks, Christian, and good morning, everyone, also from my side. Thanks for joining. Of course, we're here to deep dive Q2 and then the outlook. But before that, I wanted to give you a quick update on our big picture. As you know at Daimler Truck, it's our ambition to build the best truck and bus company in the world. And I think we got a lot done in the last couple of months to support that journey. We finalized the definitive agreement to integrate Mitsubishi Fuso and Hino in June. to form a strong Japanese global company. And we plan to hold a 25% equity stake in this company and will continue to collect to share technology and investments. .

Another highlight in July, we celebrated the opening of our global parts center in Halberstadt. In this new facility, we will be able to set global standards for availability of spare parts. And we are investing EUR 500 million in this global parts center, which I think is a clear sign of our commitment to Germany, where we also plan to invest over EUR 2 billion in our production network until 2030. In June, we also launched Coretura, our new software joint venture with Volvo Group to develop software-defined vehicle platforms. This will allow Daimler Truck to build on that foundation and deliver distinctive vehicle applications to our customers. Highlights from the defense business, which is a growth area for us. We did secure a big contract with the Bundeswehr, the German Armed Forces. By May 2026 we'll deliver a mid-3-digit number of Mercedes-Benz Axor Logistics vehicles.

And during the last months, we've had lots of interest in this business. We've also signed a letter of intent for local assembly of Mercedes-Benz Trucks in the Republic of Senegal, where we will deliver vehicles for defense, for the fire brigade and for the police. In Brazil, we launched our new extra-heavy Mercedes-Benz Axor, which has been a product gap that we had in the last 2 years. we see huge market potential for this truck, not just in Brazil but also across our export markets in Latin America. And the highlights from India where we reached an important milestone, we delivered our 200,000 BharatBenz vehicle. This is a brand that we established in 2012, which is tailored to the Indian commercial vehicle market and where we also see a lot of export potential.

Now strategy is nice, but it's all about execution. And I think here, we have kept the momentum very high. Going forward, what's ahead for the rest of the year is to operationalize our strategy, which we presented just a few weeks back at our Capital Markets Day to become a simpler, faster and stronger company. And so there is a long list of things to do, but of course, I really look forward to check marking the last box on achieving industry-leading margins.

Now let's turn to the results for the second quarter. The key takeaway is that we delivered a strong performance in the second quarter. As you know, we're facing an economic environment that's quite volatile, mainly due to the international trade and tariff negotiations and their unclear effects. This creates uncertainty for our customers, especially in the North American market and makes it harder for them to take longer-term investment decisions. In these challenging conditions, we kept our profitability at prior year level with EUR 1.1 billion adjusted group EBIT and the 9.3% adjusted return on sales in our Industrial business.

Our earnings per share were EUR 0.36, which does not reflect the strong operational since they are impacted onetime adjusted items, this includes the provision for restructuring measures in Europe and the impairment of capitalized development costs related to the delayed transformation of ZEVs technology in the U.S. Once again, Trucks North America was a strong contributor to our results, delivering 12.9% return on sales despite a 20% drop in unit sales.

Daimler Buses also delivered a double-digit return on sales. Mercedes-Benz Trucks, Trucks Asia and Financial Services improved their profitability on adjusted levels compared to the same quarter last year. And Eva will take a deep dive with you in a minute. The takeaway message for me is that we have a strong first half, which gives us a solid foundation for the full year results, but we do expect more headwinds during the second half of the year.

With that, let's take a closer look at the markets.

In North America, the Class 8 market reached 135,000 units in the first half of 2025, which is a 7% decline year-over-year, mainly due to the increased uncertainty in the economy. The Mexican truck market was also weak following the transition to Euro VI emission standards at the start of the year and prebuy activities back in 2024. I our Class 8 market share was at 41.1%, underscoring our clear leadership position and showing that our vocational strategy continues to deliver good results. In Europe, the heavy-duty truck market declined by 15% to 149,000 units, our heavy-duty market share in Europe was 15.3%, which is an improvement. We were at 14.2% in the first quarter, so we are improving month-over-month.

We remain focused on our profitability but we're still confident that we can continue to grow market share, especially as we continue to roll out our new products like the Actros L with improved fuel efficiency.

Next, let's look at unit sales and order intake. At group level, both sales and orders declined by 5% compared to the same period last year. At Trucks North America, sales declined by 20% and orders for Q2 are down by more than 50%. This reflects the current market environment in North America where, as I mentioned, customers lack the certainty they need to make investment decisions. And this doesn't just affect that truck. It affects the entire industry, and we'll come back to this when we walk you through our outlook for the rest of the year.

Despite these uncertainties, we are confident that the strength of our products will help us maintain our strong market position. We're continuing our successful vocational strategy and have further increased our units in the heavy vocational segment. About order intake, very recently in July, we have seen better order intake and it remains to be seen whether or not this could be the start of a trend. At Mercedes-Benz Trucks, unit sales remained flat, but orders grew significantly by more than 20%.

In the EU 30 regions, sales for Mercedes-Benz vehicles were up by 9% and orders increased by 30%. The However, order intake momentum has slowed somewhat in quarter 2 after a very strong increase in the first quarter. The reason for this is that the general uncertainty around future tariffs and economic developments have spilled over somehow to Europe, which makes some customers more cautious with their investments and even though activity is high, we also see that customers take longer to decide.

At Trucks Asia, sales rose by 13% and orders increased by 2%. At Daimler Buses sales were up by 5% and orders increased by 35% and which gives us a very strong momentum in the bus business. Production slots are largely filled for 2025. Now, let's take a look at our ZEV volumes. For the first half of 2025, we sold nearly 2,000 battery electric trucks and buses, up from around 1,500 in the same period last year. In the city bus market, we sold more eCitaros than diesel Citaro in the past quarter for the first time. So this marks a bit of a shift that cities are then increasingly opting for 0 emission solutions. However, order intake for zero-emission vehicles declined from around 3,200 in 2024 to roughly 2,100 this year.

And here, I want to say that our most important products like the eActros 600 continued to develop positively. -- for the first time in Q2, we are the market share leader in the heavy-duty electric truck segment in Europe. As you'll see in these figures, they once again reflect that the shift to zero emission not only depends on the right vehicles, but also on achieving cost parity with diesel and building comprehensive charging infrastructure. This is still not moving fast enough, and a lot of work still needs to get done.

With that, I'll hand over to Eva for a closer look at our financials.

Thank you, Karin, and good morning, everyone. Let's take a closer look at our financial performance for the second quarter. Please note that all figures presented include both continued and discontinued operations. The group delivered a strong result with an adjusted EBIT of EUR 1.1 billion remaining in line with the previous year despite lower unit sales and ongoing macroeconomic uncertainties.

Looking at the performance by segment. Mercedes-Benz Trucks, Daimler Buses and Trucks, Asia and Financial Services all made positive contributions to the overall result. Given tough year-over-year comparisons, Trucks North America was the only segment with a negative EBIT impact, primarily due to the economic uncertainty in the U.S., which led to reduced sales volumes. For the Industrial business, adjusted EBIT declined by 5% year-over-year, also totaling EUR 1.1 billion in the second quarter. In line with our commitment to moving at the speed of right when it comes to technology adoption, we recorded an impairment of EUR 218 million as an adjusted item.

This reflects the noncash derecognition of previously capitalized development costs due to the delayed transformation of -- due to the delayed transformation pace of battery electric vehicles, particularly in the U.S. market. Related to provisions for restructuring measures under our cost on Europe program, we booked an adjusted item at Mercedes-Benz Trucks in the amount of EUR 339 million. In the M&A category, EUR 64 million were adjusted with the majority related to IT carve-out costs.

Trucks North America delivered an adjusted EBIT of EUR 657 million and an adjusted return on sales of 12.9%. And a strong result, particularly on tough comps compared to second quarter of 2024. Unit sales in Q2 were down by 20% as customers remain cautious amid ongoing uncertainty. Additionally, the Mexican market has been significantly weaker in 2025, following the Euro VI pre-buy in 2024. Key drivers behind the strong EBIT and return on sales were disciplined pricing as well as a continued favorable customer mix. Unfavorable tariff developments put upward pressure on material costs and a labor agreement that took effect in June last year, increased manufacturing costs year-over-year. .

However, we were able to partially offset these impacts through our continued focus on operational efficiency initiatives. Our western star heavy vocational trucks also made a positive contribution, delivering significant margin improvements compared to previous years. Finally, we achieved notable reductions in SG&A expenses, largely driven by head count reduction efforts initiated in Q1 as part of the segment's resilience program. Mercedes-Benz Trucks delivered improved results in the second quarter compared to the previous year, which included a EUR 10 trillion impairment from our Chinese joint venture.

Adjusted EBIT amounted to EUR 283 million, resulting in an adjusted return on sales of 5.9%. The EMEA region continued its positive momentum also overall results were still impacted by the ramp-up challenges in production of new eActros 600 and Actros L models. Unit sales were broadly in line with Q2 last year, but a favorable sales mix provided some uplift. Additionally, the aftersales business continued its positive trajectory. In Latin America, we gained market share while maintaining strong profitability and continuing to be accretive to the group. Trucks Asia posted an adjusted EBIT of EUR 64 million in Q2 with an adjusted return on sales of 5.4%, both KPIs improved year-over-year, highlighting the further improved financial resilience in a challenging market environment. The Japanese market remained subdued, declining by 7% and while Indonesia saw a significant 12% drop primarily due to uncertainties from governmental policies.

Key tailwinds Trucks Asia included higher sales volumes, sustained net pricing, lower quality-related costs and continued SG&A discipline. These factors more than offset headwinds from unfavorable foreign exchange rates and mix effects. Daimler Buses delivered a very strong second quarter, posting an adjusted EBIT of EUR 107 million and achieving an impressive adjusted return on sales of 10%, supported by generally improving market conditions. Daimler Buses maintained its market leadership across core regions, including EU 30, Brazil, Mexico and Argentina. The positive development in Q2 was primarily driven by higher sales volumes, along with favorable effects from both sales mix and net pricing. Smaller negative impacts resulted from increased material costs due to new emission legislation in Mexico and manufacturing costs, mainly driven by high inflation in Turkey which were overcompensated by the devaluation of the Turkish lira.

Let's turn to our Financial Services segment. Adjusted EBIT increased year-over-year from EUR 12 million to EUR 23 million. This improvement was driven by stronger margins, which more than offset the impact of lower sales and higher cost of risk, mainly due to the ongoing freight recession in North America and negative currency effects. As a result, adjusted return on equity increased from 1.8% to 3.1% in the quarter.

Now let's take a look at our cash performance in the second quarter. As expected, working capital effects weighed on cash conversion, primarily driven by the new product ramp-ups at Mercedes-Benz Trucks and prestocking at our new global parts distribution center in Halberstadt, Germany, this resulted in a total effect of minus EUR 460 million. Net investments in property, plant and equipment as well as intangible assets totaled minus EUR 297 million. These investments reflect our strategic focus on future growth and innovation, including initiatives such as the Coretura joint venture with Volvo Group. As a result, cash flow before interest and taxes for industrial business totaled EUR 344 million.

After accounting for EUR 345 million in cash taxes, along with interest payments, pension contributions and other reconciling items, free cash flow for the industrial business came in EUR 20 million. On an adjusted basis, free cash flow stood at EUR 96 million. At the end of Q2, net industrial liquidity stood at EUR 5.9 billion, down from EUR 7.9 billion at the end of Q1 and EUR 7.2 billion at the end of Q2 2024. Over the past 12 months, the group has returned EUR 1.5 billion in dividends and EUR 1.1 billion through share buybacks. The current program will be completed and will soon begin the next one.

As you can see, we remain firmly committed to our strong shareholder return policy. With strong cash generation expected in the second half of the year, we are confident that net industrial liquidity will exceed our EUR 6 billion target by the end of the year.

Let's take a look at what we expect for the rest of 2025, always, our outlook is subject to further macroeconomic and geopolitical developments. The guidance is based on the assumption that we will be able to operate under the current U.S. MCA framework, And it is subject to revision should there be changes in the tariff landscape or in the resulting macroeconomic conditions. As we mentioned during our Q1 disclosure, potential financial impacts regarding the way forward for our China business are not included. They are contingent on the outcome of ongoing discussions with our joint venture partner.

Due to the continued uncertainty in North America, we've adjusted our market outlook for the heavy-duty segment, now expecting between 250,000 and 280,000 units. Guidance for the EU30 heavy-duty market remains unchanged. Our segment level guidance KPIs for 2025 remain unchanged, except for Trucks North America. Alongside our updated market guidance, we've also lowered our full year unit sales expectations for North America. We've seen a pickup in order activity in July, assuming this positive trend continues, we now expect 135,000 to 155,000 units for Trucks North America. And of lower unit sales, we now expect full year profitability to land between 10% and 12%.

Our top priority remains serving our customers in the best way possible. with ongoing uncertainty around tariffs and the Section 232 investigation. In the first half of the year, our clear focus was on getting truck to our customers. In quarter 3, we expect truck volumes in North America to drop by around 20% compared to the second quarter. Profitability is expected to come in below the lower end of our updated full year margin corridor. For all other segments, the full year 2025 guidance remains unchanged. For the third quarter, we expect group sales at Mercedes-Benz Trucks to increase by 15% to 20% compared to quarter 2.

Despite ongoing challenges in Latin America, including inflation, higher interest rates and unfavorable exchange rates, profitability is expected to come in slightly above second quarter levels. For Trucks Asia, we expect Q3 group sales to be about the same as in quarter 2, with profitability anticipated to be around the midpoint of the full year guidance range. Daimler Buses is expected to deliver Q3 sales and profitability around the level of quarter 2. For Financial Services, we expect Q3 EBIT to be around the Q1 level.

As a result of the new guidance for Trucks North America, our KPIs that both group and industrial business have been updated as follows: adjusted EBIT for the group is now expected at EUR 3.6 billion to EUR 4.1 billion. Unit sales are now projected in the range of 410,000 to 440,000 units. Revenue guidance for the Industrial business has been revised to a range of EUR 44 billion to EUR 47 billion. Adjusted ROS for the Industrial business is now expected between 7% and 9%. And finally, free cash flow is expected to land between EUR 1.5 billion and EUR 2 billion.

As mentioned earlier, cash generation will be back-end loaded with stronger performance in particular expected in the fourth quarter, as we demonstrated last year, Daimler Truck has a track record of converting cash effectively towards the end of the year, following our usual seasonal patterns. These updates reflect our commitment to transparency and our focus on long-term value creation, even in a dynamic or uncertain environment.

With that, we'll wrap up the presentation. Before we move to Q&A, I would like to take a moment to acknowledge that this is Christian Herrmann's final earnings call as Head of Investor Relations at Daimler Truck. Christian, thank you for your outstanding work and dedication. We look forward to continuing our collaboration with you in your new role as Head of Corporate Development. Thank you for your attention. We're happy to take your questions now.

Ladies and gentlemen, you may ask your questions now. The operator will identify the questioner by name, but please also introduce yourself and the organization you are representing. To practical points, as always, please ask your questions in English only. And as a matter of fairness, please limit the amount of questions to a real maximum of 2. Now before we start, the operator will explain the procedure.

[Operator Instructions] And the first question comes from Nicolai Kempf from Deutsche Bank.

It's Nicolai from Deutsche. Two, the first one, you have mentioned the bit of positive order trends in July in North America. That is obviously an encouraging sign. Is this driven by a slight market recovery? Or is this driven by kind of sales measures so granting discounts?

And then my second one, a lot of your truck PSF already reported and the comments we got on Europe, the potential recovery on Europe was a bit mixed, given that your OpEx post to Germany, would you say that for you, the recovery in Europe is a bit more broad based and see that impact?

Karin here. So on the first one on North America, it's -- we believe it's market driven and not a result of discounting. On the second one on Europe. Yes, Germany is still having another relatively weak year. So I would say we still don't really see the effects of this stimulants that have been announced for the economy. So my prediction is we will see more of that in 2026. But I would say Europe is like it's not horrible, but it's not great. So it's somewhere in between.

Then the next question comes from Miguel Borrega from BNB Paribas Exane.

The first one, allow me and I know you don't want to speculate, but I'm sure you've been preparing for Section 232, if the U.S. indeed slaps say, a 15% tariff or whatever on Mexican imports on trucks, regardless of being USMCA compliance, how does that change your business model? And what are the 3 key alternative measures to soften the impact? I would imagine just raising prices is not ideal, of course. .

Miguel, yes, so commenting on 232, as you say, it's a little bit hard to -- so what's going to happen with that one. But I have to say we're actively participating in the process. We don't think that trucks assembled in Mexico are a national threat to the U.S. On the positive side, we are preparing. So we have a strong footprint in the U.S., as you know. We have assembly both in the U.S. and Mexico. We can produce all our models either in Mexico or in the U.S., and we can work a lot with shift models. We can rebalance volume up and down. So -- of course, both actively participating and following the 232 discussions very closely and preparing ourselves for the different outcomes that might come. Do you want to add something, Eva?

Yes. Just 1 comment on measures how we would counter a potential impact. I believe it's a mixture between first also then if you would shift volumes into the year, of course, also increasing efficiency in our U.S. plans further by, for example, increasing automation levels. And then, of course, it would be a combination of that and some pricing impact.

That's great. And then the second one on order intake of Mercedes Benz, up 24% year-on-year. I wonder how -- just a follow-up on that question, how Europe or Germany have done in the quarter? Because I would assume Brazil is down on a year-on-year basis, correct me if I'm wrong. So I wanted to get a sense of how Europe and Germany, your dream take is doing. And with that, I know you've been cautiously optimistic, but are you getting more confident this could be this order intake in Europe and Germany could be sustained over the coming quarters or years.

Yes, thanks. Actually, we don't see a trend down in Brazil. Actually, our order intake in Brazil continues very strong. As I mentioned, we introduced the Axor, which brings us back into extra heavy segment. So I think some of the positive order intake reflects that. So we're still pretty optimistic on Brazil and as I said, in Europe continues on sort of a okay-ish level. So that's the outlook that we have and just to give you a little bit more flavor on the order intake.

Right. Thank you very much. Christian, all the best, and good luck on the role.

And the next question comes from Akshat Kacker from JPMorgan.

Akshat from JPMorgan. A couple of questions, please. The first one, again, in North America. Could you just elaborate what kind of discussions are you having with your customers on the EPA regulation? And if you're already starting to have some discussions on the depreciation benefits that they might get within the One Big Beautiful Bill, interested in your discussions there, please?

And the second one for Eva probably is the free cash flow guide. I've seen that you have taken down the numbers by around EUR 800 million on both ends of the range. Could you just give us a big picture view on the moving parts within that cash flow bridge? How much of the revision is earnings versus revised CapEx assumptions or working capital, please?

Akshat, Karin here, I could start with the EPA question, and then I'd hand over to Eva for the other topics. So on the EPA side, there were some announcements this week related to greenhouse gas which seems that it will go away completely. For that, I would say we've already adopted our strategy, and we have anticipated a slower ramp on zero emission trucks, when it comes to NOx, we have not yet the information on how that -- what will happen to NOx. We see it as more and more unlikely that there will be a prebuy at least in 2025. if it would come, it would rather go into 2026. But I believe it will take some more weeks to get certainty on that.

We have not made our forecast dependent on anything in 2025. So we are not counting on it, and we are obviously also there preparing for both or it could be multiple scenarios. It could be the 35-millimeter -- 35, that was announced. It could be 35 with modifications. It could be staying with the 200, which is the regulation today. It could be something anywhere in between or it could even be removing the NOx regulation altogether. But I think everyone has invested to be prepared already for the 35. So the technology is ready. And if it would be implemented, we're ready to go.

Now I would hand over to Eva.

Yes. Thank you, Akshat, for your questions. So let's do the One Big Beautiful Bill first. So first of all, when we look at the final bill, we are pleased that the intended Section 899 has been removed or is not part of the bill anymore because that could have triggered withholding taxes on certain payments from the U.S. to Germany, namely dividends. We also welcome that the One Big Beautiful Bill includes some provisions like full expensing of R&D costs and 100% bonus depreciation, which are positive for us as they allow us higher tax deductions and thus lower tax cash payments in the first year.

Obviously, it's a timing effect. But in the next couple of years, we do expect positive cash impact and tax benefit from the One Big Beautiful Bill in a mid-triple-digit million amount for the next couple of years. And on your question regarding free cash flow. Looking at the previous guidance to this guidance, the change is really only earnings driven in North America. There is no change in our assumptions for the cash conversion rate. But when we look now at the first half to the second half, what really is the biggest change that is driving a much stronger cash conversion is the inventory reduction in Europe.

As I mentioned before, we have the impacts there, from the ramp-up challenges with the Actros L and the eActros 600 production and then also the buildup of inventories in our new parts center in Halberstadt in Germany.

Then the next question comes from Klas Bergelind from Citi.

Klas Bergelind, Citi. So my first one is on the margin into the third quarter in North America. I think, Eva, you said unit sales for North America down 20% quarter-on-quarter, margin below the low end of the year, so that's below 10%. I guess this is a collection incremental production cuts, less favorable mix and then some impact from tariffs on the Europe to U.S. flows. Could you comment here on the moving parts a bit more?

On the -- first, on the tariff impact, I think you said a low triple-digit number for the year before on an annual basis, how much of that is incremental here into the second half versus the first? And then how should we think about the incremental savings from the capacity adjustments that you're now pushing through in North America .

Klas, thank you for your question. So first of all, margin in North America, as you have rightfully said. So we expect it to be about 20% down in unit sales in quarter 3 with a probability below 10%. So on tariffs, as I said before, that it will be a low triple-digit million range for the year. And this is more or less spread equally between quarter 3 and quarter 4. So that's what you can assume there. and production cuts, yes, we have announced also capacity reductions of about 2,000 headcounts in our plants in Mexico over the last few weeks.

And of course, we have reduced our production program as a basis also now for our guidance reduction. And this will also then lead, of course, to the respective effects and also a bit less efficiency once the volume is at a very low level, which we expect for the second half of the year, so that you will see also. And then we are very disciplined on pricing in North America. We do still expect a net positive pricing effect for the year, but you can also expect that in the second half of the year, I think will be quite a bit less positive than in the first half of the year. So that's also impacting margins in the second half in North America.

Got it. My second one is coming back to orders into July. If unit sales is down 20% quarter-on-quarter, 1/3 of a second, then you need to do 26,000 unit sales in the fourth quarter to meet the low end of the guide that you need to make 36,000 at the midpoint of the guide in the fourth quarter. If you look at orders here into July, and I appreciate that this is tricky.

But if you would adjust for seasonality, take into account the fleet season typically starts later in the quarter in September, are we on track here from what you can see here to get back to perhaps the 25,000 to 30,000 range of orders in the third quarter, given that you have that sort of lead time of about 2, 3 months to ship that in the fourth. Sorry, a lot of numbers, but I hope that you got what I meant.

Yes, Klas, very good question, obviously, given the situation. So we said also when we had our Capital Markets Day that every week count it comes to orders. And the positive thing is that orders did pick up in July compared to June. And so expecting that this -- or hoping and assuming that this momentum continues, is obviously the base for our full year guidance. In quarter 3, of course, our production program, the lowered production program now is largely filled.

But of course, if orders would now pick up further, then that would help us in quarter 4. And this will then be the defining factor as to where in the guidance range that we set for North America, we would actually end up. So yes, you're right, in September, usually, that's when we see an uplift in orders when we look at the last couple of years, but we also know that this is a very special year right now in a very special situation. So we're still a bit cautious, and we're monitoring it week by week, and we need to see whether that continues.

And the next question comes from Shaqeal Kirunda from Morgan Stanley.

Shaqeal from Morgan Stanley. So from what I understand, the North America market outlook is on a retail basis, your revenues are determined by wholesale. So how much lower than 265,000 do you see wholesales in the market? In other words, how much attention should we pay to inventory levels.

So as you rightfully said, our market is obviously based on retail sales. And also, please note that our market guidance is only Class 8 in North America. So no medium duty. And what we're looking at is we're seeing that our share of market for heavy-duty currently remains stable around 40% to 41%. As our dealer inventory for Class 8 is about proportionate to the market but we're also seeing decreasing market share in the medium-duty segment. There's also more pricing pressure going on there.

And we do expect dealer inventory to reduce from current levels. And that results then in higher bill sales, so market sales than group sales. And therefore, also the market decrease is less than the industry group sales decrease.

And then one more. So when you speak to your large fleet customers in the U.S., I imagine the most uncertainty is caused by the Mexico and Canada tariffs rather than Europe, Japan and rest of world. Is that also your sense? And doesn't that imply demand weakness could continue for the next few months.

Yes. I think our customers are probably mostly concerned with what happens with the American economy because that drives the need for transport or not. So it's not actually that they are looking at the 1 or other tariffs -- it's rather that when there is this continued uncertainty, it's difficult for them, more difficult than normal to predict how freight volumes will develop, and therefore, how to gear their investments. So I would actually say they look more generally on the economy, what's happening to the interest rates, inflation, industrial production, consumption rather than looking at 1 particular tariff from 1 particular country.

The next question comes from Daniela from GS.

I have 2 questions as well. I'll ask them one at a time. But just to go back to -- you mentioned the order pickup in July. So far, you've done about 7% or high single-digit North America cuts in terms of staff, which I guess would equate to production. Do you plan more cuts? Or these order pickup sort of and the savings there are yet to come from whatever ready it is what you get you to the margin the end of the year, I guess, in Q4, given you already comment on Q3.

Daniela, thanks for your question. So when we look at the capacity adjustments that we've also announced beginning of July for the U.S. and Mexico. This is based on the current production program, that we have now with the reduced guidance. So if that all holds true, then we also don't need to make further adjustments, but obviously, to manage the situation very closely. And the all momentum that we've now seen in July needs to continue.

The growth rate sort of sequentially needs to continue. Is that what you mean or just the level of July in absolute?

The July level needs to generally continue. And then, of course, we would also appreciate it if it increased more because that would then also position us at a higher level in our margin range.

And then second question is just like mechanically in percentage, you're reducing basically the revenues more than you're reducing the units. Is that just pure North American mix? Or what are you seeing across regions in terms of pricing that you bake into those assumptions? .

This is North America, Daniela, and it's because it's a higher reduction of high ASP vehicles, and there's also foreign exchange impacts considered.

And pricing in general? .

Pricing, in general, to a certain degree. I mean, I said when I answered the question from Klas that, obviously, the net pricing, we assume that to be positive for the full year, but it will be weaker in the second half than in the first half.

And the next question comes from Alex Jones from Bank of America.

Two questions, if I can. First, just to follow up on this dry comment again. you able to help us with any sort of magnitude on that or even qualitatively, for example, was July better than May? Because I appreciate that the June base that you're comparing it to so far as particularly weak?

And then the second question on Mercedes-Benz, I think you had a weaker quarter on volumes than you originally expected. Can you just remind us of the reasons for that and your confidence on catching those up in the second half of the year?

Thank you, Alex. For the first one regarding the monthly development in quarter 3. What we can say is April was obviously very low. You can see that also from the order report, then May was a bit other than that and then June was really, really bad again and July was better. So you can say May, July more going into the same direction, and then April and June on a very low level, that distinguishes the month, the last 4 months.

I'll take the question on Mercedes. So yes, we had originally anticipated higher volumes for Q2. We have had some challenges ramping up new products. We introduced the eActros 600 end of the year. We introduced the Actros L with the new Pro cabin in the beginning of the year. So yes, we have a little bit more units on stock waiting for parts than we would have anticipated. It's quite common when you ramp up new products with a lot of new suppliers and new ways to assemble, I do think it will still carry over somewhat into Q3, but that we will be fully caught up before the end of the year. .

The next question comes from Hemal Bhundia from UBS.

And all the best in your role, Christian. My first question is on tariff-driven pricing or surcharges. How has this been flowing during -- through the quarter and is now largely reflected in the top line going forward?

Hemal, thanks for your question. So yes, we are working with a certain level of tariff surcharges. So we are taking a portion of the tariff impacts and we're passing on a portion of it. And of course, it also always depends on the demand situation and how we handle that exactly also based on particular fleet deals. What we can that there is impact didn't hit us so much yet in the second quarter, but they will come into full effect in the second half of the year.

And apologies if you've already mentioned it earlier, I might have missed it, but could you provide an indication where on the new North America margin guidance you expect for the full year?

Obviously, it's a margin range and depending on where we end up. And actually, the most decisive factor on where we end up within that range is the volumes. So that's a bit different depending on which months I now use to extrapolate the volumes for the second half. So yes, assuming the midpoint for right now is not the worst thing. Thank you.

So this was the last question. Ladies and gentlemen, thank you very much for the questions today. And in all the calls we had together. Thank you, Karin and Eva for answering and taking the time, as always. After a short week, we will start with the media Q&A at 9 a.m. Now as always, IR remain at your disposal to answer any further questions you might have. We are looking forward to staying in contact with you. Have a great day and as always, stay healthy. Take care. Thank you, and goodbye.

Good morning, everyone, and welcome to this conference call on the second quarter results and first half year of 2025. I would like to welcome our CEO, Karin Radstrom, our CFO, Eva Scherer. Yesterday evening, we already published our press release and all relevant documents. We have it on our website as well. I assume that most of you already have followed today's presentation by Karin and Eva and the analyst call prior to this media Q&A.

Let me just mention a housekeeping note. This call is conducted in English, so please be so kind to ask your questions in English as well. And the operator will now explain the procedure for registering your questions. Go ahead.

[Operator Instructions]

Ilona Wissenbach, first one to ask, Ilona is from Reuters.

I would like to know after all the debates and noise we heard around the job cut number of 5,000 in Germany and the discussion with the Works Council, how did all this peter out now? I mean, are you on the same page again? The Works Council says he doesn't accept the number because part of it can be saved in Germany by doing jobs more efficiently.

So perhaps it would be good to have your perspective on the outcome of this quarter. And then you have in the U.S. announced 2,000 job cuts. I would be interested how is the reaction of the workforce on the labor side there? Is there also some trouble and debate? I mean it was a bit surprisingly only a week after Mr. O'leary said at the CMD, there will be no job cuts for the time being.

Thanks, Ilona. Maybe I'll start actually with the second question. So he, as far as I know, did not say that in the Capital Market Day. I think we are -- have a little bit different setup in the U.S. As you know, the labor laws are quite different. So to make big changes according to the demand in the market is sometimes a little bit less challenging. So we did announce a 2,000 headcount cut. It concerns our factories in Mexico and in the U.S., and it's around -- it's a mix of white and blue color.

With regards on your first question, maybe I roll back a little bit and start with something we also talked about in the Capital Market Day, which is why I decided to be the CEO of this company, which is that I want to build the best truck and bus company in the world. And I wouldn't have stepped into this role if I didn't believe we will make that happen. Now looking at where we were when I took over and doing a lot of benchmarking, obviously, with our competitors, it was quite clear that we have a cost structure which is not competitive.

And that's also why we decided as part of our strategy, but only one part of the strategy to start the so-called cost down Europe. This was announced in January, and we then went into negotiation with the Works Council, which was obviously very tough but also very fair. And we reached agreements, I think it was towards the end of April. So we have the mechanisms and the measures on how to reduce cost and headcount. And I have to say both sides are fully committed to these agreements, and we will and can achieve the more than EUR 1 billion cost reduction by 2030.

But as I'm also saying all along, to get that kind of cost saving is not possible without a significant reduction in the workforce. So in the agreements that we made with the Works Council, we did not explicitly agree and write down a number when it comes to headcount. We were fully focused on the measures and the mechanisms. However, when I add up all the measures, I do think this will result in a headcount reduction of approximately 5,000.

Of course, we will always look at make or buy decisions. That's also part of the agreement, and we will do whatever is best for the company. And there, honestly, I think we have very similar targets between me and Michael Brecht and the Board of Management and the rest of the Works Council is we want to build a strong company, which is competitive not only in 2 years from now, but which is something we can be proud of 50 years from now and which is also here 100 years from now.

So we will manage this in a responsible way. We've had lots of good discussions. And I think we are all ready to move forward and to make this happen and to build a stronger company.

Okay. Next question comes from Alexander Jungert, Mannheimer Morgen.

The first one is you have just signed the Tarifvertrag for the parts in Germany. Why is this an important step for you? And what does it mean for locations like Mannheim? And second question, you mentioned the orders by the Bundeswehr. How much do you think do you want to expand the defense business?

Yes. So the Tarifvertrag was signed yesterday, and I saw that it was also announced. This has been part of our negotiation and part of the constant Europe agreements with the Works Council. Maybe something positive to point out, which I also mentioned in my speech earlier today is all these agreements that we've made is in no way a sign that we are not committed to Germany. We have also communicated that we do see the strategic importance of all our sites in Germany. And as I mentioned in my speech, we are investing in our production sites until 2030, around EUR 2 billion, which I think is probably more -- one of the highest investments of German companies into Germany.

Besides announced a few weeks ago, we have invested over EUR 500 million into our new global parts center in Halberstadt, which will also create around 650 jobs. With regards to the Bundeswehr -- what was the question exactly? Defense, sorry, Alexander. Yes. So I mean, I mentioned the Bundeswehr. It was really a breakthrough order for us. We had not historically been so successful with the Bundeswehr, but we have invested a lot, both in our capacities to run these tender type businesses, but of course, also into our product portfolio.

So it was a little bit of a sign that we have been doing the right things in the last couple of years. And we did announce at the Capital Market Day that we see a potential to grow our defense business to around EUR 1 billion by 2030, which would be around a doubling of where it would be today.

Okay. Next question is from Marco Engemann, dpa-AFX.

Two, if I may. The first one would be around the capacity reduction in North America as well. How much in savings can this yield in absolute terms? And my second question, you mentioned an uptick in orders in North America in July. And did I get that right that the new guidance is dependent on a further normalization or revitalization of those orders? And what are the risks in the order phasing in North America for the guidance?

Thank you, Marco, for your question. I'll do the one on the capacity adjustments in the U.S. first. So you can't really talk about savings and a positive P&L impact there. You can talk about the avoidance of negative effects because obviously, due to the reduction of the guidance, we had to adjust our production program in North America. And for that, we have to reduce capacities in order to counterbalance under-absorption effects. So that's the reason behind this and how it affects our P&L.

And then on the orders trend in North America, yes, I explained that we did see an improvement in July, and we do have the assumption considered in our guidance that this trend continues. And yes, that is currently what we are seeing. But of course, having seen that also we had an improvement in May versus April and then a reduction again in June, it is still a very volatile environment. And that's why we said it's a bit too early to call it a trend, and we will keep on monitoring it closely.

So currently, there are no further questions. [Operator Instructions] If you have any further questions, maybe half an hour or so, please do not hesitate to contact the Daimler Truck Communications team. We are at your disposal. I wish you all a very good day and until next time, see you. Bye-bye.

Welcome to the Capital Markets Day 2025. We started planning this event a couple of months ago, and we started debating where should it take place. And we thought about Germany that's a place where we can showcase our heritage, our great history, our big turnaround potential. But then we thought, aah, maybe not Germany, we're a global company. We want to show something else. And then the next idea we had was Brazil, where we have a very interesting region, a lot of growth, a lot of potential. We have a great turnaround story to talk about. But then we thought -- probably most of you guys don't want to travel that far, so that was off the list.

And then finally, Cleveland, North Carolina, perfect. We have a fantastic market here. We have strong years. We probably see a great pre-buy effect, '25, '26, it's going to be amazing. So perfect fit decision was made. And then the months passed, and it's a little bit crazy actually to reflect on what happened in the last months. Obviously, now a lot more doubt about the economy, a lot more doubt about any kind of pre-buy, a lot more doubt in general in the world about the economy and where it's moving. But I have to say, despite that, I'm very happy that we picked this location because today, we're not here to talk about what's happening in the short term, but we're here to showcase our road to 2030. And on that road, North America remains a cornerstone of our global success.

So welcome to our Cleveland manufacturing plant where we build our flagship products in North America, the Freightliner Cascadia and the Western Star X-Series, and welcome to our Daimler Truck Capital Markets Day.

The title of today's Capital Market Day is Stronger 2030 because that's exactly what we want to talk about. At Daimler Truck, we are really proud to work for all who keep the world moving, and we want to achieve nothing less than to build the best truck and bus company in the world. And I want to start by saying how proud I am to have a great team here with me with Karl, Achim, Eva, John, Andreas, Jürgen, a really, really great team. They're all great leaders very different backgrounds, different strengths, different experiences, and it's really cool to see how we come together as one team, all very motivated to take this company to the next level.

Now I said in the beginning, we want to build the best truck and bus company. What does that mean? It means #1 in customer satisfaction. We want to be the partner of choice. We want to help our customers beyond the trucks. And if they wake up in the middle of the night and they have a problem with their business, we want them to call us because they know that we can help them solve it. It also means being the #1 truck and bus employer. We attract the best talent.

We have the most engaged employees that are empowered, accountable and able to perform every day. And it means being #1 in market share in our key markets. And I think with these industry-leading trucks and buses and services, we can offer the best total cost of ownership, so our target can be nothing less than to be the market leader in the most attractive markets and segments. And when we achieve all of these targets, I'm sure that we will not just be the best truck and bus company for our customers and for our employees, but also for our shareholders. When I was in the process and when I decided to take on the role to be the CEO of this company, I did it because I'm convinced that we have everything in place to make it happen. For sure, we have some hard work to do over the next years, but let me assure you that this team is up for it, and I don't see any reasons why we will not succeed.

Today, we want to give you an update on our road to 2030 regarding strategy, regarding execution and of course, our financial targets. So I will start with an overview, then Eva will take over and present our -- how the strategy is driving value. Achim will do a deep dive on Mercedes-Benz Trucks; John, Daimler Truck North America; and then Andreas on technology transformation. And then I'll do a wrap up. And after that, for sure, some time for questions.

So let me start by looking a little bit at the environment in which we operate. And as I mentioned at the beginning, right now, the markets are very uncertain and volatile. But in the longer term, there is a clear positive trend. The global economy will continue to grow. And in response, the need for transportation will also continue to grow. And this means that commercial vehicles remain a very attractive growing industry, and we, as Daimler Truck, are very well positioned. We have top 3 positions for both trucks and buses in all decisive segments and markets in the Americas, in Europe, in the Middle East, in Africa, in Asia, and we have still even more potential for growth. And actually, I think it's more or less impossible to go anywhere in the world without running into one of our vehicles. And I think that's really, really cool. But our strength is not just in our products. It's also in our brands, whether it's Mercedes-Benz, Western Star, Freightliner, Fuso, RIZON, BharatBenz, et cetera, or Thomas Built Buses. Each brand serves a unique purpose and a specific customer base.

Let me add some few more strengths that we can build on, on the journey to become the best truck and bus company. In 2024, we sold 460,000 units worldwide, which gives us industry-leading scale. And scale is important especially in the ongoing transformation of the industry where we need to develop a lot of different technologies in parallel. Another strength is our balance sheet. When we became independently listed a couple of years back, we had a strong balance sheet. Today, our financial strength is even greater with the net industrial liquidity of more than EUR 8 billion, and that's important because it gives us freedom to move. And we have an amazing global team. Our people take pride in going to work every day, wherever in the world that might be, doing their best for this company and for our customers. And I'm pretty sure that our team of more than 100,000 people of 130 nationalities worldwide is the best one in the industry.

Coming back, I mentioned we have some great products. And just since our last Capital Market Day in 2023, we have launched a number of new flagship products and service initiatives that will help drive our success going forward and some of them highlighted here on the slide. In December, we went into production with our Mercedes-Benz Actros L with our new ProCabin, which improves aerodynamics, and reduces fuel consumption by up to 3%. With our Mercedes-Benz eActros 600, we have reached a big milestone in battery electric truck. It's our first true long-haul electric truck, and we're getting really good feedback from the customers. As an example, we had an order from Amazon for 202 vehicles. And we see now that also smaller customers start to show interest in e-mobility in the European part of the business.

Our Freightliner Cascadia was launched almost 2 decades ago and with over 1 million units sold, it's currently the most driven Class 8 truck in North America. With our fifth generation, we're setting new standards, adding additional safety features and even greater efficiency. And a final highlight in just 2 days, actually, I'll go directly from here to there, we're going to celebrate the opening of our new global parts center in Germany. With this new global parts center, we can quickly and efficiently supply spare parts to Mercedes-Benz truck customers in over 170 countries. And I'm actually really excited about this one because we started it already a few years back. and it is one of the key initiatives to drive our mid- to long-term service growth.

Now turning to performance, and we see that we have also achieved a lot in this regard in the past years. Growing services has been a strategic priority and we have grown our service business by 24% since 2019. We've also delivered 2 critical turnaround stories, Daimler Buses grew its adjusted EBIT by more than 50%. And our Latin America business, we have achieved a similarly strong performance, which Achim will tell you more about later.

Next, on our track record, our cash conversion and cash generation have been consistent and reliable. In 2024, we generated EUR 3.2 billion of free cash flow and a total since 2023 is EUR 6 billion. And through our dividend policy and our share buyback program, we have returned EUR 5 billion to our shareholders in the last 2 years. Our progress is also reflected in our profit margin. We have clearly improved our performance in the last couple of years.

In 2023, we had very strong market conditions across all the regions, and we achieved a 10% return on sales. In 2024, markets were a little bit more mixed and return on sales was lower, but we still reached our promised target level. So we are proud of the progress we've made, but we're not yet delivering to our full potential across all our segments. Daimler Truck North America has maintained and even improved a very high level of performance.

In Daimler Buses, we have achieved a fantastic turnaround. And in Mercedes-Benz Trucks, we have improved significantly as well, but we saw that in more mixed markets as last year, we still need to do more, which is why we have now launched Cost Down Europe. The most ambitious restructuring program in the history of our company as well as a very good strategic plan, which obviously goes beyond cost savings and which Achim will be presenting later. So this was a quick recap of what we've achieved.

And now I want to spend the rest of my presentation on the future, how we move forward and how we will build an even stronger company. Key for our road ahead is our new corporate strategy. And we have 5 strategic pillars, which are: one, unlock potential through growth, scale and efficiency. This is about leveraging our scale and platforms across the world, but it's also about growth, about strengthening our positions and entering and growing in new markets and segments.

The second one, evolve into a customer-centric solutions powerhouse. So I mentioned we have grown our services in recent years. But this strategic initiative is about breaking the curve, growing even faster, both in traditional parts and services as well as in new areas.

Number three, transform at the speed of right. This is about mastering the trade-off between 0 emission and investing into diesel and to be sure that we have the best products for both. And it's about investing the right amount with the right partners into our next-generation vehicle software as well as autonomous driving.

Number four, build a lean and effective operating model. It's about rightsizing, it's about implementing lean methods and setting a new operating model.

And number five, foster performance culture. This is the one pillar of our strategy that's crucial for all the other pillars to make our strategy work and to take Daimler Truck to the next level. We need to take our culture to the next level as well.

Now I will go through each of these strategic pillars and give you a few deep dives and headlines or go a little bit beyond the headlines and show you some of the initiatives. Starting with our first pillar of unlocking potential through growth, scale and efficiency. Last month, we made a big strategic move in this regard when we concluded the definitive agreements to integrate Mitsubishi Fuso and Hino Motors, which is today a subsidiary of Toyota. This strategic step makes sense because at Daimler Truck, most of our other brands are specializing in heavy-duty, while Fuso is specialized in light duty.

So we have seen that our potential to leverage scale has been limited, while the combination of Fuso and Hino will create a Japanese global company with over 40,000 employees and the right potential for synergies and scale to be successful. At the same time, the integration of Fuso and Hino will also benefit Daimler Truck. First of all, we plan to hold a 25% stake in this new company that we believe will be a very exciting one. And we also expect the cash inflow of somewhere between EUR 1.5 billion to EUR 2 billion from this transaction. And we continue to collaborate with the new company to share technology and investments.

Another initiative within our first strategic pillar is to drive growth in attractive profit pools. And I brought 4 examples of growth opportunities that we have launched. Number one is zero-emission vehicles where we aim to deliver 25,000 or more units per year in Europe by 2030. We have the right product portfolio and we feel confident we have leading technology in e-mobility.

Second is India, where we have established a strong position, but we can grow both within India to be even bigger and also through export.

Third, our vocational business in North America. Since the launch of our all-new Western Star X-Series in 2020, we've already achieved a lot, but we believe we can do even more. And we aim to increase our vocational volumes by over 60% until 2030.

Fourth, defense. It's one of our hidden gems. It's a high-margin business with very long contracts and we have developed a clear strategy to more than double our revenue. We have and will continue to strengthen our product portfolio on the defense side, and this is very often a tender-driven business. So we've increased our capacities, and we see already now that, that starts to pay off.

Another part of our growth strategy is the autonomous business. Our focus here is on long haul in North America. This is a much larger addressable market than, for instance, ports or mining. And the U.S. is the perfect place for pioneering this technology because here, trucks travel about twice as far per day as in Europe. The driver salaries are higher and we have a very good forward-looking regulation. And when you want to do autonomous trucking, you need 2 different things: you need hardware and you need software.

In Daimler Truck North America, we are developing the hardware, which is needed for autonomous trucking, a vehicle platform with redundant systems for braking and steering and so on. So if there's a problem with any of the primary systems, the backup systems are kicking in and the drive -- or there is no driver, the truck can still be controlled safely. Also for our subsidiary, Torc, DTNA supplies the compute and the sensors for the autonomy. And when we start to scale, these trucks will run off our factory line, already prepared for autonomous driving with everything factory-fitted which gives us lower cost and better reliability.

In Torc, we are developing the software for autonomous trucks, virtual driver that will steer the truck instead of the real driver. We plan to offer it as Software-as-a-Service, which could open up for us a very profitable recurring revenue stream. So I think we have a really unique setup for this business, developing the software in Torc, the stand-alone software company, which is agile, which moves fast and which attracts the right talent. And we combine it with the weight and reach of Daimler Truck North America to leverage the best redundant platform and also important with already an established dealer network to support this new business.

So we are convinced that autonomous trucking is a great business case. Our customers should be able to reduce their total cost of ownership by 15% to 20%, which is huge. And for us, we see a revenue opportunity of EUR 3 billion by 2030.

Moving now to the second pillar, creating a solutions powerhouse. In 2024, we generated over EUR 8 billion in our industrial services revenues. So this is already good, but we believe we have much more potential, so we are investing for growth. One example is the expansion of our own retail network in Europe. Today, we have a relatively low penetration of own retail, and we also have many locations that are not truck dedicated 100%. So we are investing an additional EUR 250 million to expand our footprint and to increase truck dedication.

Our third pillar, transforming at the speed of right. When you look at investing into new technologies, you have actually 2 risks. You have a risk of overinvesting and a risk of underinvesting. Overinvesting would have been, as an example, if we had gone completely all in on battery electric some years ago, if we would have built our own cell factory or as some people were saying and doing, buying our own mine. If we would have done that, we would have been in serious trouble today.

But at the same time, you have the risk of underinvesting. For instance, if we already some years ago, would have stopped investing into diesel, we would also be in real trouble today. So we really need to balance these 2 risks, and we do that with a modular, flexible technology strategy, where we work also a lot with partners to share, invest and to take down risk. An example is our joint venture with Volvo on fuel cell, cell-centric and we work with Cummins and Deutz on diesel engines. And not to forget, with over 200,000 engines produced annually, we are the heavy-duty diesel engine champion. All of this enables us to transform at the speed of right to drive the technological transformation of our industry and to really make sure we match the speed, which we are working at with the speed of the picking up of the customer demand.

Pillar 4, establishing a lean and effective operating model. Historically, Daimler Truck has not always delivered on the structural cost improvements we were aiming for. So as CEO, this will be one of my key priorities going forward. Cost Down Europe plays a key role in establishing our lean and effective operating model. And by 2030 at latest, this program will deliver more than EUR 1 billion in cost savings. It covers fixed and variable cost. It includes headcount reductions and a shift of roles and functions to best cost countries.

We are better positioned than ever before to execute this. And I think the most important difference compared to the past is the agreement we have reached with the German Works Council. This really puts us in a position to execute what's needed to achieve these cost reduction targets. So what will we do? We will make our operations more effective, more resilient. We're optimizing our indirect functions, and we are reducing our labor costs. And just to give you 2 concrete examples of things we have agreed on.

We have linked the bonus payment of our employees in Germany to the performance of Mercedes-Benz Trucks in Europe instead of the global performance of Daimler Truck as it has been in the past, which means at the current Mercedes-Benz Trucks performance levels, the new payout would be significantly lower, so this team has a very good and very high incentive to make this business more successful.

Second example, we have increased the maximum quota for temporary workers to 18% in all our German locations. And we have also increased the duration of having temporary contracts and this helps us because we have much more flexibility to handle the demand cycles than we would have had historically.

Now the final pillar of our strategy, the pillar on culture. And as I said before, this one is absolutely crucial for the other strategic pillars. So what's it all about? At Daimler Truck, we are proud of our strong foundation, our brands, our footprint. And as I said in the beginning, our exceptional people. But in order to stay ahead, we also need to evolve how we work. So we are building a high-performance culture. And to be clear, this is not a side project. It's a core part of how we will deliver success. So we're driving this culture development with very concrete measures like a pay for performance, reviewing our level system. And in addition to this strategic pillar, we are establishing 3 fundamental principles across our entire organization, simpler, faster, stronger.

These principles define how we want to work every day in every team at every level. Simpler means that we focus on what truly matters, what drives value either for us as a company or for our customers. So we're sharpening our priorities, asking ourselves. Am what I doing right now adding value? And if not, maybe I shouldn't be doing it or I should be doing it in a different way.

Faster means accelerating decision-making and execution, empowering teams, reducing unnecessary alignment loops and meetings and pushing decisions out into the organization and stronger means building resilience, building accountability, raising the bar on performance, encouraging ownership, and fostering a mindset of continuous improvement. And these principles matter a lot to me personally and also to the rest of the Board of Management. So we will make sure that we make these principles really come to life in all of Daimler Truck because with this mindset, we will make the difference going forward. And this will help us turn our strategy into results, which brings me to my next slide.

We are putting a clear focus on execution. And I think that we started strong. I had very clear priorities for my first weeks and months as CEO, and we consistently worked on them, and I think we can already now tick off quite a few important boxes. I started with a very clear 100-day plan connecting with customers, regions that I hadn't worked with before, media and, of course, many of you.

We've also selected Achim as a great successor as the new CEO of Mercedes-Benz Trucks. We implemented the new setup of Mercedes-Benz Trucks and merged it with our businesses in India and China. We reached an agreement on our Cost Down Europe program, and we successfully negotiated the integration of Fuso and Hino. And as mentioned in just a few days, opening our new global parts center. So we are in full execution mode, and we will keep the momentum high on the topics we talked about today, like operationalizing our strategy to become simpler, faster, stronger, executing on Cost Down Europe, where we expect to realize the first tangible financial impact already in '26. And it goes on, and of course, I really look forward to ticking off the last box in the bottom right on achieving industry-leading margins.

So here is my final slide. And in concluding, I just want to boil it down to 2 numbers. So everything I touched on in the last minutes, all our strengths, all these initiatives result in these new financial targets for the group for 2030. We aim for a return on sales of 12% or more in our industrial business and we target a compound annual growth rate of 3% to 5%. And I think these figures clearly show how serious we are about taking Daimler Truck to the next level. And we're in full swing already. We got a comprehensive strategy in place. We're executing it very consistently. We're touching culture. We're touching efficiency. We're touching technology and a lot more, and together with our teams, we want to make Daimler Trucks stronger in every region and in every segment.

We want to build nothing less than the best truck and bus company, for our customers, for our employees and for our shareholders. And with this, I hand over to Eva for financial insights.

Thank you, Karin, and hello, everyone. It is really great to be here with you all today. As you have just heard, we're operating in a world that is anything, but predictable. Geopolitical tensions, including the latest developments in the Middle East, continue to add pressure. Across our markets, conditions remain volatile. And North America is no exception. As you're all aware, the order environment in North America is, in fact, still very challenging.

Back in the first quarter, we said we needed to see a pickup in orders to stay on track with our guidance, but that has not happened yet. And so each and every week remains critical. As we work through these short-term challenges, and we will, we are here today to talk about where we are going in the long term and how we are going to get there. Because this moment in time is about more than reacting to the market. It is about how we are evolving our strategy to drive value and how we are setting ourselves up for a performance revolution as we look toward 2030. So let's dive in.

Our strategy is one of ongoing refinement, as Karin said during her speech. With an extreme focus on execution and financial performance, to achieve this, we have 4 priorities: fix the core, this is all about empowering our teams to improve what we do, how we do it and where we do it. This is our main focus, and therefore, we will put a lot of attention on this topic today.

Delivering resilient growth that is growing where it creates value and resilience. We're doing this by increasing our service business with recurring revenue continuing to drive growth in the zero-emission vehicle segment and further building on our successful vocational products. Another lever is our laser focus on our capital allocation to ensure efficient use of our capital employed in the business. Last but just as important, we remain focused on continuing to reward shareholders through both our dividend policy and our share buyback program.

Looking back, Daimler Truck has a lot to celebrate from a financial performance perspective. Despite unprecedented global volatility, the COVID pandemic, and a conflict in Europe, we have delivered 3% organic growth per annum in our industrial business. Additionally, we have increased the adjusted EBIT for our industrial business by plus 70% since 2019. And expanded our profitability to 8.9% to a level consistent with our objectives.

Cash generation has been a key priority with EUR 6 billion of free cash flow generated in 2023 and 2024 alone. We have rewarded our shareholders with EUR 5 billion of payout, returning more than 15% on of average market capitalization via buyback and dividend in the last 2 years. I hope you agree that this is a significant return. However, we also need to be realistic and honest while Mercedes-Benz Trucks achieved more than 10% adjusted return on sales in 2023, it has become clear that recent performance in a weaker market has fallen short of where we need it.

As Karin has already highlighted, the entire management team is pulling all possible levers to further improve the resilience and performance of Mercedes-Benz Trucks and our group as a whole. Our clear answer to close the gap between achievement and potential for Mercedes-Benz Trucks is Cost Down Europe. Cost Down Europe is a holistic program, meaning that we are addressing all aspects of Mercedes-Benz Trucks cost position. This covers all elements of the value chain from development to purchasing and manufacturing down to sales and all headquarters functions.

We can clearly identify over EUR 1 billion in cost potential, which translates to about 150 basis points of margin upside by 2030. The saving potentials are going to be achieved by the following components: More than EUR 400 million for material cost, more than EUR 200 million from operations and about EUR 100 million each from R&D, sales, headquarters and G&A functions as well as IT run costs. The targeted cost savings measures are expected to involve a headcount reduction of approximately 5,000 employees in Germany, which represents about 1/3 of the total planned savings of more than EUR 1 billion.

In addition, we substantially increased our flexibility with regards to temporary workers. Hopefully, you can all understand the significance of this, difficult as it may be. Some of these effects will take time to realize. For example, materials and operation savings will depend on product cycles. First impact will begin to come through as early as 2026 with a low triple-digit million euros impact. We have offered aggressive targets in Europe before. So some of you might be asking, what is different this time?

First, this is our most holistic efficiency program ever, meaning that we are not just focusing on a single area at a time. Second, we are including indirect and direct functions for the first time. And third, as Karin explained, we have reached full agreement with the Works Council, which includes key levers to enable stronger execution such as the planned headcount reduction in Germany. We are going to get this right, and we will provide you with an annual update.

Across all cost buckets, we have looked at relevant industry benchmark data in conjunction with independent consultants to derive our targets for 2030. These benchmarks highlight clear opportunities for Mercedes-Benz Trucks to improve, including annual material cost efficiencies and expanding both production and R&D activities in best cost countries.

Let's focus on 60% of the cost opportunity, which is in material costs and operations. We plan to save 8% in material cost based on our annual purchasing volume in 2030 versus our baseline in '24. In fact, year-over-year, in 2024, our material costs were only stable while industry benchmarks indicate year-over-year improvements. For operations, we identified tangible opportunities to reduce cost production -- production cost by 7%. By relocating over 20% of our production volume to a best cost country. We anticipate reducing costs by approximately EUR 3,000 per truck. We will not achieve all of this in year 1, but we will ramp up over time and be fully at cruise speed by 2030 to deliver more than EUR 400 million of savings in material and more than EUR 200 million in operations. Achim will give you more details on how we plan to achieve these targets.

Turning to the next 3 buckets of cost savings. Here, we are targeting EUR 300 million by 2030. Again, this is derived through our benchmarking process. For R&D, we target EUR 100 million of savings. Two examples of how we can achieve these targets are: increasing the percentage of R&D headcount in best cost countries to about 40% and outsourcing of R&D activities to suppliers, both will result in a leaner and more flexible R&D setup in Germany.

For sales, we will reduce overall headcount by around 15%, which combined with a few other measures result in around EUR 100 million in savings. This means, for instance, that we are streamlining our central sales functions and are implementing lean setups for our local market functions. And for IT, we aim to reduce our yearly run costs by EUR 100 million. Example of savings include sundowning legacy applications, reducing complexity and application landscape and consolidating vendors to achieve scale.

Furthermore, we are implementing a cost program for G&A functions in our headquarters to generate savings of EUR 100 million. The defined measures are expected to result in a headcount reduction of approximately 20% in Germany by 2030. To realize these savings, we will implement 4 key measures: rightsizing our resources and setting a clear focus on our core business. Outsourcing transactional activities, for example, certain accounting and controlling functions, optimizing team and leadership structures for greater efficiency. And last but not least, we will eliminate functions related to Trucks Asia.

The transformation of our businesses in Latin America and at Daimler Buses, serve as concrete examples of successful restructurings. Achim, now responsible for Mercedes-Benz Trucks, will share his experience on how he delivered in Latin America. And at Daimler Buses, the leadership team has made substantial progress in improving performance since 2019. The following main levers were introduced successfully as part of the transformation program. Implementation of margin-based sales steering and additional pricing discipline, exiting unprofitable markets, sale of noncore shareholdings and simplifying the global chassis portfolio as part of active portfolio management.

A significant reduction of our German-centric operations footprint to one that is far more focused on best cost countries and taking advantage of the extension of our production facilities in France, Turkey and Czech Republic for complete buses. One key supporting factor was the recovery of the coach market after COVID-19, which had come close to a standstill in 2021. We also delivered strong growth in our parts and service business, increasing revenue by 24%.

Starting from a low base, we increased zero-emission vehicle sales in the city bus segment by a factor of 9 and this growth continues at attractive margins. The segment has significantly improved its profitability and resilience driven by a reduced SG&A ratio, stable gross margins and a breakeven volume that is now 30% lower. A second element, a key element of our fixing the core initiative is the strategic solution to our Trucks Asia business. The definitive agreement on the integration of Fuso and Hino was reached last month, a culmination of tremendous effort by all involved and a fantastic outcome for all parties.

Following the integration, Daimler Truck will be even more focused on the heavy-duty truck segment with an expected 70% heavy-duty group sales share in 2030. The pro forma impact by 2030 represents a 50-basis point improvement in adjusted return on sales and a 300 basis point improvement in return on capital employed. We expect to receive between EUR 1.5 billion and EUR 2 billion in cash from this transaction while retaining a 25% stake in the new company. This is clearly a very positive outcome that reinforces our robust capital allocation framework. Until the deal closes, which we expect to happen in April 2026, Trucks Asia will be treated as a discontinued operation. After that, the new company will be consolidated at equity.

Let's now turn to our growth initiative, key levers that will shape Daimler Trucks trajectory through 2030. We see multiple tangible revenue growth opportunities ahead. First, zero-emission vehicles will be a major growth engine, particularly for Mercedes-Benz trucks where the significantly higher average selling price compared to diesel vehicles creates a strong lift in value.

Second, we are positioned to significantly expand our heavy vocational market share in the U.S. and Canada, a segment characterized by premium pricing and robust aftermarket part sales.

Third, India represents a strategic long-term opportunity. There, we are leveraging domestic volume to build a foundation for profitable export growth. While still early, the potential EU India trade agreement could accelerate this opportunity for us. And for defense, we aim to double our revenues, capitalizing on the high-margin, long life cycle nature of this business, including services and support. Taken together, and excluding Asia, we're targeting an organic annual growth rate of around 3% to 5% in Industrial Business revenue by 2030.

Most importantly, our strategy is rooted in disciplined organic execution. Unlike in the past, our financial performance is less reliant on top line expansion. We are focused on margin quality, operational excellence and capital efficiency. Overall, we are pleased with our growth outlook, but we like our margin resilience even more. And one of the key drivers of this resilience is growing our service business, typically higher margin, high return recurring revenues, all built on trust, loyalty and convenience.

Today, we are disclosing our service revenues for the first time, both on the Industrial business level as well as for Mercedes-Benz Trucks and Trucks North America. Each segment has its own strategic initiatives to drive further growth. And we see multiple opportunities to further build on our solid results today. Overall, we expect to significantly increase service revenues with a higher compound annual growth rate than our new vehicle sales. In the long run, our growing service revenue will be a key driver of profitability and a vital source of stability across market cycles.

As you will hear in more detail later from John, the heavy vocational segment remains a significant opportunity. This is a great incremental growth segment for Daimler Truck as we are underpenetrated at a 24% market share. The DTNA team relaunched the category in 2020 with the Western Star X-Series. And we have seen a nice increase in market share as a result. We have a compelling product offering and our customers love it. The market is less volatile compared to the on-highway segment with higher average selling prices, higher part sales and long-term relationships.

Another pillar of our resilient growth story is our financial services business. It now holds the portfolio exceeding EUR 30 billion and is a key enabler for the Industrial business. The business is adequately funded with a robust capital structure. Our priority is to cover our cost of capital through cycle and to bring our return on equity above the 15% mark. Furthermore, we do not anticipate any further equity injections will be required. While we are working on lifting our financial services performance to the next level, we have 2 core priorities: first, we intend for all of our financial services growth to be self-funded. To do this, we are prioritizing growth of our combined service offerings. For example, through the recent integration of the CharterWay business into Financial Services, the launch of the unified payment solution, DT Pay and bundled retail insurance products.

Second, while our operating ratio is already at a benchmark level, we continue to drive operational excellence, achieving an attractive cost-income ratio through transformational activities such as our North America business hub and service center. Given the current volatility in global markets shaped by geopolitical and economic uncertainty, our focus on resilience is more important than ever. To address this, we have comprehensively upgraded our risk management capabilities, leveraging process automation and AI-driven analytics, real-time monitoring and deeper strategic integration.

All in all, we expect that the combination of fixing the core and executing our resilient growth strategies will deliver more than a 310-basis point improvement in adjusted return on sales by 2030. As I have shown half of the overall margin increase is attributable to cost efficiency programs, delivering more than 150 basis points. These efficiency measures mainly cover Cost Down Europe as well as additional cost measures in Trucks North America. The pro forma benefit of the Fuso and Hino merger contributes another 50 basis points. So when we look at the full picture, over 200 of the 310 basis points in margin improvement are driven by structural efficiencies, not by growth or market tailwinds.

Additionally, we are pushing forward on the service opportunity, which is expected to deliver a meaningful benefit of around 50 basis points. And finally, as you have heard, we continue to pursue several promising growth opportunities. These are expected to positively impact volume, price and mix, adding at least another 60 basis points to our margin.

To be frank, the 600 basis points are landing at the lower end of our planning range, reflecting built-in contingencies. This is yet another example of our careful, conservative planning and a departure from past practices. Summing it all up, we are on track to achieve an adjusted return on sales of more than 12% by 2030. Bringing all these value drivers together today, we are increasing our long-term return on sales targets for the Industrial business. We are giving an upper and lower range in our targets to reflect how we should perform in realistic through-cycle economic conditions.

For 2030, we target an adjusted return on sales between 9% and 13%, an upgrade of 200 basis points compared to our CMD in 2023. For Mercedes-Benz Trucks it might appear that we are keeping our adjusted return on sales target unchanged at 8% to 12%. However, it is important to keep in mind that previous targets for 2030 were based on the old structure, excluding India. With India now included and having a slightly dilutive impact, the 8% to 12% range actually reflects a more ambitious target under the new setup.

For Trucks North America, we are raising our target to a new range of 10% to 14%. For Daimler Buses, we have narrowed and raised the target range to 7% to 11%. On capital efficiency, we are now targeting a return on capital employed for the Industrial business of between 40% and 50% by 2030. This significant improvement is clearly driven by our enhanced profitability and represents a mid-single-digit increase at the midpoint of the range compared to our CMD 2023 targets.

One of the drivers of our attractive return on capital employed is the relatively low level of capital expenditures required to maintain and grow our business. Nevertheless, we are approaching a peak in our absolute level of capital expenditure in 2026. This investment is essential to support the implementation of our strategy, transforming our product portfolio and production sites as well as expanding on our own retail footprint across Europe.

Thereafter, we anticipate a gradual decline in absolute capital expenditure levels. This will support stronger cash conversion and contribute to further improvements in our return on capital employed. By 2030, we also expect a noticeable reduction in our CapEx to sales ratio for property, plant and equipment compared to 2024, demonstrating our commitment to capital discipline while continuing to invest strategically.

Referring back to the topic on my previous slide, the elevated levels of transformational investment have led us to apply a higher-than-usual R&D capitalization rate. The capitalization rate peaked in 2024, and we expect it to decline steadily going forward, as we gradually reduce our spending on zero-emission vehicle development. We are taking this approach to give you greater margin visibility and to reduce our overall risk profile, ensuring transparency and stability as we move forward.

Looking ahead, we plan to achieve a significantly lower target range of 5% to 10% for the capitalization rate between 2026 and 2030. In addition, we are further derisking the balance sheet by adjusting existing book values. This will result in a nonrecurring adjustable noncash item in quarter 2 2025 expected to be in the low triple-digit million range.

Just as the group has demonstrated over the last 5 years, we will continue to consistently convert our profits into cash. Our adjusted cash conversion rate is expected to remain solid at around 0.9-1.0 by 2030. As a result, we expect free cash flow to increase by approximately 50% compared to 2024 levels. We are reaffirming our minimum net liquidity target of approximately EUR 6 billion. The EUR 6 billion threshold is sufficient to maintain our single A credit rating, which underpins the commercial competitiveness of our Financial Services business.

As CFO, one of my top priorities is to ensure that every euro we allocate is working to create long-term value for our shareholders. That means maintaining a disciplined capital allocation policy and a strong, robust balance sheet that supports the company's sustainable growth. We remain committed to investing in our core business, prioritizing opportunities that drive profitable growth, enhance operational efficiency and strengthen long-term resilience. With regard to M&A, we remain disciplined, executing only on value-creating opportunities that align with and reinforce our strategic pillars. Any investment must deliver an internal rate of return that exceeds our risk-adjusted cost of capital hurdle rates.

In addition, we target M&A activities that are accretive to both our operating margins and earnings per share. We believe the Fuso and Hino transaction clearly demonstrates our disciplined execution of this strategy. Finally, we remain strongly committed to consistent shareholder returns. Our dividend policy remains unchanged at a payout ratio of 40% to 60%. Just to remind you, this approach implies a higher payout ratio in weaker years to ensure a more stable dividend. For 2024, our dividend stood at EUR 1.90 per share, representing a 51% payout ratio.

In addition, we are now almost completed with our inaugural EUR 2 billion share buyback program. And today, we announced a new EUR 2 billion program set to begin in the second half of 2025 and to be completed within 2 years. We firmly believe this combination of stable dividends and consistent share buyback programs not only rewards all our shareholders, but also strengthens our earnings per share. So bringing everything together, what I have shown you today is a stronger, more focused financial framework that is built around our 4 key drivers of value. We are shifting our focus toward relative metrics, revenue growth, cash conversion and profitability. And we are simplifying our guidance to reflect that shift starting in 2026.

Looking ahead to 2030, we are targeting an adjusted return on sales of 9% to 13% for our industrial business, supported by over EUR 1 billion in cost reductions at Mercedes-Benz Trucks in Europe. We are also aiming for 3% to 5% organic revenue growth per year and a return on capital employed between 40% and 50%, all while maintaining our strong track record of cash generation. And importantly, we remain committed to rewarding our shareholders through our 40% to 60% payout ratio and a new EUR 2 billion share buyback program. Also, the market remains uncertain in the short term, we understand the challenges we face, and we have evolved our strategy to revolutionize how Daimler Truck performs and how we drive value for you all.

Thank you all again. And with that, I will hand over to Achim.

Thank you, Eva, and hello, everyone. At Mercedes-Benz Trucks, our focus is to turn potential into profit. And the way I see it, our potential has never been bigger. Unlike in the past, we are now a truly global segment. We are building a stronger future with 2 strong brands: Mercedes-Benz Trucks and BharatBenz. Therefore, our global reach is greater than ever. We are using this opportunity to restructure our organization to leverage talent, scale and efficiency and to grow in promising markets and product segments. Let me be clear, I'm confident that we can and that we will reach our targets. Why? Well, for more than 20 years, my journey with Daimler Truck has included many international assignments. From managing global corporations and industrialization projects at Mercedes-Benz Trucks to sales and customer services Daimler Trucks Asia to my previous role as the CEO of Mercedes-Benz to Brazil, running our Latin American business. No matter the role or the region, my core convictions were always the same.

Customer focus, trust, entrepreneurship and performance. Most recently, I led the team in Latin America to a strong turnaround. I see this turnaround strategy as a blueprint for Mercedes-Benz Trucks. And you will see many similarities between the 2 strategies today. So what did we do in Latin America? Overall, we focused on 4 main topics: We implemented a high-performance culture with focus on execution, speed and continuous improvement. We listen to our customers and improved products and services. We improved customer uptime by focusing on parts and services and at the same time, reduced product complexity and optimized pricing in the market.

Finally, we set a clear focus on cost reduction on all cost categories. Yes, this was difficult but absolutely necessary. Just to mention a few examples, we negotiated with strong unions. We closed the site, we outsourced certain functions and components. Overall, I'm really proud of the outstanding job the team has made. And I'm also very proud of the results we have achieved in Latin America. We achieved our return on sales targets ahead of plan. We improved our resilience with breakeven volume almost 50% lower than when we started. To me, Latin America is proof of what we will achieve at Mercedes-Benz trucks overall as well. And let me be clear, no matter the region, it ultimately comes down to one thing. We must deliver for our customers. They come first every single day.

Our one global team enriches us with their diverse talent and ideas. At the same time, they are the ones being closest to our customers, understanding their local needs. Our industry-leading products and services keep their businesses running. All of this is delivered under 2 strong brands: Mercedes-Benz Trucks and BharatBenz. Yes, customer focus wasn't always our main focus. But when Karin led the team, it became part of our DNA. And it will only get stronger because this matches with everything I've been standing for throughout my career. We want to be the best partner for our customers by listening, by delivering what they need and by being easy to do business with.

As the CEO of Mercedes-Benz Trucks, I have deep respect for our legacy and a strong belief in our even brighter future. So let's take a quick look back and then look forward. Well, first, let me briefly explain how to read the slide. The white bars show Mercedes-Benz Trucks results under the old segmentation. The gray bars show our results with India and China included. In 2023, we proved that we can achieve strong profitability. Unfortunately, 2024 clearly also shows that we need to become more resilient and that our actions so far have not been enough. Cost Down Europe is the right path to achieving the resilience we need.

In addition to the negotiated framework, it's a comprehensive plan to unlock our full potential. And that means reaching our profitability targets in all market environments. What is important? Cost on Europe is not our entire strategy, but it is an essential part of it. However, as I said, at the very heart of our strategy are our customers. And since our last Capital Market Day, our customers have told us in surveys that we are continuously improving. I'm really proud of the high ratings we recently received for our vehicle reliability and quality. They have also told us that we're reaching top levels in several areas of the aftersales business.

And of course, happy customers are great. But what I really like about this, we are receiving the best customer feedbacks in the areas we have been investing in. For example, product quality and aftersales. Looking at product launches. On the battery side, we have earned a 200-unit order from Amazon for our flagship, the eActros 600. In terms of diesel, our Actros L with the ProCabin gets great customer feedback when it comes to fuel efficiency and driver comfort. However, we are also experiencing right now some production ramp-up and supplier challenges in quarter 2 with the ProCabin, but are still confident that we will reach our full year expectation.

So let's look ahead now and see what our new Mercedes-Benz Trucks blueprint looks like. We are entering into a new era to turn potential into profit. Therefore, we have laid a strong foundation with 3 strategic levers.

We will restructure our organization to improve efficiency and reduce complexity, relying on Cost Down Europe as our guide. We will leverage the talent, the scale and resources of our global organization to deliver the products and services our customers need. Our R&D operations teams are ready to design, build and to deliver products smarter than we have ever been before. And we will grow in areas such as zero-emission vehicle business in Europe, the defense sector as well as in our parts and services business. Our customers need to turn every kilometer on the road into profit. They trust us with their business. And when we deliver what we promise, we are on the way to turning our potential into profit. We are fully committed as one global team.

[Presentation]

In this, you already get an idea regarding a key difference for Mercedes-Benz Trucks in 2025. We have added India and China to our business. This forms one truly global segment, anchored by 2 strong brands: Mercedes-Benz Trucks and BharatBenz. Just looking at India alone, the potential from this change is huge. Daimler India Commercial Vehicles has been in business for only 13 years. And in that short period of time, the team produced more than 250,000 trucks and buses that are sold within India and exported to more than 60 countries.

Additionally, the commercial vehicle market in India is projecting further growth. However, we are also not underestimating the fierce price competition that makes profitability growth in India a challenge. Quite the opposite, we will take advantage and valuable -- and gain valuable learnings from this competition, making us even stronger as one global team. We will tackle the improved cost positions that we can source from India globally as we stronger focus on increasing our Indian activities. We will invest in the right export strategy and tap into best cost opportunities.

Now let me also tell you more about our 3 strategic levers. Starting with the first one, restructure. This brings me to Cost Down Europe. Karin and Eva already mentioned the negotiations with our works council in Germany. The 3 months of negotiations were intense, but productive and in the end, we received the result and an agreement that we are satisfied with. We all recognize that delivering more than EUR 1 billion in cost savings until 2030 is crucial to our success and ultimately to our ability to reinvest into the future of our business and our people. Eva already shared an overview on Cost Down Europe. And because Mercedes-Benz Trucks has such an important role in implementing the measures, I would like to share more details in 4 areas: sales, R&D, operations and material costs.

In sales, we are finalizing a large-scale restructuring of our central sales functions, streamlining roles and processes. Furthermore, we are implementing lean truck operation centers in our markets. This will reduce operational complexity and bring us closer to our customers. And we will utilize best cost country sources to support our global sales operations. For research and development, we remain committed to product innovations and investments. Even more so, we are pushing for greater efficiency and effectiveness from our R&D resources. Here is where the new global structure really kicks in. Designing with global collaboration reduces complexity where we don't need it. And this will free up resources to deliver what the market and our customers need.

Additionally, to meet our R&D efficiency benchmark target, we will further shift R&D activities to best-cost countries. As I mentioned earlier, I'm proud of our customer reported quality scores. So it goes without saying that these measures will not compromise quality. Instead, we see the opportunity to deliver quality while also creating cost savings of up to EUR 50 million. The other EUR 50 million in savings come from reduced product complexity and a new global modular system. You will hear more about both topics later as they pay into so many aspects of our business.

Now let's look at operations. For our German operations footprint, we have 4 key priorities to deliver on. First, we will implement the world-class manufacturing or WCM standard. This will help us to achieve 7% reduction in production cost. The good news here is we do not begin from 0. Two years ago, we started implementing WCM at our largest plant in work in Germany.

First, we focused on areas with the biggest short-term impact. In some cases, we already see twice the efficiency compared to when we started. Now we are scaling WCM to other areas within the [ work plant ] and to our other sites around the globe.

Second, we plan to move 20% of our European production volume to a best cost location. We are focusing on activities with low automation, which could reduce manufacturing costs of the shifted volume per heavy-duty truck by around EUR 3,000. Yes, the German production footprint has made us strong over decades, and we are proud of the history that we are building on. At the same time, we are facing a different situation today and we must make adaptations.

Third, we will focus on our core business by reducing vertical integration in areas that are dilutive to our margin. Our primary focus here is on powertrain components.

And fourth, we have standardized and increased our resource flexibility across all our German sites. This includes a higher quota for temporary workers, which can now be up to 18%. It also includes the ability to balance capacity between production lines as well as the across sites.

Coming to the biggest contributor for Cost Down Europe, material cost reduction with savings potential of more than EUR 400 million by 2030. To be clear, material cost is an area we should always be working on, and we have in the past. However, in recent years, we focused more of our resources and transforming our product portfolio towards zero-emission vehicles. Unfortunately, the results show that today our material cost efficiency is below where it was prior to 2020. So we need to get back to it, but we can't just reuse our 2019 blueprint to reach our benchmark level. We have to do it differently. We have to do it better. The potential is enormous.

In Europe, Middle East, Africa alone, we spent a single-digit billion euro amount annually on direct materials to supply our customers with trucks. So we have identified 3 levers for optimization. First, our biggest potential is driving commercial excellence with our suppliers. We are collaborating with suppliers earlier in the product development process. This can boost idea generation and facilitate more off-the-shelf components usage.

We are focused on cost-effective supplier partnerships with shared cost targets. And we will better leverage our global procurement network as we see tremendous potential with India's existing best cost country supplier base.

Second lever is driving technical efficiency. Here, we focus on cost-oriented product design along our entire value chain, both for new components in future products, but also optimizing existing components. Beyond that, we will focus on reassessing product specification with the goal of optimizing material usage.

The third lever is complexity reduction. This is essential and very important to achieve our EUR 400 million material cost reduction target. We will reduce complexity by cutting variation on component level by up to 30%. And on system level, including, for example, our electronic architecture by up to 40%. I will go more in detail in terms of complexity reduction on the next slide.

So let me be clear. We will remain unwavering in our execution on material cost. We will reach our ambitious 8% reduction by doing -- not by doing business as usual. We are bold, and we will do what needs to be done, and we are already working on it with high focus.

Now moving from the first strategic lever to the second one, leverage. We are committed to building a powerhouse product portfolio because our customers depend on it. And delivering even more competitive products will require a new approach. We will develop a one modular system, leveraging the global strength and cost advantages of our new one global team.

Leveraging our one global team will mean strengthening our product portfolio while reducing complexity. Under the new structure, we have the unique opportunity to do this with 2 brands while providing the right level of differentiation in terms of price points and customer needs. And it's important to emphasize that this strategy is not Europe-driven only. In India, as a new region, we will leverage R&D, the manufacturing footprint as well as logistics and supply chain components for scale and cost efficiency.

Well, while the major impact of a modular system will take shape in a few years, we are also creating short-term impact. One concrete example here. Although our new segment only formed earlier this year, we have already decided to develop a medium-duty cab with a single team in India. Previously, this cab would have been developed separately in Germany, Brazil and India. And in the future, we will also produce that cab in 2 plants only instead of 3. This is one example of our new speed of execution. We identify and immediately act on opportunities coming from our new global scope. Personally, I can't wait to share more examples like this.

Now coming to our third strategic lever, grow, and thereby coming to an outstanding truck that will help us grow.

[Presentation]

It's effortless. It's the future. That's [ touchless ]. I talked about happy customers before and it's really great to see all the positive feedback we got on our eActros 600. In terms of growth opportunities in Europe, trucks like this play a major role because Europe remains committed to zero-emission transport and we at Mercedes-Benz Trucks are ready to lead the transformation. The European zero-emission vehicle market is projected to be over 40% of all truck sales by 2030.

Zero-emission vehicle sales also unlock an ecosystem of e-mobility and service opportunities. By far, the largest growth segment is long-haul trucking, which is also the biggest impact on CO2. And this is a segment we are best positioned to lead. With our battery electric flagship truck that you just saw in the video, we have the benchmark e-truck in series production. The eActros 600 has won the International Truck of the Year 2025 and is purpose-built to deliver profitable TCO for our customers.

Now we are taking the next step, expanding the eActros 600 lineup with additional wheelbases, battery pack options and cab variants to better serve our customers. And the new eActros 400 will be based on the eActros 600 technology. And we will also serve construction customers with eArocs 400. Besides zero-emission vehicle market, we are also targeting growth in another product segment where we see significant potential. And that's defense. We want to double our defense-based revenue latest by 2030. We have a long history and experience in the defense sector and are well positioned in many markets. For example, we have had a strong presence in Nigeria. For over 10 years, we are supplying Arocs and Zetros with an average sales volume of about 1,000 units annually. In the Baltic countries, our Unimog is the preferred choice. In Chile, we have recently won a tender supplying Arocs and Zetros with further potential over the next years.

Most recently, we delivered our over 700 Zetros to Ukraine. And we received the awarding of a tender by the German Federal Armed Forces. We are prepared to deliver whatever is needed. And of course, our products come with comprehensive service offerings. The defense business is characterized by long-term contracts with parts and services through a cycle of over 20 to 30 years, resulting in recurring revenues well into the future.

In Europe, you tends to alone budget is increasing by more than 50% by '27 compared to 2022. And in recent years, yes, we did not actively participate in tenders, but this is changing now. In fact, we have already started to reinvest in our defense product offering and to optimize our tender activities. Our main focus is on common platforms and solutions. One example is our new Zetros 8x8 as a portfolio extension. Moreover, we are expanding our global service network and enhancing full service offerings such as refurbishment options. As we can rely on our global sales network with local expertise and offset structures, we are well positioned for all upcoming tenders.

Last but not least, and especially in the defense sector, partnerships are key to our success. One of the most recent big wins was based on the partnership, the Canadian Logistics Modernization Program tender. This was one of the largest NATO tenders in recent years with a total project volume of CAD 1.8 billion. And we are participating in that with our Zetros chassis and aftersales services. An extension of the frame contract is already under discussion with the Canadian Ministry of Defense, intending to procure another high 3-digit number of Zetros.

Speaking of partnerships, we are using the Canadian tender as a blueprint. We have now signed a memorandum of understanding together with General Dynamics Land Systems for joint partnership on defense tenders in many more countries. Two more examples our recently announced strategic partnerships. First, ARX Robotics, a leading German company in unmanned autonomous vehicle technology. Here, we will integrate robotics and AI technologies into our vehicle platform. And second, we will do joint military vehicle development, production, sales and services with [ Arcus ], a French German partnership. As you can see, we are already executing our strategy. The third area where we aim to grow is our Services business.

I want to highlight 3 potential focus areas. Expanding and improving our retail network, growing our classic parts business and delivering on e-mobility solutions. In terms of retail, we need more truck dedication locations instead of mixed locations that service both passenger cars and commercial vehicles. We will achieve this by first growing our own retail network and second, improving the truck dedication by our dealers in the markets.

By 2030, we will grow our own retail footprint by over 60%. Coming to our parts business. Delivering parts quickly to customers is a win-win. We keep our customers up and running while also growing our aftersales business. To do so, we are shifting from a previously more passenger car focused setup to a truly truck-dedicated model. Since 2022, we have opened 16 new aftersales facilities, all 100% truck-dedicated. And most importantly, our new global part center in Halberstadt in Germany will officially open on Thursday this week.

All in all, we extended our shipping times, we improved our dealer-to-dealer transactions for urgent parts, and we have direct deliveries to customers with own fleet workshops. And since 2022, we have consistently improved our parts availability, increased our daily pick fulfillment and reduced our parts back order.

Looking at our e-mobility solutions with our truck charge brand, we offer a holistic customer service solution. We are currently running over 300 e-consulting projects, providing customers with tailored charging contracts and clear cost analysis. And we want to build the largest semi-public charging network in Europe on this brand. We already have more than 10 pilot dealers and customers ready to go. Our e-mobility services also include payment solutions, our fleet board charge management and charging stations at our retail sites. All these services help us to be the best partner for our customers. Now I talked a lot about our plans on how we want to turn potential into profit at Mercedes-Benz Trucks. Essentially, we have 3 main steps: restructure, leverage and grow. So now what is the foundation to realize all of this? At the beginning of my speech, I talked about my career over the past 20-plus years. There's one thing that connects all of my global assignments across the Daimler Truck universe. And that's my strong conviction that people make the difference.

As discussed, it also was the foundation for our turnaround in Latin America. The key is high-performance culture. With the relentless focus on the customer, I even like to call it customer obsession with fast execution and excellent quality based on trust and accountability with a mindset that reflects Mercedes-Benz Trucks now a truly global one team. And with the conviction to become better and better every day.

So let me summarize the key aspects that you should take with you from my presentation. First, restructure. With our Cost Down Europe program, we have the right levers in place to structurally transform our business, to drive higher profitability and to build long-term resilience. Second, leverage, we are unlocking the full potential of our global scale and capabilities more than ever before. Third, grow. We are laser-focused on capturing high-value growth in services, zero-emission vehicle and defense. And we will deliver on all of this to reach 12% return on sales powered by the global collaboration and exceptional team that is fully committed. Execution is what matters, and we are in full motion. We are not just planning the future, we are building it.

Now we take a 15-minute break and when we return, John will be back on stage with Daimler Trucks North America.

[Break]

Thank you. Welcome back from the break, everyone. I hope everyone's enjoying your time here in North Carolina. I know Cleveland is a bit of a hike from Charlotte. But as Karin said earlier, it's a great opportunity to showcase the Mercedes-Benz tour rider coming and going. Till is here, the Head of our Bus division. I'm sure he would love to brag about the features and benefits if you only should ask him. So no doubt you saw many of our other great products on the road during the drive, and if you didn't, then please keep your eye out on the way back, I think you'll be surprised by the high percentage of penetration on the roads.

This plant has been such a critical part of DTNA and Daimler Trucks success over the past year that we wanted you to get a chance to see where it all happens with over 2,000 employees in nearly 40 years in operation, Cleveland is our largest plant in the U.S., as Karin said, and it's responsible for manufacturing some of our top-selling products.

We've got a little bit more presentation for you this morning before we give our investors here a chance for Q&A. And I hope you all join us after the event today to drive some of these exceptional vehicles that we manufacture here in the States.

At Daimler Truck North America, we're operating from a position of strength continuing with a clear proven strategy, a disciplined focus and a deep commitment of continuing to deliver long-term value to our customers and to our shareholders. And in this time of rapid change and uncertainty, we remain grounded in what we can control, scaling strategically, sustaining our market lead and streamlining our operations to further increase efficiency and profitability. And today, I'll walk you through how we're executing that strategy and how every move we make is designed to strengthen market leadership and drive sustainable, profitable growth.

Now since our last Capital Market Day in Boston, DTNA has continued to demonstrate a strong and consistent year-over-year performance with a proven track record of meeting and exceeding our financial goals. And if you look back at our guidance ranges from Capital Market Day in 2023, you can see that we were able to meet our '25 ambition well ahead of schedule.

On top of that, as I'm sure you know, we achieved a 14.4% ROS in Q1 of this year, and our compound annual growth rate in North America has been 5.6% from '22 to '24. Now one of the key drivers of this success has been our focus on value-based pricing and an enhanced mix. And by aligning pricing strategies with the value we deliver to dealers and customers, as well as improving operational efficiency, we've been able to grow profitably even with slightly lower sales. This has been achieved in close collaboration with our dealer network and customers ensuring that our offerings are not only competitive, but also aligned with the best possible pricing for total cost of ownership.

And a standout example of this strategic alignment can be seen through our vocational Western Star X-Series products that you continue to hear about. Since their launch in 2020, we've seen very consistent incremental growth on top of our dominant on-highway business. By strengthening our position in the vocational segment, we've broadened our market reach and created new revenue streams while reinforcing our leadership across the larger commercial vehicle landscape.

Of course, the past few years have brought significant supply chain challenges as well between COVID, semiconductor shortage, global conflict and overall economic uncertainty, the resilience of companies across nearly all industries has been tested to the extreme. But at DTNA, we didn't just react, we adapted. We transformed. We enhanced the agility of our production network, improved cross-functional coordination and built overall stronger, more responsive internal systems and processes. And as a result, we're now more nimble, more efficient and better positioned to navigate future volatility.

Our resilience is also the result of deliberate, proactive measures to increase operational efficiency and make it part of our culture to continually streamline our organization. These measures that we've put in place during solid market conditions now will help us to navigate the market decline we're facing in 2025 and even generate attractive returns through this period.

Our ability to deliver profitable growth even through inconsistent and challenging environments speaks to the strength of our strategy and the discipline of our execution. For that reason, we continue to be a core profit engine for Daimler Truck Group, just as we were when we last all met. The North American segment is not just performing well, we've built a foundation for long-term strength and value creation. And in today's unpredictable environment, resilience is more than a strength, though, it's an advantage. We understand the best way to prepare for the unexpected is to be operating at absolute peak performance in every aspect within our control.

We're no stranger to these sorts of market conditions. We faced them before, and we've weathered them very successfully, often coming out the other side stronger than when we went in. Freightliner, for example, has been around for over 80 years, and Thomas Built Buses for nearly 110 years. In that time, we've experienced at least 14 major market downturns, including several global recessions and financial crisis. And it's no accident that we're still here in our strongest overall market position to date.

We know how to rightsize our investments to create the products our customers demand, how to effectively manage capacity and how to streamline our operations. Throughout the presentation today, you'll hear me talk about our strategy from the perspective of how we plan to scale, sustain and streamline our business in North America. We scale it with purpose, investing in capabilities that allow us to flex with demand and seize growth opportunities without compromising efficiency.

And at the same time, we sustain what works, reinforcing the core processes, partnerships and technologies that consistently deliver value. This balanced approach enables us to navigate uncertainty with confidence, maintain strong performance and remain agile in the face of change. And simultaneously, we are fully integrated with the global vision for Daimler Truck AG, as Karin outlined earlier today, driving results as its largest segment.

Every initiative we pursue is aligned with the broader Daimler Truck Group strategy and every action we take is designed to drive value. We're accelerating heavy vocational growth building on the momentum of our Western Star X-Series and scaling our presence in that high potential segment. This is a key lever for both revenue and margin expansion. And at the same time, we're working to optimize product complexity, streamline our offerings to reduce cost, improve speed to market and enhance quality. It's about doing more with less and doing it smarter.

Our service revenue growth remains a top priority as well, scaling parts and digital services to build a more resilient recurring revenue base that supports long-term profitability and customer loyalty. We're also enabling flexible production for both internal combustion and zero-emission vehicles, ensuring that we can meet customer demand across technologies without compromising efficiency. This flexibility is critical as the market transitions at different speeds.

Internally, we're continuing to strengthen our continuous improvement culture. It's embedded in how we operate, driving accountability, innovation and operational excellence across every function. We're also maintaining a sharp focus on fixed costs. By managing our cost base with discipline, we're building resilience and protecting margins in both stable and volatile environments.

And finally, we're guided by a simple, but very powerful principle: Mission first. People always. Our people are the engine behind our performance. And we're investing in a culture that empowers them to lead, adapt and deliver. Together, these initiatives form a cohesive focused strategy, one that's already delivering results and positioning us for continued success. We're not just aligned with the group's vision, we're helping to lead it forward. As the anchor of our scaling strategy, our vocational business is one of the most exciting growth opportunities within Daimler Truck North America and one that we continue to develop through both our Freightliner and Western Star brands. There are some key benefits to this focus on vocational growth. The vocational market tends to be less volatile year-over-year than the on-highway market.

They tend to have a higher spec count and revenue per unit based on how they're equipped to work. These products tend to have higher average part sales in aftermarket due to the often extreme working conditions, duty cycles and sensitivity to downtime.

And finally, vocational customers tend to be more fiercely brand loyal, forging stronger long-term relationships with dealers and OEMs. Now we already hold a very strong position in medium duty and mid-range vehicles with a growing position in heavy vocational, with the Freightliner M2 and SD, we've gained a leading position due to their value proposition and highly customizable offerings, one that we will defend at 42% market share.

And now with the Western Star X-Series, we're able to take the heavy-duty vocational market by storm with a clear path to continue to grow it to over 35% by 2030 as Eva mentioned earlier. The X-Series trucks are engineered for durability, performance and most importantly for our customers' customization. This makes them ideal for industries like construction, logging and as vocational tractors.

Simply put, we have the right products for any job our customers need to get done. But the world's best product doesn't matter in the long run if it's not backed up by superior customer experience, from specking and ordering to delivery, service and support, our dealer network is fully engaged, and we're constantly investing in tools and training to ensure that every touch point reinforces the Western Star brand proposition.

We've also made substantial strides to improve the flexibility of our supply chain and manufacturing operations to support us in scaling the vocational business quickly. Last year, in North America, for example, we experienced a pretty dramatic shift almost overnight in market demand from conventional on-highway vehicles to vocational platforms. Thanks to that flexibility, we were able to completely invert our model mix here at Cleveland in an incredibly short time to secure a larger piece of that vocational market. This ability to shift gears so quickly gave us the edge to seize several opportunities for customer conquest, bringing new fleets into the Western Star family and laying the groundwork for long-term partnerships like this one here.

[Presentation]

So how about that? The quintessential vocational [indiscernible]. As you can see, this wasn't a one-hit wonder. Our approach to scale the heavy vocational business is in place. The momentum is building and the opportunity is clear. We've got a phenomenal lineup with the X-Series. We know it, the market knows it and so do our customers. But there's more than just great products under the hood of our scaling approach. At Daimler Truck North America, service is a cornerstone of our long-term value creation strategy. As the market evolves and our customers face increasing pressure to reduce downtime, manage risk and operate more efficiently, our ability to deliver tailored service solutions becomes a key differentiator while also expanding our own recurring revenue base.

Looking towards 2030, we're setting an ambitious but achievable goal to increase our service revenue with strong double-digit growth compared to 2024. This slide outlines how we'll achieve that, not through reliance on any single area, but through meaningful contributions across all areas of the business, including our Daimler Truck Financial Services organization, which is not included in the chart, but they're a strong enabler of our industrial business nonetheless.

It's a broad-based strategy designed to increase lifetime customer value by meeting real operational needs. These efforts are grounded in customer feedback with each category playing a distinct role in how we deliver value. Parts remain the foundation of our service business expanding our portfolio and improving availability and customer uptime. Over the past few years, we've grown our all-makes parts business and expanded our sales channels including our accelerator e-commerce platform, which despite its fairly recent 2020 launch is already on track to achieving $1 billion in parts sales annually. And we continue to strengthen this foundation with programs that support uptime and customer confidence throughout the ownership cycle.

Our service products include extended warranty offerings and second life coverages. And we've recently launched a collaboration between Daimler Truck Financial Services and GEICO, allowing customers to bundle insurance plans. This gives fleets greater cost predictability and flexibility of coverage at a crucial time when no one wants to be surprised by unexpected costs.

Digital services is an increasingly vital area of differentiation as well. While we scale back on outdated and legacy IT solutions, we're sharpening our focus on proprietary value-creating offerings like over-the-air updates, software-based services and safety solutions. We're also expanding scalable platforms like Data-as-a-Service, turning vehicle data into actionable operational insights. And although internal combustion remains the preference in North America, we will continue to offer a zero-emission ecosystem-related services focused on charging infrastructure. Altogether, these offerings from a highly scalable customer-centered strategy to drive long-term value, helping our customers operate more effectively while positioning DTNA for leadership and resilience in the rapidly evolving services space.

And at the same time that we're scaling up our vocational and service offerings, we're also focused on sustaining the areas where we already have a clear market advantage in North America. In 2023, we put a spotlight on our 0-emission vehicle portfolio, highlighting 4 different models to cover the range of customer applications. We'll continue to support and sustain our customers who have invested in these products for their businesses. But with market maturity for 0-emission vehicles, losing momentum in North America, we've reshaped our capital allocation strategy to refocus on further developing our internal combustion technology.

This is a great example of how DTNA moves at the speed of right. Where it makes sense, when it makes sense and always in alignment with customer readiness, infrastructure maturity and regulatory timelines. This dual path strategy allows us to serve the full spectrum of customer use cases, whether they're early adopters of electric or operating in segments where diesel remains the most viable solution today, which is still the vast majority of applications in North America.

For that reason, our diesel engine strategy remains a top priority for sustaining our market lead. Our fully integrated powertrain combining Detroit engine and transmission continues to deliver exceptional value with over 90% captive engine penetration in our on-highway products and over 1.2 million engines built in North America alone. And within the X-Series, the DT12 has grown to 25% of the volume in these units. So not only have we increased growth into new segments, we've also increased our vertical integration with technology that is still considered very new for that market.

And furthermore, our integrated powertrain fully unlocks industry-leading Detroit Assurance safety features, which is a major source of value for our customers. Introduced in 2015, these advanced features lead to more uptime, greater driver retention, reduced insurance claims and better safety for all of us on the road. This has been a significant capital market driver for us and will continue to drive value for DTNA in the future. And thanks to our advanced powertrain and vehicle technologies, our current trucks produce 160th the nitrogen oxides than those built before the 1990s, and emit 20% less carbon dioxide than the pre-2017 standard.

Altogether, our engine strategy results in a regional and global portfolio that's flexible, aligned with real customer demand and provides a clear advantage that we can defend and sustain throughout the market cycles. Now as one of the pioneers in commercial diesel engine development, Daimler Truck has shaped the evolution of internal combustion technology for industrial and on-highway use around the world. For nearly 90 years, the Detroit brand has stood for power, reliability and innovation. And for almost 20 years, the heavy-duty engine platform has been the cornerstone of our global engine strategy, developing consistent performance and efficiency across markets. Today, Detroit is the market share lead in 13-liter and larger engines, and we're in contention for the #2 spot in the heavy-duty vocational segment, an impressive leap from where we had been for a long time. This momentum is no accident. It's the result of sustained focus on engineering excellence, customer value and strategic investment.

And now we're giving you, our top investors, an exclusive first look at what's next. The 2027 Detroit engine portfolio, this lineup is engineered to meet compliance with the '27 emission standard using advanced combustion and after-treatment strategies that use known technology and builds on a proven platform. For example, the base of the after-treatment retains -- remains the same, while new components are based on proven technology while maintaining Detroit's hallmark durability. It also delivers continuous fuel economy improvements to help offset impacts from meeting stringent emission requirements. And it leverages our proven global platform, ensuring scalable, cost-effective manufacturing with the quality and reliability that fleets have come to expect from Detroit.

This platform reflects everything we've learned from decades of leadership and everything we're building toward. It's a powerful statement of our sustained commitment to internal combustion excellence, even as we continue to develop zero-emission technologies at the global scale. The 2027 Detroit engine portfolio is more than a product. It's a strategic advantage that will continue to defend. And today, you're among the first to see what's coming.

One of our key products powered by Detroit is the Freightliner Cascadia. The Cascadia has long sustained its place as the benchmark product in the on-highway segment, and with the launch of the fifth generation, we've built on that legacy with even greater ambition. Today, Cascadia stands as the undisputed market leader, commanding a 45% share of the on-highway market and 60% share with the largest fleets like Penske. Ryder, NFI, Schneider, J.B. Hunt, just to name a very few. It's a reflection of customer trust, product excellence and a focus on delivering what fleets need most.

The fifth generation is the result of deep customer insight, advanced engineering and a clear understanding of what drives value on the road. Every design decision, every system upgrade and every performance enhancement is aimed at helping our customers run smarter, safer and more cost effectively. Safety remains a top priority with 85% of Cascadia's spec with Detroit Assurance. The fifth generation Cascadia features the latest in active safety technologies, including Active Brake Assist 6. It builds on our leadership in collision mitigation, lane keeping, and driver assistance systems. On the efficiency side, we continue to push boundaries with aerodynamic refinements that deliver fuel savings and directly translate into profitability for our customers.

And speaking of profitability, the fifth generation is designed to maximize uptime and minimize total cost of ownership from predictive maintenance capabilities to enhance connectivity and over-the-air updates, we're giving fleets the tools to stay ahead of issues and to keep trucks on the road where they belong. It's not just the next step for our portfolio, it's the new standard for our customers. We've got a strong momentum rolling with this product already, and we're confident in our ability to sustain our lead in the space. One of the key enablers to our scale and sustain approach is our continued focus on streamlining operations.

At DTNA, operational excellence isn't just our goal, it's in our DNA. It's how we run our business every day with a focus on simplicity, agility and performance. And it's how we continue to deliver strong results in a dynamic and competitive environment. We've already made meaningful progress through stringent fixed cost discipline, we achieved EUR 185 million in savings, reinforced our commitment to lean, efficient operations.

Our focus on efficiency has also brought Daimler Truck specialty vehicles back to double-digit profitability, a clear sign of our ability to turn strategy into performance. This evolutionary transformation has been supported by our dealer partners who've invested over USD 2 billion in new factories and upgrades over the past 4 to 5 years, bringing us up to over 600 outlets.

Looking ahead, we're focused on restoring manufacturing efficiency per truck to pre-COVID levels, a critical step in protecting margins and improving competitiveness. We're targeting a reduction in nonvalue-added complexity while increasing automation to boost consistency, speed and quality across our operations. And we've identified other avenues for efficiency with agentic AI for warranty analytics, allowing us to predict issues earlier, reduce claims and feed actionable insights back into product development.

All of this supports our ambition to deliver a plus 50 basis points improvement in return on sales with these operational excellence measures alone based on our 2024 baseline. This is how we earn excellence every day by staying disciplined, staying focused and continuously streamlining how we operate. As you've seen throughout today's presentation, Daimler Truck North America is building on our solid foundation and aiming for even more success and strength in the years and decades ahead. We have a clear focus on what is within our control, so that we minimize the impact for the industry's cyclical nature and remain nimble for the evolving landscape. This is how we move from strength to strength by executing with discipline, adapting with agility and a relentless focus on excellence.

With purpose in our heart and ambition in our stride, we're delivering results today and building momentum for tomorrow. Our ambition to grow our return on sales from 12.9% to over 14% by 2030 is aggressive, but we're confident that it's achievable. No matter the market conditions, we will continue to be top performers in the industry from product innovation and service growth to operational efficiency and financial performance, creating lasting value for our customers, our people and our investors.

Thank you all again for joining us here today in Cleveland. I'm now glad to hand it over to my fellow Board member, Andreas Gorbach, Head of Truck Technology. Thank you.

Yes. Thanks, John. Ladies and gentlemen, welcome also from my side. I have the opportunity today to give you a little bit of an update as for our technology strategy. And you will see compared to what we said 2 years ago, we made quite some adaptations in terms of implementation speed of the technology strategy. But you will also see that we keep to the core of the strategy and that we deliver what we promised. But let me start with a slide that some of you might have already seen, which is important for the beginning because before we talk about technology strategy, it's always important to understand what we mean with technology in a truck.

And technology in a truck obviously has many purposes, but two of them are decisive. Two of them are decisive. Technology in a truck always needs to create customer value. It must create customer value and that means to maximize the value of the asset called truck in their books. And to do so, we don't build to build. We built to solve, be it in the vocational truck in the U.S., the city bus in Sao Paulo, the mining truck in Indonesia, the distribution truck in India or the long-distance truck in Europe. If our customers win, we win.

And the second purpose of technology in a truck is to create scale, scale for the company, be it in our global vehicle portfolio or be it with partners. And at the end of the day, we aim to achieve both, value creation for our customers and global scale for us. And this combination ultimately obviously transforms into shareholder value.

Now there are 2 technology clusters that best fit to these attributes. First, the power to drive a truck, the propulsion system; and second, the intelligence to drive a truck. So everything related to software and electronics in a truck. Both technologies, both clusters provide the highest differentiation in customer hands and the biggest scale opportunity for us. Because both have a direct impact on every puzzle piece of the total cost of ownership equation and that's on the business case for our customers. And both can be developed once and then deployed many times in all products and brands of Daimler Truck and beyond.

Now these two technology clusters are undergoing a huge transformation fueled by the big mega trends of decarbonization and digitalization. This transformation by itself is most likely the biggest challenge this industry has ever seen. What makes it though even more challenging, what makes it more challenging is the fact that this transformation speed is largely, largely determined by our ecosystem, and this thus highly uncertain and very dynamic.

External factors. External factors are having a major impact even with the best products, for example, our eActros 600, the best battery electric truck. Even with the best products, our customers will only buy a relevant number of it if the economics are at least on par with diesel and if the required charging infrastructure is in place. For the same reason, customer demand can change overnight as soon as these enabling conditions are in place. This development is hard to anticipate as these external factors strongly depend on political will.

And as a matter of fact, we've seen quite some changes -- quite some unpredictable dynamics in energy prices, subsidies, regulations, just to name a few. And we see them diverging more and more between our core markets. So how to best deal with this uncertainty. And as you have seen and Karin mentioned it, we have dedicated one pillar of our strategy at Daimler Truck to answer this question, and we call it transform at the speed of right. And it basically means working out the optimum between two factors: first, being able to scale up fast with differentiating technologies; and second, and, at the same time, mitigating the risk of overinvesting too early before the market is ready. Or put simply, transforming at the speed of right is about managing the fine line between being too fast and too slow.

For us, this essentially means we hold on to what we stated at the last Capital Market Day, 2 years ago. We set up a flexible modular tech strategy. And this includes three main strategic levers. First, we are going step-by-step in terms of investment and ramping up our technologies. For example, our electric trucks still share a big portion of components with our diesel trucks and can be built on the same lines in our plants. And we balance make or buy decisions pragmatically and move from upscale passcar technology to truly truckified zero-emission platforms in line with the market uptake.

Second, we are reducing risk, increasing scale and sharing investment with strong partners, and we are doing so, as you know, for all our technology [ clusters ]. As for diesel, we are sticking to our strategic decision to disinvest on the medium-duty side by leveraging, for example, our partnership with Cummins. And we are also holding on to our partnership with Deutz because that helps us, that enables us to scale well beyond our core truck business.

As for battery production, we have started our JV amplified cell technology together with Cummins, Accelera, Accelera by Cummins, PACCAR and EVE. And on the hydrogen side, and you are well aware of this, we have our joint venture with Volvo, cell-centric, where we are making great progress and have started pilot production of fuel cell systems.

And most recently, we have expanded this great partnership with Volvo to the software side. Our new joint venture, Coretura, is now up and running. So you see we are teaming up with industry and technology leaders, and we set new standards, create benchmark technology and reach new level of efficiency and scale, which brings me to the third lever. Global scale has always been part of our DNA at Daimler Truck. We develop once and then deploy many times.

All of our platforms are based on a commonality concept, scaling in our trucks across brands and regions and even with partners beyond Daimler Truck. Today, we have one, today, we have one heavy-duty diesel platform. And we have one electronic architecture for all Daimler Truck brands worldwide. And we aim for the same approach for both battery and hydrogen once, and that's important, once the market uptake accelerates and thus, global volumes justify the invest. So as I said, this was our statement in '23, and these 3 levers have since then been the foundation of our tech strategy. They support us in transforming at the speed of right: the right products developed the right way and released at the right time. And that means being flexible to make strategic adaptations, and that's exactly what we are doing right now as the speed of right is changing for some of the tech clusters.

And the important message here is, and John, you actually alluded on it already, the momentum is changing, especially in the U.S. We see a momentum increase, a momentum increase for diesel and we see a momentum decrease for zero emission, especially in the U.S. Equally important, though, is the message in the middle of the slide, the speed of right in terms of our software activities as well as for our propulsion strategy in Europe and other markets around the world largely remains unchanged. So what are the implications? This is our tech strategy at the glance.

As for diesel, we are focusing on the most profitable heavy-duty segment, staying compliant with upcoming regulations and serving our customers with a highly competitive product, diesel. On the battery side, we started with a fast-to-market approach with intended low volume, basically upscaling passcar technology. And now with the eActros 600, we made a first big step into truckification, ready for high-volume production while the battery pack still remains a buy solution. Now as soon as global volumes ramp up, we are flexible, we are flexible for further buy-or-build decisions, battery.

Third pillar, we are complementing battery electric trucks with hydrogen-powered trucks as we are sticking to our well-known dual strategy, not only because the technology is complementary, they complement each other perfectly in terms of customer use cases; not only because of this, but also because it is the economic optimum for decarbonization, which might not be intuitive. Decarbonization is overall faster and less capital intense with battery and hydrogen. For example, when you look at building up the infrastructure or when you look at building a battery cell factory versus a fuel cell factory, yes, yes, there might still be a risk that no infrastructure for hydrogen-powered trucks will develop. This is still a risk. And it also depends on the political will to get it going. However, the opportunity to create value for customers and shareholders with these trucks is incomparably bigger than the risk for now.

And for now, Europe still has the chance to maintain technology leadership in this area. And cellcentric, the JV, has the potential to become the most competitive truck fuel cell player in the world, but it needs decisive political action to catalyze the initial phase along the value chain. Otherwise, we might have to buy the technology from China in the future, like we do with battery cells, solar and many other technologies today. And China is investing heavy in hydrogen.

Pillar #4. In terms of software, we are following two main streams. First, we are increasingly decoupling hardware from software, allowing us to create high-performance yet nondifferentiating architectures that can be shared with other truck OEMs for larger scale. By doing so, and second, we are more and more providing customer value with higher speed and lower cost of software-only solutions.

Now let's add a little bit more color to each platform and start with the one that laid the foundation of this company for the last 100 years, and that's diesel. Our heavy-duty diesel platform delivers a scale that is unmatched. And Karin, you mentioned the number. It's unmatched in the entire commercial vehicle industry. We produce about 200,000 heavy-duty engines per year. And our latest forecast project that this volume stays constant well beyond 2030. The main reason is that the global diesel ramp down is not in sight as of today. And we are ready to meet this development with the next evolution.

The first start of production of this evolution is already planned for next year, and it will provide our customers with yet another efficiency push. And we are already thinking beyond that. Reacting to the increasing diesel momentum, we will ensure the long-term competitiveness well beyond 2030. So mastering the speed of right in terms of diesel means leveraging global scale even more than ever before and thereby largely benefiting from existing assets. Now obviously, these adaptations, they also have an impact on our battery strategy.

When we look at Europe, we have the benchmark battery electric truck in series production, our eActros 600. And our strategic focus right now is to further expand our e-truck portfolio on the foundation of the eActros 600. So the first step, this means that we will offer more vehicle variants with additional wheel bases and battery packs and so on this year, especially due to the current ZEV deceleration in the U.S., global volumes do not justify a purpose-built global platform. That includes a deeper vertical integration. This is why we ramped down our captive battery pack activities, and we stick to buy solutions for the time being. However, as I said, as soon as global volumes justify. As soon as the global ZEV market uptake is there, we aim to be ready with our captive platform again. Closely connected to this development is obviously our second strategic adaptation as we align operations of our battery cell JV, amplify cell technologies, strongly depending on the market outlook in the U.S.

Now coming to the second ZEV technology, hydrogen. The first-generation fuel cell systems by cellcentric is currently in customer hands. We have trucks on the road. We learn a lot from these tests and transfer all learnings directly into the development of the next-generation fuel cell, which is already in full swing. The second -- this second generation shows best-in-class test results in terms of efficiency, durability and cost. Cellcentric still has the ingredients to become the most competitive truck fuel cell player in the world. However, I already mentioned, the enabling factors, the enabling conditions that are necessary for zero-emission trucking. And the progress in terms of public charging infrastructure is way too slow, but the progress in terms of hydrogen refilling stations is even slower.

Therefore, our customers will not be able to operate hydrogen trucks in large numbers in the next couple of years, which is why we decelerate the large-scale fuel cell industrialization and shift it to the early 30s. Thus, we will utilize Gen 1 and early Gen 2 technology for small volume during this decade. We maintain the ability to bring more vehicles on the road in sync with the infrastructure ramp-up, while mass production invests are further stretched. And obviously, we are focusing on Europe first. At the same time, searching for additional partners and customers for cellcentric to further consolidate the supply landscape remains a strategic imperative, and we are optimistic that we will have some news here soon.

Now I'd like to close this chapter of my presentation with our software activities. And the most important message here is the software-defined truck is not some theoretical concept far in the future anymore. In fact, we are already implementing big steps to go from concept to reality. The foundation is our propulsion and brand-agnostic software and electronic platform for the intelligent and efficient operation of all our vehicles worldwide. Put simply, it's about a number of computers steering and controlling different systems and components in the truck.

The rollout of our latest evolution already started last year. It significantly increases computing power and bandwidth in the truck, being the key enabler for all new functionalities like next-level safety systems, new HMI, speech control, full integration, Apple CarPlay, Android Auto and so on. And certainly, this evolution will also make our trucks ready for even bigger leaps like next-level connectivity, cybersecurity, the next generation of zero-emission trucks and last but not least, ready for autonomous trucking. But still, this increase in intelligence remains mostly dependent on a rather decentralized architecture with many controllers that speak different languages and thus, run on different operating systems.

To realize -- to really leverage the full power of software, we have to redefine this architecture. And this will be no longer an evolution, it's going to be a revolution. And as I mentioned before, to master this revolution, we are teaming up with Volvo. Since the beginning of June, our JV, Coretura, has been up and running. We've made a conscious decision to start small, with about 50 employees. And then depending on the topic, depending on the matter, we will either build on existing market standards or develop commercial vehicle-specific solutions.

And same as with cellcentric, Coretura also welcomes additional partners and customers. In this joint venture, we will combine the deep understanding of the trucking business with strong know-how in software and electronics. Essentially, we are writing the code for the future of trucking. Our common goal is to establish a new industry standard, a software-defined vehicle, a software-defined vehicle platform and with it, a dedicated operating system for commercial vehicles. This will enable us, our customers and basically all developers out there to deploy differentiating software features onto our trucks just by using standardized APIs.

And these software-only features, they allow us to do three things: first, to develop more and more complex functionalities with the development speed and cost of software without touching the hardware and to a large extent, without involving any suppliers; second, to continuously improve the existing customer fleet with regular updates, the way it works today with our smartphones; and third, to optimize TCO, to optimize total cost of ownership for our customers with more uptime and higher asset value over time. And our pipeline for software-only features is already filling up.

Now to put a little bit more color on that one, I would like to share our vision of the software-defined truck. In the end, it might look a little bit different, it might not look exactly like this, but we will see more and more pieces of this puzzle evolving over the next decade. So welcome to the future of trucking.

[Presentation]

Yes. And with that, I'd like to conclude my part of the presentation today. So to summarize again. With regard to the two defining megatrends, decarbonization and digitalization, we are transforming at the speed of right, holding on to our three strategic levers of flexible investments, strong partnerships as well as global scale and commonality. We are ensuring longer competitiveness of our heavy-duty diesel platform. And at the same time, we are adjusting to our ZEV activities to the market demand for battery electric and hydrogen-powered trucks. And we remain laser-focused on developing and delivering the software-defined truck of the future. So thank you very much, and back to you, Karin.

It's great. You all look very awake and attentive, so that already makes me happy. I know it's been a lot of information and a lot of presentations here on stage. So I will try to keep my wrap-up simple, fast and hopefully also very strong. And I guess two main takeaways. The first one is at Daimler Truck, we will put an even stronger focus on execution. We will make sure that our corporate strategy, the what, is very closely linked with our segment strategies and plans and of course, with our financial plan, it all has to fit together, and it will enable us to closely monitor the progress on how we're doing. Also, we're putting a lot of focus on the how to make sure that we execute on the strategy, that we make it a success. We will make Daimler Truck simple, we will make it faster, and we will make it stronger, and we're going to focus on execution, execution, execution.

The second takeaway is this. We have put a strong strategic and financial framework in place. And I think this slide is providing a good overview in case you lost focus for just 1 or 2 minutes, you have it all here. We have defined the right strategic pillars. And within these pillars, we are working on a great number of strategic initiatives. And we have defined the right financial ambitions to achieve benchmark profitability. And of course, we will let you, our shareholders, participate in this with an attractive dividend and a continued share buyback.

Now I want to return to where I started. At Daimler Truck, we are proud to work for all who keep the world moving. And we have a clear ambition. We want to build the best truck and bus company in the world for our customers, for our employees and for you, our shareholders and partners. And if you remember one thing, then that's it. That's my commitment. It's shared by all my colleagues in the Board of Management. We will execute together as one strong team, and I'm convinced we have what it takes to be successful.

Thank you very much all. You're now waiting for Q&A. We just need 1 or 2 minutes to rearrange the stage and then we will get going. So please give us the short moment. For those joining online only, you can send your messages directly via e-mail to [email protected], [email protected]. So we will get started in 1 or 2 minutes once the stage is ready. Thank you.

Thank you very much. We are now ready for the Q&A. Again, for those following online, please feel free to send your questions via email to [email protected]. For all here at our Cleveland plant, you will now have the chance to ask your questions. To do so, please just raise your hand, and I will then call you one at a time. Before we start, as always, just two practical points. Please introduce yourself with your name and the name of the organization you are representing. And as a matter of fairness, please really limit the questions to two maximum. One additional comment. This Q&A session is meant for analysts and investors. Media and bankers, we will have separate sessions later this afternoon.

So with this, I would say first question to you, Nicolai.

Yes. It's Nicolai from Deutsche Bank. And first of all, thank you for hosting this event. Two questions. First, on the cost on Europe. And as you've mentioned, we have seen many initiatives in the past years and why they have been improving profitability, maybe they have been lacking the last margin profitability we hope for.

So my question is, where do you see the biggest challenge in executing these new initiatives? Where do you think that the program will clash with reality?

And I'll go to the second one. There could be a lot of moving parts next year on the cash position with the inflows from Trucks Asia, but also outflows for structuring and peak CapEx. But net-net, it still seems that the net cash will increase next year. Do you consider something like a special dividend post the Trucks Asia sell-down?

Thanks, Nicolai. Cost on Europe, Achim, and then on the cash, Eva.

Thank you, Nicolai, for the question. So as explained during the speeches, it's a huge program with cost reductions targeted by 2030 of more than EUR 1 billion. If we focus at the big buckets, obviously, an essential contribution is to come from material cost with EUR 400 million. Here, the focus is on enabling the groundwork, so reducing complexity, working on the processes and get going. As you could have seen, the materialization of the first impacts will start paying off in 2026. So material costs will really need to change the way we are doing things, reduce complexity and move forward.

And secondly, it's a scope in the program that we did not have yet in past programs. So we focus on the indirect. We focus on the direct workforce. We focus on the footprint. So a lot of relocation activities need to take place. When we talk about best-cost country sourcing, that needs to be well prepared and executed. And obviously, also where we talk about changing footprint topics, we need to prepare this transition.

So overall, we have a very encompassing program in place that enables us to materialize the cost savings with necessary strong focus on being prepared, executing and delivering. And I believe we have a really good framework in place for that and obviously are fully committed to deliver.

Yes. Thank you. And thank you, Nicolai, for your question. On the cash inflows, you've captured it correctly that, obviously, there are a couple of components that contribute to our cash generation next year. Obviously, the inflow from the Fuso-Hino transaction. I just want to emphasize that the EUR 1.5 billion to EUR 2 billion number, it's not everything at closing that's going to come in. There will also be a sell-down period that gets us to the 25% shareholding that we are targeting. But there will also be a component that will be substantial at closing within that amount.

Then, of course, there will be outflows for severance payments. We will book the first part, which is the largest part of the provision in quarter 2, which is low to mid-digit triple -- low to mid-triple-digit million amount. And the cash outflows there will be over the next couple of years and also some further additions to the severance provision because we're not able to book everything already now in quarter 2.

And then another component that you have to consider is obviously the current market weakness in North America. So there's a lot of uncertainty as Karin and I have also emphasized in our speeches, so we're building in some contingencies into our model for that. But I think with the EUR 2 billion share buyback over the next 2 years that we have just launched, which is already the second one in the short history that we have as a listed company, we've demonstrated how important shareholder returns are from us. And I can assure you that this will continue to be a priority for us. So let us close the Fuso-Hino transaction, and then we will, for sure, look at the best way to deploy the cash in.

Next one would be Daniela..

Daniela from Goldman Sachs. I have two questions as well. I'll do the same thing. I'll ask them the two in a row. But first, just to -- if you could deep dive a little bit further on the service. It's 50 basis points of the bridge. Is that net of the investments that you have to do? And how different the initiatives now versus the ones you targeted at IPO?

And then the second one, just relating to defense. I think it's the first time we see you repeating a lot the defense as an opportunity. Do you see that as only organic or inorganic would be something you'd consider there as well?

Yes, service steps on the bridge, Eva, and then Achim for defense.

Yes. I mean the first part of your question, Daniela, is simple, the 50 bps, that's a net number after investments. And then maybe John and Achim, you can explain a bit what the initiatives are that are maybe also different than what you've been driving before.

Yes. So to add on the service growth, as you've seen in the presentation, with strong focus on retail acceleration. In the past, we are focusing on 4 to 6 additional outlets per year. We are increasing the ramp-up of new activities and outlet locations up to 10 per year going forward. We put a very strong focus on -- together with our dealer network in the countries, specifically in Europe, to focus and to move towards truck dedication.

We have a few blueprints in the markets like Spain, where we see that the truck dedicated outlets are significantly increasing in profitability on the truck business. And this is something we are going to reinforce also in other countries where we're still historically strong with the setup of mixed locations. That is one, obviously, growth dimension we are following on. Then accelerated also now the service growth coming from the defense business. Here, we see due to the long-term contracts, strong potential to contribute to the service profitability.

And we are obviously also looking very strong in the topics of zero-emission vehicles and the e-mobility services around the e-mobility ecosystem, where we are working on setting up charging structures, setting up e-consulting for the battery electric operation of our vehicles. And with that, John, please, I'd hand over to you.

Yes. And for us, I mean, there's a lot of things. Fundamentally, first and foremost, we've talked a lot about vocational. So there's a big opportunity there. Vocational trucks as we continue to grow that market share, they are high consumers of parts due to the nature of their business. And obviously, we've got even penetration opportunities there on the powertrain side. So that's one. And I'm just trying to be a little bit different from his because there's a lot of overlap and I don't want to repeat.

But on a connectivity services standpoint, there's opportunities there to basically take data and sell it back to customers in ways that help them run their businesses better. So maybe those would be a couple that I would highlight as being a little bit different. Parts-only stores and then also just trying to get a little bit more of the third and fourth owner. We tend to be very good with first and second owners coming into dealerships where we are the retail point of sale, but we've got opportunities to get deeper into that third, fourth owner into those parts revenue streams as well.

And so coming to your second question, Daniela, on the defense section. So this is an essential growth field looking forward. And as Karin mentioned, we see it as a hidden gem. So yes, we are doubling revenue latest by 2030. This will bring us in a ballpark of revenues of around EUR 1 billion. That's obviously not a significant share yet. But together with the defense team, we are looking on organic growth in terms of growing businesses, but we also look for potential inorganic opportunities. However, acknowledging that we are in the middle of a quite focused military season. So -- but we are looking left and right, but on the inorganic one, nothing to share as of the moment.

Thank you. Next questions for Klas, please.

Klas at Citi. So thank you for the presentation, a lot of good initiatives. I also want to zoom in on service. It looks like if I back out currency, that service growth since 2019 has been growing at around a mid-single-digit CAGR for the group. And if I eyeball and this is obviously -- I know, I'm looking at that slide. But if I look at going from EUR 8.4 billion, it looks like over EUR 10 billion, maybe EUR 11 billion of service sales, that would be a similar CAGR to 2030.

Obviously, a 5% CAGR would be at the higher end of the group range. So that explains some of the accretion. But what I'm trying to get to is that it's not higher service growth and it doesn't look like the service margin is improving a lot. Or am I wrong? I'm trying to understand that better.

I would say Eva.

Yes. What you have to understand when it comes to the service growth, also the service share, obviously, that we're targeting because when I said that we overall intend to grow stronger than our average new vehicle sales CAGR, that means that in North America, we see that a bit more strongly than we see that in Mercedes-Benz Trucks because in Mercedes-Benz Trucks, we have a separate effect within that, which is the zero-emission vehicle sales, which come at a higher level of revenues per truck, and that is an effect that with the service that comes a bit afterwards.

It has an impact on share, which is why looking at 2030 now, the service share for Mercedes-Benz Truck is more on a more stable level because of that inflated level of new vehicle zero-emission sales, while it is growing stronger in North America. So that's the technicalities within that, that's important to understand. Does that answer your question?

Yes. But -- and I tried to make this into a positive and try to look -- I know, we guide to 2030, but if there's also a margin story on service, I mean, you want to increase the level of captive dealers, et cetera, right? And spare parts availability, you're launching the new spare parts side. Like the 2030, that accretion is not that much. I mean that means that beyond 2030, after the Cost Down, I mean, the margin should improve even more.

Yes. I mean, for sure, there will be more potential because especially when you look at the own retail opportunity within Europe that Achim has mentioned, when we look at what the potential is to increase that further, we will not have achieved the end target of own retail locations by 2030. So that will continue, and that will continue to add value and that will continue to increase service revenues and margins for sure.

Yes. My second question and final is on market shares. And I think Karin, you said in the beginning of your presentation that you're aiming for a #1 market share in key markets. If you look at the European market share today, that's quite a big climb given where we are at the moment.

And obviously, when you get spare parts availability, the trucks come back on the road quicker, the customer-centric organization has been implemented. I can see why this would happen. But is that also a 2030 ambition on getting to a leading position in Europe on the market share? It's quite a big climb. I just want to understand the timing.

Perhaps Achim on market share.

So thank you, Klas, for the question. So if you look at the recent development in Europe, we see that our strategy to focus on profitability rather than market share is paying off, and we had great achievements during the last years. If you look at the development throughout '24 and the recent development, we also figure that our very good pricing position has brought a deterioration on market share where we are fighting back. And we have already last year initiated several activities on the product side.

So for instance, bringing the new program in to improve efficiency. We have brought new transmissions to our vehicles that improve driver comfort and rail fuel consumption. We are running a dual cap strategy now basically to offer our customers a broader portfolio. What we see when we look at the month-to-date performance from one month to the other throughout '25, we see month-by-month increase in the market share. So we are coming back in terms of performance.

And obviously, we are very closely monitoring the situation in the European markets because we also see a scattered picture in terms of market structures and market developments. But overall, we still focus strongly on profitability over market share. But you're fully right, it's about finding the sweet spot to make sure that we have sufficient vehicle stock in the market for the after-sales network as well.

Thank you. The next question is one right here, yes?

Akshat from JPMorgan. I have a couple of questions, please. The first one on your margin targets by 2030 for the key divisions, North America and Mercedes-Benz Trucks. And thank you for the presentation on the Cost Down Europe and the service potential that we just discussed. But when I think about the 2030 targets, you still have a 200 basis point of margin difference between the two divisions. Can you just explain the key factors that still explain that margin differential between the two businesses? And how can you close that into the long term?

And the second question is on truck pricing and the market discipline in the next cycle. What makes you confident on holding on to the pricing gains that you've had in the business following the pandemic, given that competitive pressures might be increasing in North America as well as Europe? And when we think about your customers, they are running all-time low margins since the GFC. So what makes you confident on truck pricing into the next cycle, please?

I think on the margin difference, perhaps Eva and then on the pricing, John and Achim for North America and Europe.

Yes. On the margin, what you can see in North America is that we are already operating at a very high margin level also considering the overall profit pool of the market, and we're also comparing very well there against our peers. We've also demonstrated, as you could see now in quarter 1 with a lower volume that we're extremely resilient already in how we ramp down and also our ability to ramp up the business if market demands and how we also adjust to different scenarios as we've demonstrated last year with the vocational growth and the on-highway weakness.

In Mercedes-Benz Truck, we will make a giant leap in getting our cost structure to the level where we needed to be, to be on benchmark level, and that will happen by 2030. That's where we will get the EUR 1 billion cost improvement translating to about then 150 basis points on group level in return on sales expansion. What we will not have fully closed when it comes to benchmark level is what I just explained to Klas, and that is the service opportunity because it's just physically not possible to add, let's say, 100 own retail locations in 5 years, not only because the CapEx spending would be massive, but also we'd be rigidly reaching the limits of what our organization can do when it comes to running these in the best possible manner.

So we need to gradually, as Achim has said, increase the truck dedication, building up new own retail locations, while at the same time, enabling and strengthening our dealer network to then maximize that potential out of the service opportunity. But when you would look at benchmark levels of service revenues and profitabilities, 2030 is not the endpoint there in Europe.

Pricing?

John, Achim, pricing?

Yes. So pricing, it's an interesting phenomenon. We're in a cyclical industry in North America, and I know probably globally, too, but I know North America best, obviously. So definitely a cyclical industry where the troughs and the peaks have been somewhat attenuated, I would say, in recent years due to the EPA emissions regulations having become less of a factor. But now we find ourselves in one of those transitions from where we had a lot of pricing power to now the customer has pricing power because we have capacity, our competitors do and everybody is very reluctant to give up on that capacity.

So that's a transitory thing. That will happen for a while and things settle out and capacity adjusts and pricing recovers. And obviously, nobody is happy with having to deeply discount. So while it's true now, I certainly wouldn't expect it to remain true for a long period of time, certainly not until 2030. And obviously, our challenge is to get back on the right side of that equation as quickly as possible.

And to add from the Mercedes-Benz Truck side. So with focus on Europe, we see, as mentioned earlier, a bit scattered picture in terms of the pricing development. If we look at the current price points in the markets, we are still in the European markets' leading brand or among the leading brands regarding pricing position. So that translates at the moment that we are still in '25 above average pricing levels as, for instance, in 2023. We are strongly focusing on maintaining this pricing position, but obviously have a strong focus in markets where we see increased price activities of our competitors that on the one hand side, we countersteer with selective measures, but focused strongly on the product offering.

If we look at other parts of the world, looking at our Latin American business, specifically in Brazil, we still see that we have a good pricing position in the market compared to our competition. And that basically looking forward, we watch and observe the activities in Europe of our competitors. If we look at the order situation, we still see that orders in '25 compared to '24 are going strong. We see a lighter dip beginning mid of May in the European market. But overall, we don't see any significant price deteriorations to our ambition.

So perhaps I squeeze in one online question from Shaqeal Kirunda from Morgan Stanley. His question is the 2030 revenue CAGR target is a step down from the previous target from the last CMD. It seems the new target excludes autonomous revenues and assumes weaker ZEV truck demand in the U.S. but not in Europe. Why is autonomous excluded now? And how confident are you that your European ZEV demand will grow, given current infrastructure challenges? It's for you, Karin.

Yes. Well, I think one important thing in this strategy is that we really focus on not growth for the sake of growth, but really on profitable growth. And I think one example of that is the deconsolidation of the Trucks Asia business, and that in itself actually brings down our revenue, so it brings us to a different starting point. And then the second...

Why is autonomous?

Why is autonomous on top? Yes. So autonomous, we see as an on-top opportunity. Obviously, to develop an autonomous truck is not like developing a diesel engine that we've done many times. So I would say the team is very well on track. They're delivering on the milestones that we have set up. But for sure, there is more risk in that kind of investment than it is when we develop a new engine or a new cab. So I think it makes a lot of sense to have it on top and also because we want the 99-point whatever percent of the organization really focusing on making sure we're delivering the core. So I think it makes a lot of sense to put that separately.

And infrastructure, yes, I mean, infrastructure is -- I don't know if -- I can take it, you can relax. Infrastructure is one of the challenges to speed up the uptake of zero-emission trucks in Europe. We have always said and we continue to say, you need the trucks. You need to have TCO parity and you need to have infrastructure. We have the trucks. We have shown that. It's in series production. We start to see the uptake from the customers. We actually also start to see that in many markets, the total cost of ownership starts to make sense, especially in the markets that have already made a differentiation on the road toll like Germany, like Denmark and a couple of others. So that differentiation can make a difference, especially for customers who drive longer distances. So the big challenge is the infrastructure, which is why a lot in Brussels these days and trying to push and to create awareness that has to speed up.

And then the second question is how concerned are you by the prospect of Chinese OEMs coming to Europe? What does Daimler Truck do to protect itself against new entrants and ensure it will not face the same pressures as some of the passenger car OEMs? Achim, on Europe, that's for you.

Yes. Thank you. Very good question as well. So what is obviously essential, we constantly move and monitor the competitive development, also including our Chinese competitors. If we look at Europe, one of the main pillars that we are driving forward to be competitive is on the one hand side, focusing on the cost side. Here with Cost Down Europe, we are focusing on improving our cost position including, obviously, also the variable cost part of our vehicle, as you've seen earlier.

Additionally, yes, we have still a strong brand and a very strong network, especially in Europe that gives us a very solid footprint. And we also offer a variety of services to our customers that on the one hand side, create a stronger level of customer retention and adherence to our brand. And these are great ingredients to be prepared for the competition. However, we also have to acknowledge and we are strongly focusing on that we cannot get slowly and losing grip in terms of bringing innovation on the product side and on the service side to be prepared for potential entrance of the Chinese competition in the European market.

Thank you, Achim. Then I would continue here.

Alex Jones, Bank of America. First, Karin, I think you talked about a performance culture and a realignment of pay and a review of the management levels as part of that. Can you give us a bit more detail about what you've already done on those 2 and what you're planning to do in '25 and '26?

And then second, to follow up on autonomous. One of your peers has given a decent amount of data or some data publicly about their progress and different milestones. Can you share something on what milestones you've already hit and what we should sort of look at you to check whether you're making the right amount of progress on talk towards launching in 2027?

Right. In terms of culture, I think we have done -- I mean, I think it's something that's not -- you don't work with culture and then all of a sudden, you start. So I think that's a journey that we've seen over the years, but where we are definitely putting extra emphasis in the last, let's say, 8, 10 months. I think a couple of things that we already did. We did a number of leadership changes. Some of them are here on stage. But for sure, also, if you would go down a little bit further into the organization, we have taken some tough decisions. And it's not always about that someone is doing a bad job, but more about that at a certain point in time, you need maybe a different kind of skill or leadership than was needed in the past. And I think those are moves we might have hesitated to do in the past where we are now much more decisively addressing.

And then about the remuneration system, I think it makes a lot of sense when you have a new strategy to make sure that the remuneration is connected to it and that you are remunerated based on how you deliver on that strategy. So I think it's very good timing to do that kind of calibration now. And we want to make sure we connect it to individual performance and of course, also that we're driving value for the company. But that's like a journey we're starting now with the aim to have something in the AGM next year, which will hopefully be then approved and we can start rolling out.

And then I think, Alex, your second was some progress on autonomous. What did we achieve so far compared to competitors who disclose some metrics?

Yes. That's also for me.

That's also for you.

I mean we -- one of the big milestones that we achieved was last year when we were driver out on closed course. And honestly, it was not so much that we can show that the truck can drive driver out. But what was really significant on that occasion was that we did the whole release process as in our production environment and how we want to do the release process going forward. So I think that was a significant milestone.

Another one is that we have already defined and we're using our production intent hardware when it comes to compute and sensors because it's one part is to develop the software that's challenging enough. But I think the big challenge and where we have really focused a lot is to be able to bring that into the truck without adding like a 3-ton box of compute. So to like -- sorry, I'm not a software person, but to like make it small enough that it fits on the truck. And of course, also to make sure we have the hardware we need, the LiDAR, radar and cameras and to preparing that for production.

So I think we're making steady progress. I've been personally investing a lot of time into following the development because it is one of our big strategic bets. And so far, the team has been delivering on agreed milestones. So I think we're positive about where we are, and we see huge opportunity, as I said in the presentation.

And we go over here, David?

David Raso from Evercore ISI. How the 2027 EPA standard plays out? How does that impact what products you introduced? And how would that impact your view of your profitability in North America from here to 2030?

Yes. So that's a question that I think is in everyone's minds right now, including mine. Still waiting for a lot of clarity from what it means. We've had a lot of -- I mean, the big beautiful bill is not about emissions really. I mean there's some aspects to it, but really it's more EPA and CARB mandates that are still have yet to be defined. So we know directionally where the EPA wants to go. They've asked for our input. We've given it to them, but they've yet to make a decision.

And clearly, there's one person who makes most of the decisions in the government these days. So we have to wait and see how that shakes out. It's not going to change anything dramatically. One thing we do have to state, there's no dial on a truck that you just switch to 35 or 50 or 75 or 200 milligrams of NOx, like there is work involved unless they leave it exactly where it is today. There is work testing, et cetera, potentially even some minor hardware changes to be able to accommodate that. So we're actively hoping and waiting and pressing for more clarity. But at this point in time, it's been more about headlines and less about specifics.

So as that comes clear, then obviously, we're going to jump on it right away, especially if it results in a change. And that then drives pricing potentially because if there is cost associated, then we look for recovery on that. So we still have to wait and see. It's just we're hoping by September to have clarity on that.

Thank you. And then one more online question from Anthony Dick, ODDO BHF. Two questions actually for you, Eva. Minimum industrial net liquidity increased from EUR 4 billion to EUR 6 billion outlined during the last plan to EUR 6 billion. Why is this?

It's not really an increase per se because what we've always been saying that between EUR 4 billion to EUR 6 billion, but we don't really want it to be much below the EUR 6 billion only temporarily. So what we're actually doing now is we're going to make it simpler, and we're just going to say around EUR 6 billion because that is the net industrial liquidity requirement that we also derive from the rating upgrade that we received last year to a single A credit rating. So it's as simple as that. Just a clarification.

And then somewhat related question, your net liquidity is still well above the EUR 6 billion target. Will this extra cash allow you to buy back DTG shares that might be sold by Mercedes?

So generally, I think, as I've said before now multiple times today, shareholder returns are important to us. We're demonstrating that with the current share buyback program, which is already the second one we're doing, obviously, what Mercedes-Benz Group AG does is up to them, not to us, but we do generally have the ability to react given our liquidity position.

Then here's one more question in the room.

Hemal Bhundia from UBS. John, just on the North American vocational market share targets, how are you thinking about the annual market share improvements to achieve that 35% market target? And also, as you said, this market is quite sticky, which works for you in retaining customers, but I imagine vice versa challenging when trying to acquire market share. Are the vocational customers more receptive now? And are there any particular brands that you're going after?

Yes. So I think one thing we got super lucky on with the launch of the X-Series is that, a, the launch was flawless, like we've had launches in the past where there's little hiccups that may cause customers to pause and wait until all the bugs are worked out before they buy. This time, the X-Series was perfect. And as a result, people who got them early really liked them and really started talking them up. Then we got into the situation with the constrained capacity that we had in the market.

So there were people who might otherwise buy a competitor truck that they couldn't get because they were auctioning off their build slots or whatever, and we were able to put some of those trucks into those accounts. So they found in very real terms how well they work for them.

So we're able to shortcut some of those traditional -- the old way of -- or let's say, even the current way a lot of times with vocational customers is you have to go to them and convince them. They've had a Kenworth repeatable for -- in their fleet for 50 years, and they're not interested in anything else. You have to maybe put a few in, seed them in. And then after 2 years, 3 years of running them, then they say, "Oh, yes, these aren't so bad. Now I'll take 5. And then 3 years later, well, I'll take 10." I mean it's a very long drawn-out process due to that loyalty. But we've been able to shortcut that.

And again, I think now they're out in the field heavily. People see them out running around. They know it's viable and a lot of respect, a lot of articles written and things like that. So in many ways, we were kind of victims of luck, but also of our own success with a great launch. So that's why I'm pretty optimistic that we can continue to grow.

And again, our competitors are super tough in that space. So it's not just a walk in the park. It's a lot of fundamental blocking and tackling. In many ways, this process I described earlier of really selling and getting trucks in people's hands and letting them see having ride and drives like some of you will see today, those are really critical.

So yes, we'll continue to work that, but we feel because of the input that we've received from customers about the product that it's very competitive, and we should be able to continue to slowly grow that.

I see one more here. Yes, over to you.

It's Michael Aspinall from Jefferies here. I think it would be a remiss if we didn't ask your updated thoughts on kind of what's happening with the 232 investigation and how you're thinking about setting North American targets or setting a strategy for the next 5 years in the context of potentially some change.

Yes. So that won the award for most asked question last night, by the way, for me. 232 is one of those things that like emissions and other things are still a lot of clarity that needs to be provided from the government. They had a comment period that was open where I'd say, most from what we understand, most parts of our industry pushed in comments saying, "Hey, this is a bad idea. Ultimately, it's inflationary for the industry, and therefore, not a good thing." We do know that at least one competitor was saying the opposite, and there's always going to be differences of opinion when you think that it benefits you. But the vast bulk of the industry feel that it would not be a good thing. So that's the input that they've received.

Now again, there's one person ultimately who's probably going to rule on that and ultimately, even not just yes or no, but how much within if yes. So we still have to wait and see what's going to happen there. Certainly, if something dramatic happens, we have the ability to flex our production from Mexico to here without too much difficulty, especially in non-peak markets like we're in right now, not so much of a problem. But the other aspect is still the supply chain, right? The Mexican-produced parts that ultimately everybody who builds in the U.S., whether it's us or our competitors, are still a pretty high percentage of Mexican-built parts and assemblies.

So ultimately, it would impact everybody and ultimately, again, be inflationary, we think, if that comes to pass. So certainly, once it becomes clear, just like with emissions, like once it's clear, then we're on it, and we've game planned different scenarios, but it's still not clear. I can't wait till it is, by the way.

We have one more -- two more questions from Miguel Borrega from BNP. Two for Achim on the revenue growth drivers. ZEV, how does the 25,000 unit target in Europe compares to previous targets? And how much will ZEV represent as a percentage of total? And second on defense, how much does this represent today?

Okay. Thank you, Miguel, for the question. As you've seen in today's presentation, we are targeting in Europe for more than 25,000 ZEV sales until 2030. That accounts for above 40%. Looking back in the past, how does it relate? In the past, we're talking about up to 60%, which translates in an absolute higher number than today. It was in the ballpark of around 40,000 units. What -- and relating to what Andreas said, this reflects our discussion transformation at the speed of right.

Yes, we have the products in place. You have seen we are well prepared in the most essential segments in Europe with eActros 600, with the eArocs 400. But we also see, as Karin just mentioned earlier, that the infrastructure and the cost parity that is impacting the TCO is limiting the progress in terms of absolute volume increase. But we are very confident that the above 40% will materialize.

On the second question, Miguel, so -- and repeating what I mentioned initially, it's a hidden gem. We believe that the revenue in the defense business will grow up to the ballpark of EUR 1 billion until 2030, which is double as much as where we are standing today.

Then one more from Miguel for you, Eva, on capital allocation. If free cash flow is set to increase 1.5x from EUR 3 billion and dividend payments totaled EUR 1.5 billion plus EUR 1.1 billion buyback per year, net cash is set to increase. If you only need a minimum of EUR 6 billion industrial net cash, why not increase the share buyback at this point in time?

Thank you for the question, Miguel. I mean the share buyback that we've announced is EUR 2 billion 2 years. As I've also explained before, we've built in some contingencies there. Also for the recent market weakness that we see in North America and also for the Fuso-Hino transaction that is yet to close. So please give us the time to close it. And then of course, we can talk about that at the appropriate time, but rest assured that cash returns are a priority for us to shareholders.

And then last question online from Harry Martin at Bernstein. ZEV trucks, it seems like you are still assuming ZEV truck prices at 250,000 plus per truck. Is there really a market for 25,000 units per year at this price premium to a diesel truck?

Obviously, we derive the price point from the TCO advantage that we are materializing from our customers or for our customers. Yes, we believe the price point and the significant higher price point for the ZEV trucks is still feasible. We also do simulations, obviously, how sensitivity in terms of price differentiation would materialize. But overall, strong focus on margin stability in terms of relative performance. And so we believe with the price point and the TCO advantage, that's the pricing on the ZEV side that we are targeting is still realistic and feasible.

Thank you, Achim. So this was the last question for today. Ladies and gentlemen, thank you very much for your questions. Thank you for answering all of this so far. At this point in time, I would also like to thank all of the virtual participants for attending today's Capital Market Day at your mobile devices or computers.

As always, should you have any further questions, our IR team remains at your full disposal. The full replay of the presentation will be available on the website soon. We will turn off the live stream now. Thank you.

Ladies and gentlemen, thank you very much for joining us today despite busy schedule. Allow me to introduce myself, I am [ Asami Abe ], your MC for today. We would now like to begin the joint press conference between the 4 companies, Mitsubishi Fuso Truck and Bus, Hino Motors, Daimler Truck and Toyota Motor Corporation.

To begin with, please allow me to introduce the CEO of the new company and also the representative, President and CEO of Mitsubishi Fuso Truck and Bus, Mr. Karl Deppen. Mr. Karl Deppen, please proceed to the stage.

Dear ladies and gentlemen, dear supporters and friends from media, more than 2 years ago, the idea was born about the potential collaboration of Hino Motors and Mitsubishi Fuso that would transform the global automotive landscape as we know in the 4 companies took it forward. Thanks to the shared belief that our industry will be undergoing severe changes that require action. And today, it is more true than ever. In the early phase of our discussion, we shared our shared project vision, which has defined our common beliefs and joined ambition. We did this by considering the transformation of the industry and the investment needs into case technologies. It was a daunting challenge, but together, we saw a way forward.

And today, we are here to announce that Daimler Truck, Toyota Motor Corporation, Mitsubishi Fuso and Hino Motors, have officially concluded the definite agreements to integrate Mitsubishi Fuso and Hino. This means Hino and Fuso will come together on an equal footing to cooperate and develop commercial vehicles together, including collaboration on procurement and production. We aim for the new listed holding company to start operations in April next year. Holding company will be listed on the prime market of the Tokyo Stock Exchange. Daimler Truck and Toyota will each aim to own 25% of that company's stock with the rest of the shares available for the free float. That holding company, which will own Mitsubishi Fuso and Hino will be located right here in Tokyo.

Now let's take a look at the companies involved. First, Hino Motors. Over 30,000 employees, products produced and sold in more than 90 markets. Hino motors has been making a better world in future by helping people and goods to get where they need to go for more than 80 years. And Mitsubishi Fuso, another 90 years of manufacturing process sold in over 170 markets. Creators of Japan's first mass-produced or electric light-duty truck, the eCanter, which is Toyota and Daimler Truck. Two respective leaders of the automotive industry are committing to join forces. It is this courage. This foresight to take the long view that has set both companies apart as leaders in their respective fields. And it was this common view of imagining the future for an integrated Hino and Fuso, which energized all of us to pursue the task.

Two years ago, we signed the Memorandum of Understanding and informed you about our aspirations. Since then, our industry has become even tougher. Our Japanese customers have been struggling with the so-called 2024 problem of driver shortage. And outside of Japan, strong competition from new large volume competitors is more fierce than. At the same time, we all have to step up significant investment into the relevant future case technologies and carbon-neutral mobility, this is why in our industry, scale matters, and this is why the Japanese market cannot support so many commercial vehicle manufacturers. And this is why today is a great day. It is a great day for our customers, for our dealers and distributors for our employees, for our shareholders, for our industry and for society.

Let me explain a bit. For our customers, it is a great day because it will make our strong brands even stronger by combining engineering strength, competencies and expertise. The new company will be able to even better support our customers and their transportation needs. We will be ready to provide them with strong, reliable and efficient products superior services and solutions while being their go-to companion on migrating to 0 emission solutions over the next year. Going forward, our integration means great things for commercial vehicles with our combined expertise, passion and resources, this new company will offer new levels of quality, efficiency, and technology to our customers. It is also a great day for our dealers and distributors because we appreciate and value the close cooperation with them and honor the long-standing relationships we have shared for decades.

This merger will help us to provide even better products in the future to make us successful together in our markets. It is also a great day for our employees as we are building a new company that is strong and healthy and draws on even larger competence and knowledge. We built a resilient business that has bright future and provides great employment and development opportunities for our employees around the world. We will be a company that people are proud to work for and happy to be associated with. It is also a great day for our shareholders as we are aspiring to capitalize on our combined strengths and aspire to turn our market success into attractive total shareholder return.

And as a listed company, we aim to be transparent in disclosure, trusted in performance and reliable in our governance. And it is a great day for our industry because we need to accelerate the development of CASE Technologies. The decarbonization of transport is a key task for the industry and we will be an even stronger part of that solution. And as a strong manufacturer will be also good for our suppliers to grow and support our customers with better technologies and efficiency. As we accelerate our development of technology, we also increased our global competitiveness. And finally, very important, it is a great day for society. Modern societies need modern transportation and we aim at continuously providing safe and clean on road transportation. And as much as we focus on our products and services, we also feel of light to remain good corporate citizens in our neighborhoods, no matter here in Japan or internationally.

Gentlemen, combining 2 strong companies under one joint enterprise, it's a huge task. And what sounds like a logical move is, in reality, a complex transaction requiring tremendous effort hard work and enormous determination by everybody involved. So while this is a very special day for all of us, I would also like to acknowledge and appreciate the incredible hard work of all the employees and teams in Hino, Toyota, Mitsubishi Fuso and Daimler Truck. A big thank you goes to all of you. And to get here today, took an incredible journey over the past 2 years, filled with deadlock, difficulties and setbacks. But even more so, it was a journey of motivation, shared ambitions and the strong desire to seize the huge opportunity for both Fuso and Hino.

I would also like to mention and appreciate the strong encouragement we have received from authorities and ministries to go ahead with our plans to strengthen our industry. And on a personal note, I feel truly honored to have gained the trust of the major shareholders to lead this new company. From the very beginning, I have been convinced that this cooperation is for the good of all our stakeholders. With this, we will make the Hino and Fuso brands even stronger. To build and lead this new company is for me a tremendous honor and even more so, it is an obligation and motivation to make it success. And while acknowledging all the hard work necessary to get to this major milestone today, the real work will only start from now on.

So what's going to happen next? As I mentioned earlier, we aim for the new listed holding company to start operations in April 2026. Until then, we have defined several milestones in between to make ourselves ready for it. We will now immediately file for the antitrust clearance here in Japan, to get the approval to proceed with our plans. The same is true for many other countries we are doing business in. Furthermore, we will select and fix the name of the new company. We will conclude the agreements of governance and company structure, and we will announce the full management team and the Board as soon as they have been put together. We will incorporate the new company to be ready to go live by April 1, and we will announce all these details to the public in due time later in the year to keep you all informed. So please stay tuned and connected, and I invite you to join us on this exciting journey.

I see this as an important opportunity for Fuso and Hino, and I'm pleased that my fellow CEOs sit the same way. And I'm sure you'd like to hear it from them directly. So let me now pass on to my main partner in this incredible journey, a man for whom I have the utmost respect. Hino Motors CEO, Ogiso san.

I'm Ogiso of Hino Motors. As the new company CEO, Mr. Deppen has mentioned, environment surrounding our commercial vehicle industry is facing a major turning point with various challenges such as achieving carbon neutrality and further efficiency in logistics. In order to respond to these changes, it is obvious that we need to advance our speed and flexibility, which requires appropriate investment. To achieve a better future beyond these challenges, the collaboration between the 4 companies are truly a once-in-a-lifetime opportunity. As the leading company of passenger cars, Toyota continues to lead the realization of a future mobility society with its thorough understanding of the customers in the transportation industry, Daimler Truck continues to contribute through their advanced technology as a top-notch commercial vehicle company receiving the strong support from these 2 companies, Mitsubishi Fuso and Hino, which have long been engaged in a healthy competition in Japan and Asia will be operating business in collaboration.

What we share is the strong aspiration to contribute to a prosperous society through mobility. In order to envision and realize the future in line with this aspiration, the 4 companies will be forming an alliance to complement the effort with their own strengths. In order to have -- be able to play our roles and continue our contribution we need to have a strong foundation not only the financial capital and foundation. Also, the human capital will be important, and we need to do what we have to do for each individual company. And as a one company to contribute, is trying to strengthen itself and also for our human capital, for the synergy, we need to have a working environment and be a company where our employees can excel. And even after the integration, we would like to aim to become such a company.

Mitsubishi Fuso and Hino have different [indiscernible] and culture. But by combining the know-how and scale of the 2 companies, we can of course expect various synergies in business from development, purchasing and production, but not only that, the synergy effect we can expect within counterinfusion of the different cultures are immeasurable. In the past 2 years, all parties have engaged diligently and tenaciously in discussions about what kind of future we will realize. It did take a slightly longer time than we had expected. But in the meantime, we make best use of the time to strengthen the trust among us.

I would like to once again express my gratitude to 3 companies for their dedication to realize this collaboration. The CEO of the integrated company, Mr. Karl Deppen is [indiscernible] share the same aspirations. And together, we will create empathy among our colleagues and face all stakeholders with integrity. In an effort to contribute to this largely transforming society, I'm confident that we will be able to create such a strong and resilient team we will collaborate to create an ever better future as a new commercial vehicle company rooted in Japan.

Thank you so very much for your continued support and understanding.

Ms. Kari, please take the floor.

Honorable guests, [indiscernible] partners of Toyota and Hino Motors, and of course, members of the press. It's really an honor to be here today with all of you. The planned integration of Mitsubishi Fuso Truck & Bus Corporation and Hino Motors, is truly historic. To iconic companies that have shaped the commercial vehicle industry in Japan, in Asia and beyond for decades and are taking a bold step toward the future of transportation. A step of this magnitude requires significant preparations. So I first want to thank our partners at Toyota.

From the very beginning, our negotiations have been defined by mutual respect, constructive dialogue and a shared sense of purpose. And I'm very grateful for that. I also want to thank the teams who have worked on both sides, on all sides, tirelessly towards this day. Two years ago, we first shared our rationale and our vision for this integration. We're bringing together 2 strong partners to form an even stronger company and to successfully shape decarbonization of transportation. In the currently ongoing historic transformation of our industries, truck companies must develop parallel multiple technologies at the same time. It's not just diesel. We also work on battery electric, hydrogen fuel cell and potentially also hydrogen combustion drives. So this is quite a stretch.

And there is only one way to make all of these simultaneous efforts work economically, and this is scale. And while Daimler Truck is a global leader in commercial vehicles, most of our other brands are specializing in heavy-duty trucks. As a consequence for our light-duty specialist, Mitsubishi Fuso, the potential to leverage scale within the group has been limited. Together with Hino Motors, this potential is much greater. This integration, therefore, comes exactly at the right time and Mitsubishi Fuso enters as a strong partner. Fuso is today the most international brand in the Daimler Truck family with trucks and buses operating in over 170 markets. Fuso offers a full range of commercial vehicles engineered for very diverse use cases, ranging from dense urban areas the quite rural environments. And Fuso has been leading the way in zero-emission transport.

Already in 2017, it launched Japan's first series-produced electric truck, the eCanter. Today, the eCanter is in daily operations in 38 markets across the world in Europe, Oceania, Asia and South America. Beyond this technological leadership, Fuso has also shown a strong financial resilience throughout the last years. So we, as Daimler Truck are bringing great assets into the integration, and I'm convinced that these are the perfect fit for Hino motors. I talked about the importance of scale. In this respect, the new company has great potential as Mitsubishi Fuso and Hino Motors can pool their R&D, industrial strength and market presence.

On top, both companies share this ambition of putting the customer first, driving innovation and making sustainable transportation reality. And with Karl Deppen, the newly formed company will have a CEO who stands for this vision and who knows how to leverage the strength of both companies. I had the chance to work closely with Karl for the last 4 years. He is, first of all, a fantastic person but also he's a great leader who understands the whole value chain of our business. I've had the opportunity to see Karl drive performance and deliver improved results, most recently as the CEO of Mitsubishi Fuso. So I'm confident that with Karl, we will have the right person who will set this new company for success.

Karl mentioned it, and I also want to say, I'm convinced that the step we are taking today is good for all stakeholders. For our customers, our employees, our shareholders and for society as a whole. They will benefit from having even stronger partner and an even stronger driving force in the historic transformation of our industry. At Daimler Truck, we are really excited about the step we are taking today, and we can't wait to see Mitsubishi Fuso and Hino Motors join forces.

And finally, Mr. Koji Sato, CEO of Toyota Motor Corporation, please.

I'm Koji Sato, [indiscernible] Toyota Corporation. While looking back on how we came to consider this collaboration, I would like to talk a little bit about our 4 companies' shared desire. The starting point of this collaboration is the shared desire to create the future of commercial vehicles together by leveraging the strengths of Mitsubishi Fuso and Hino to protect our business foundations in Japan and Asia. 2.5 years ago, then Daimler Trucks CEO, Mr. Martin Daum and the then Toyota President, Mr. Akio Toyoda began considering collaboration based on a shared vision and sense of values. Companies with different histories and cultures coming together like this, meant that we needed to overcome various challenges. Although there were times when differences and ideas and how to move forward with integration, we're hard to bridge, our 4 companies took the time to repeatedly engage in dialogue and deepen mutual understanding driven by the empathy and trust shared by the top leaders.

I believe that our unwavering commitment to the future of commercial vehicles enabled us to overcome the difficulties to keep moving forward toward our integration. In the clear discussions, there is a thought that was shared by the CEO of Daimler Truck, Ms. Karin. She said that Daimler Truck values being a company rooted in the local community. The integrated company should be a truly global company rooted in Japan. I couldn't have agreed more Mr. Deppen, who will head the integrated company, he's the perfect person to lead a truly global company rooted in Japan. He has been involved in the Japanese truck industry for more than 20 years and has extensive global experience.

Under Mr. Deppen [indiscernible], I believe that Mitsubishi Fuso and Hino we'll be able to create synergies through this integration while honing the manufacturing capabilities that both have cultivated as truck manufacturers. This integration will not only enable them to secure the scale needed to compete globally, but we'll also bring the strengths of Mitsubishi Fuso and Hino together to expand the respective areas of expertise, accelerating technology codevelopment and increased production efficiencies. Going forward, the 2 companies will work together to strengthen their business bases in Japan and Asia. And Daimler Truck and Toyota will support the integrated company in improving its competitiveness based on case technologies.

In addition, we would like to apply our 4 company framework accelerate the implementation of case technologies towards solving social issues surrounding commercial vehicles, including achieving carbon neutrality. This collaboration has also deepened the partnership between Daimler Truck and Toyota. Symbolic of this our efforts in the domain of hydrogen. We are exploring various possibilities to combine our 2 companies' technological capabilities and accelerate the social implementation and widespread adoption of hydrogen mobility, including what in-depth elaboration should truly be like. We will continue to work toward making our efforts a reality. We believe that the future is for us to build together.

Today's definitive agreement is not the goal, but the starting line. We will continue our efforts to deepen our mutual understanding while respecting differences in cultures and ways of thinking to make our partnership even better to the key. Our 4 companies aiming to achieve a sustainable mobility society will continue to create the future of commercial vehicles together. We greatly appreciate your continued understanding and support. Thank you very much.

Thank you very much to all the speakers. Now we would like to open the questions. We will be getting the stage ready for that. So please allow us a few moments. Thank you.

Now we would like to open the floor for questions. I'd like to invite the speakers up on the stage. Let me introduce the CEO of the new company; and the President and CEO of Mitsubishi Husi Truck and Bus Corporation, Mr. Karl Deppen. Hino Motor Company, CEO and President, Satoshi Ogiso. Daimler Truck CEO and President, Karin Radstrom. President and CEO of Toyota Motor Corporation, Koji Sato. Please be seated. Now we'd like to invite questions from the journalists in the room. [Operator Instructions] In that block over there in the second row in the center. The person with glasses.

I'm Nakamura from [indiscernible]. I have 2 questions. Number one, the 2 of you from Daimler Truck. Over the past 2 years, we have heard about scandals about Hines certifications, and that slowed the process. And Daimler Truck, the truck segment in Asia and Europe markets remained sluggish. So over the past 2 years, what drove you with the necessity with working with Hino. Now about this timing of tenth of June to make that announcement, were there anything that made you believe that this would be the best timing?

Thank you very much, Nakamura for the question. I think if we go back to the very beginning of the discussion, what was driving all 4 companies is really the long view. And we all know the commercial vehicle industry is always faced with volatility in the markets as it follows usually macroeconomic development. So handling volatility and dealing with fluctuating markets is one thing the commercial vehicle industry is used to. When we engaged in the discussion, we didn't have the next 1, 2 or 3 years in mind, we have the next 15 to 20 years in mind how we can prepare for the future appropriately. And with the large investments needed for the decarbonization of transportation for case technologies, we thought now is the best time as we are at the beginning of the investment cycle to make the best use of investment and funding for the integrated company.

So this was at the very beginning, the long-term view we applied. As you all know, the Hino situation was quite severe after the [indiscernible] fraud. Nevertheless, we have also seen over the past 2 years that the Hino team has done a lot of work to mitigate and to resolve the situation. I think it has been an incredible task. And when we felt that the way has cleared to proceed we thought it's a good opportunity now to take the next step in the cooperation. So with that, I would remind us, our industry has -- is following very long cycles. So we really have to see a long-term as an investment into your future.

May I ask one more question. Ogiso-san Sato-san, I hope you would respond to this question. As you make this announcement, [indiscernible] planned was also announced to be transferred to Toyota and your press release talks about that. Hino's truck that Toyota manufacturers at Hamara and also the necessary funds for the purpose of mitigation of the Hino's scandals. But are there anything else that you can share with us today?

This is Ogiso speaking, and I would like to respond. Well, as we integrate the management, Toyota and Hino is commercial vehicle domain or framed vehicle domain, I thought it will be an optimum opportunity to clearly define the roles of 2 companies. Hamara plant has been producing for Toyota for more than 60 years since 1963. Horning is production engineering technologies, [indiscernible] Land Cruiser 250 similar truck, Dyna and Detroit. We have been producing them at Amara. And after long-lasting discussions, they framed vehicles core for Toyota is something that would make the greatest contribution to the customers and to the society. So we made that announcement today, together with the announcement of the integration of the 2 companies further strengthening competitiveness and further strengthening of Hamara plant is something that we planned with that transfer.

I thank you for your questions. Actually, I have a favor to ask of you about Hamara plans. I'm sure you have questions. But today, we have Mr. Deppen and Ms. Karin and Mr. Sato so this is the place for all 4 of us, so please do not forecast too much [indiscernible]. And if you're interested in [indiscernible], please let us know the PR department of the 2 companies since this is a place for 4 [indiscernible].

Then let's go to the next question. [Operator Instructions] The person in the front row and the person with the mask, the second from the back.

I'm Takamura from [indiscernible]. And I would like to ask my first question to all -- so for each of your company, Toyota, Daimler Truck, Hino and Fuso, those are the 2 [indiscernible] I want to ask. What was the attractiveness of each other as a partner? And what made that attractiveness made you decide this collaboration? So what do you feel is a strong appeal for each of you so between Toyota and Daimler Truck and between Hino and Fuso. That's my first question.

Okay. Thank you very much, [indiscernible] I'll try to answer that. What has been the attractiveness. The effectiveness has been to make use of the opportunity combining 2 strong companies at the time where everybody in the industry needs to step up investment and preparation for the future. And we felt that knowing what our product plan was knowing what our investment needs would be, we could imagine that the similar situation must be at Hino and we thought this is the right time to start that discussion. And we found out that we were at a similar stage of making assessment on future investment, and we thought this is the right time to combine strength and also have most efficient use of investment. But I may pass on to Ogiso san, maybe you want to share your views.

Well, actually, I think I have the similar answer to what Deppen san has just answered. I was feeling the same kind of attractiveness I think that is the very important point of the collaboration and the significance of this integration. Mitsubishi Fuso and Hino has mostly in the same kit and is facing similar customers, and we are trying to contribute to this industry and also to the society. we have shared visions and shared understanding of the challenges, also sharing the same purposes. Therefore, once we understand each other very well, I think that we will be able to work together very -- in a very good way. And probably what you wanted to ask is that we wanted to ask about the relationship that we have between the 2 companies between Fuso and Hino.

And as you know, for me, I know very much the strength and value of Toyota and now when we work with Fuso with Hino works with Fuso, it means that the expert of trucks, Daimler would become our partner. That was another attractiveness on working with Fuso. So probably next will be Karin san to respond.

Yes. Maybe to add to that, I think as we mentioned already, we started this collaboration already 2 years ago, at that time, different CEO. So it was on our side down and on Toyota side and we both -- Sato-san and me had the opportunity to come in. And we have talked about it that it has always been a very strong respectful collaboration and both companies really see the benefits also from the Daimler and the Toyota perspective. And therefore, even though we had very tough negotiations, we were always aiming for the same target and we were always coming in with good spirit and looking for solutions. And I think we are very proud to sit here today from but our perspective is a historic day for Japanese industry when we will build a very strong Japanese global truck company. So it's a very big day.

So it is just as Karin-san has said I think she has explained what I wanted to say, and that is the most point that I respect about dimer truck. Daimler Truck puts importance on being a company rooted in the community that they are operating in. they've had been very spectful in dealing and talking with us. And of course, they are a leading company for the global commercial vehicle industry. Everyone knows about that. But still, they are have your vision to develop a company that will be very much rooted in the community that they operate in. And that is the kind of company Daimler Truck is, and that is the attractiveness from our perspective.

Of course, we have the very outstanding technologies and various factors of strength but what I want to say here and emphasize here, which I was something that is a little difficult to see, but the predecessor, Mr. [indiscernible] in a nutshell, he was a person that is a true truck lover. Maybe a truck guy is the right word. He loves trucks. He drives trucks himself. He's a person who is flowing with truck love. And Karin-san is also a person who has the love for trucks. And as you well know, in our company, for our Chairman, he is the master driver of Toyota. And I myself, I'm a car lover and car guy myself. And excuse me, not only us, not only us top leaders, but many people inside of our company loves cars and that is our daily life.

So I think there has been quite a strong sympathy on that point too. Our love for the products that we have. And that has, I think, had -- we felt a great chemistry between us and probably that is why we are here today sitting next to each other.

And for my second question, regarding electrification also about autonomous driving. What kind of technologies are you going to jointly develop or research on what is the initiatives for electrification and autonomous driving that you have in plan?

Yes. I think for electric -- electrification, we already have products on the road. Hino has already the euro on the market. Fuso has the [indiscernible] market. I think this is already a very bold statement on taking the lead for this technology in the market. And as you all know, especially for urban distribution, BEV technology is very appropriate and suitable. Regarding autonomous driving, we all understand the complexity of the technology, and it is always a balance of demand from logistic companies. We know the driver shortage challenge and everybody is hoping that autonomous driving can resolve all these issues. But we also have to always be mindful on road safety and safeguarding the appropriate maturity of the technology when operating heavy-duty trucks at high speed.

So the balance of safety and society demand is very crucial to find the right balance here. And this will take some time, but I think this is one of the reasons why we combined our strength to be even better positioned to drive that technology forward.

If you have 2 questions, I would like to encourage you to ask 2 of them at the same time. Who else has questions? Please let us know. Let us move on to the block over there from the second row, 1/3 from far left of the room, please.

[indiscernible] Two questions. Number one, it is about the future, the impact of integration. What benefit do you foresee? Mr. Deppen, earlier talked about the mid- to long-term perspectives set economy of scale and other numbers that you would like to achieve going forward as the impact I'd like to learn. The second question goes to Sato-san, in the future of your full view working together, you mentioned hydrogen earlier. Toyota has been making bodies in the industry. And in February, new FC system was announced for commercial vehicles. Hino, Daimler, Mr. [indiscernible], will receive such technologies. So how do you foresee the hydrogen-based society with your endeavor?

Maybe I'll start with a question on the synergies. Actually, it's too early to give you a specific number. Of course, we are well aware that this is a very interesting detail, but we also have to bear in mind, we are still 2 companies, and we have to wait until we get the antitrust approval from the authorities before we can proceed and share those details in a more specific way. Nevertheless, we do believe there is significant opportunity and especially in future investment efficiency, we expect significant gains that the 2 companies don't have to invest twice. But if we do it at the beginning of the investment cycle, we can align best the direction for the future investments. So bear with us a bit. We need a bit more patience for you as well. But I think once we have the clearance from the fair trade commission and get the go ahead for the antitrust clearance, then I'm very confident that we can come up with also more specific numbers. Thank you.

Probably, I should respond to his second question. I'm sorry. I would like to respond to your second question. In order to realize the hydrogen-based society, we have to make the entire loop of produce, convey and use. So that's the reason why we have we need bodies so that we can generate demand for hydrogen. In the commercial vehicle cover neutrality. Actually, this sector accounts for 40% of the entire mobility in terms of the emissions. If you want to neutralize this sector, you have to be more efficient in transport and other challenges after we met, especially in heavy-duty truck sector, the contribution of using hydrogen would be great.

So that's the assumption that we have in the smaller vehicle areas, we have cells as well as control technologies are the prowess that Toyota has developed so far. On the other hand, Daimler Truck is extremely strong in heavy-duty drug sector, so both of us together, not just supplying each other's technologies, but do the R&D for sales, for example, or exchange ideas about applications for faster realization of such divisions so we have no such things separately in the past, but now we can do it together so that we can be faster. So on the project basis, there are some initiatives ongoing hydrogen mobility in heavy duty truck area is the beginning of such acceleration efforts. Thank you very much.

Thank you. Anyone else with questions? Person in the other block, the person sitting in the front, the back end.

[indiscernible]. I have 2 questions. My first question is for Ogiso-san. So going forward, regarding the sales activities for the dealers, what will -- are you thinking about integrating the dealers as well? And the second question goes to Deppen-san. In May of 2023, you have said that the participation to CJPT was something too early to consider. But with the new company, will you be thinking about participating in CJPT? Or do you have any other plans? So that will be my 2 questions.

I'll first respond to your first question. When you think about the commercial vehicle business, it's really about each and every customer. We have to think about how we face every customer sincerely and not just to sell the vehicles but also to support them from a total life perspective. And this is something that I completely have an agreement with [indiscernible] but Hino and Mitsubishi Fuso, we think that it's important to maintain each brand and for the sales side, sometimes we will need to be in competition to contribute to our customers. And that will be the basics so that our integrated company can become stronger. So for the sales side, of course, from a long-term perspective, there may be many things that we need to consider.

But when we think about this integration of the 2 companies, we have to further put importance on each brand. together with our dealers, we have to take care of Hino's customers, Mitsubishi Fuso customers, and this will not change. And if you want to add anything, if you have anything different that you want to say, please, you're welcome to add.

No. Thank you, [indiscernible] I think we share the same view. We enjoy a trusted network of outlets for our brands, both on the Hino side and Fuso side, and we value that a lot. And we also see we can be effective and add value for our customers, and this is why we want to maintain it. And this is a very important element respecting the 2 brands and also the loyal customer base we are enjoying, and this is what we very much appreciate, and we will further support and mutual.

And [indiscernible] your second question on CJPT, I would say, maybe I answer that question once we have the new company. But I think being here today shows that we can also work very well together in the current framework. And I think this will take some more time before we take that decision. But I think important is that we move forward in different ways of cooperation and we've shown that in the past, and we will do so in the future as well. Thank you.

Thank you for your questions, Anyone else in the room? [indiscernible]

I would like you to send a message to your domestic users here in Japan. You talked about your dealership. How about the product names. Do you think you'll be integrating any models going forward to be more cost efficient? So that you may be able to launch some affordable and competitive model into the future. Do you have any synergies being planned in the areas of your producing forward?

Okay. Let me answer that, [indiscernible]. I think product name sharing products and so on. This is too early to answer. I think also here, we have to wait until we have antitrust and merger clearance from the authorities. Of course, there have been some ideas, but we also see that already today, fortunately, both companies have affordable and competitive and very reliable products available so there is a very good coverage of the different segments. And going forward, I think we will further strengthen our competitiveness in the lineups for both brands. And there is today already a distinct differentiation among the brands, and we will maintain that and further strengthen that going forward.

So that the Hino customer will enjoy strong Hino products and the Fuso customer can enjoy strong and competitive Fuso products.

And I'd like to go on to the next question. Person in the front row, the microphone will be brought to you, the person with the gray jacket, please.

I'm [indiscernible]. And I have 2 questions to Sato-san. The framework that has been announced today what will be Toyota's -- so for Toyota, the voting rights has been announced that it's going to be 19.9%. And so the new company will not be the equity method affiliate of Toyota. And it did mention that there was the reason it was because of some of the antitrust related issues, and I want to know the details. That's my first question. And the second question for [indiscernible] and the Daimler Truck, I've understood that there are projects that you'll work together on Hydrogen, namely. But for the new company, how will Toyota be engaged? Those are my 2 questions.

Thank you, [indiscernible], for your question. And for the second question and first question, I think I'd like to merge the 2 and respond to it together. First of all, for the 2 companies, Daimler Truck and Toyota toward for the new company, we will be strongly backing up with the technologies that we have and namely, it will be the case technologies. We will contribute [indiscernible] technology so that we can back up the further growth of the commercial vehicle business, and that will be the main mission that the 2 companies will have. And based on that, this time regarding the voting ratio -- voting rates ratio, as we have announced this time, main reason was environment needs to be protected. That is our understanding.

And with our decision, we have made this decision. And already, Toyota in the light-duty vehicle, we have 27% of market share in this area. And so with [indiscernible], there are many customers using our products. And therefore, when we think about the -- if we are involved as an affiliate company, there is going to be an impact to the competitiveness of this light-duty available light-duty truck environment. And that is why we have made the decision that the voting right ratio is going to be kept at the level as announced in today's release. And therefore, I think I've answered your second question, first of all, in the beginning.

That is the background. So we would like to provide a strong technical backup and support to the new company. That is the commitment that we have, and we will continue our strong collaboration and support going forward. Thank you.

Thank you very much for your question. We have also received -- we can also receive questions from those who are participating online. So those of you who are with us joining us online, please use the raise your hand button on the screen. And when your name is called, turn your microphone and video, both on and ask your questions. Any questions from our online participants. We are now inviting questions from online participants. These have questions, please raise your hand button on the screen and indicate that you have questions. No questions from our online participants. In that case, we should come back to the venue and see whether you have further questions from those of you who are in the room. Do you have any more questions? I see some hands. Someone in the second row from the front.

I am Tanaka from [indiscernible]. I have questions to all of you. It's been 2 years since the MOU, and it was slower than everyone had expected. And during that time, the business environment has changed a bit. Well, do you have any concerns that your final decision has been delayed?

Thank you, Tanaka-san. I think, yes, when we had made the announcement on the everybody had hoped for a faster proceeding of the corporation. But on the other hand, we also had to accept that some things took a bit longer. Nevertheless, I think we felt very confident that this is the right direction to take. So I think this was also a good testament of our partnership, understanding each other's situation. And see the potential of a cooperation for the mid and long term. And I think this was what was driving the decision to take a bit more time, even though all our impatient and want to move on. But sometimes it's also the balance of selecting the right partner and then give a time to grow in the right direction. Nothing -- this is exactly what happened here.

Yes, of course, we also see the macroeconomic environment has not improved since then. But even more so, we need to fight for a competitive setup in the mid and long term. And this is what the cooperation will set the base for and this is why we are still confident that this is the right direction to take. Thank you.

Thank you very much. How about the second question?

If I may, I would like to add one thing. April '26 is a starting day of this new company. So the mutual trust based endeavors, certainly, we'll accelerate various activities after the official merge date of April '26. Thank you.

If I may, I would like to add something. Considering the first announcement, it is true that it has taken a bit of time. For one thing, we had this certification issue of in some losses in Japan and the United States, and we had to ask authorities to understand our position, and that certainly took time. That's one thing. But then there had been some very clear decisions over what has happened and what will happen. And we have gone on. And now we have come to this day and this is a great news. We didn't spend 2 years for nothing.

As Mr. Deppen mentioned earlier, because we had 2 years there were discussions that we were able to have different cultures, meat, although was a smiling stage, sometimes I confronted Deppen-san with a lots of smiles on my face. Well anyway, it was very important for all of us to argue on honest basis so that we all understood where the differences work. And now we have come to this day. Therefore, everything will be much smoother after today. All the teams are clear of what they have to do. We sit down and do the further work going forward. Karin-san, do you have anything to add?

I think a lot has been said and I would come back with something that Deppen-san mentioned that yes, 2 years is longer than we had planned for, but this is something we do with a 10,20,30 year perspective. And if you think of it like that, then 2 years is not so long. So happy to be here today for this big milestone. And of course, now we continue all the hard work to make sure we set up the company in a very strong position for April 2026.

If they have any questions, please raise your hand. It's the person in the front row in the center, second person.

I'm [indiscernible] Nikkei Business. I have one question to Sato-san. Going forward for Toyota, how I want to ask about how you'll be facing or having a relation with the Hino. So after the company is integrated, then will Hino remain as a group company. And for the Toyota Industry corporations delisting that you have announced taking that company private, you said that the group are going to work together, feed a stronger group. And Hino is a company that will support the transportation of goods as well. So how is Toyota positioning Hino in relation to today's announced framework?

Thank you very much, [indiscernible] for your question. For Hino Motors and Toyota relationship that we have, the history that we have is, as you know, we have been increasing our capital, and that is how we came up to today's relationship. And one reflection that we have is we, Toyota, are a passenger car business company. And we are not as a parent company, we do not have the capacity or the relationship that can lead in the commercial vehicle industry and as this new integrated company is going to be founded, we think that we'll be able to work in the industry to lead more faster and more flexible. And Toyota will be supporting Hino -- will be very much engaged with Hino in supporting with the technologies and Element technologies.

We will be utilizing and complementing each other with our own strengths. So that will be the relationship going forward for Hino and Toyota. And also last year, our Chairman, Mr. Toyoda mentioned at the beginning of the year, he announced the Toyota Group Vision. And in there, it was -- he said that the group vision is inventing our path for together. And this vision is has been taken to buy -- taken back by each of the group companies think of what kind of path each company is going to event going forward. And we are not united with just one target. We have our own aspirations in our respective fields, and we'll have to think of the roles that we will be playing in our respective field. So that will be the thinking for each group company.

But this -- with this announcement, it doesn't mean that win will not become an equity method affiliate anymore. That is a fact. So that is something that will be -- we have announced.

I am [indiscernible] Mr. Deppen and Mr. Sato talked about the future of commercial vehicles requiring hydrogen mobility to be accelerated. On the other hand, when it comes to the hydrogen, we have a total lack of infrastructure and that remains a major challenge for that organic challenge. Are there anything that fully can work together to resolve teens?

Yes. Thank you, [indiscernible] I think with hydrogen, Sato-san elaborated a bit on this already, we are all facing a bit the [indiscernible] dilemma because the demand side is always complaining of lack of supply and the supply side is complaining about lack of demand. And I think we have to master the technology from a vehicle perspective, from a customer usage perspective going forward. But at the same time, we need to join forces with other industries, with other companies to overcome these bottlenecks. It is a fact we can -- we cannot continue operating like we have done in the past 100 years. And we have to decarbonize the transportation, heavy-duty transportation is a big emitter of carbon dioxide. We know this. And everybody wants his goods transported. So the transportation need is there.

So it is our role to be part of the solution. And by engaging with energy needs, by engaging with infrastructure companies, by engaging also with authorities to organized standardization. Sometimes it's just also the small things, how you fit for the gas station, the filling station, the interface between the vehicle and the charging station, all these things need to be organized and it will take a lot of effort from various companies. And we are ready to engage in those discussions. And this is why we always open the door for other companies to engage in making this possible and happen. And I think Japan has a lot to build upon. And we are very much confident that we can further pursue it in the next years to come. Thank you.

Do you have any more questions? Well, if Sato-san has anything to add, I would appreciate it.

Well, thank you very much. I cannot agree more with Mr. Deppen. But when it comes to hydrogen-based society, 3 parties have to work together, OEMs like ourselves, station operators and trucking companies altogether have to work together as off-takers, the consumption has to increase. And also has to contribute. OEMs have to contribute to make the environment to enable that in the stations, well, hydrogen cost maintenance cost and operation costs [indiscernible] of the cost over the high cost of hydrogen itself. Now as we move on the learning curve, we can revisit the safety criteria and standardization with lower management cost as a result. So that's something that we would like to foresee going forward. Thank you very much for your question.

Thank you. And since it is getting late, we would like to take the last question. Anyone else with questions? Person in the front row. A person with the blue jacket, please.

[indiscernible] regarding your the bus business, I have 2 questions. So to Deppen-san and also to Ogiso-san, I'd like to ask the question. Right now, JBS is a joint venture that he has with Isuzu. So how will you handle this business? And also for Mitsubishi Fuso you have an EV bus -- you don't have an EV bus lined up currently. And [indiscernible], do you have any ideas of [indiscernible] products? Or do you have any ideas of receiving supply from other companies like Hon Hai, they are thinking of supplying the EV bus do you think of receiving those buses.

Maybe I start, [indiscernible] that okay. So I'll start with the second part of the question, Mitsubishi Fuso. As you mentioned, Masuko-san, we have no EV bus today yet. We are working on with other partners, but too early to disclose any details. At the same time, we also realized that, of course, the bus industry is already very concentrated in Japan with JBS and FBM basically only 2 manufacturers are left. So we expect also some concerns from the antitrust authorities, and this is why we are considering how we proceed here. And it's a natural thing that we talk with different companies to cooperate also apart from Hino or JBS because consolidation to one company is very unlikely.

So this is something we have to further work on because we also see it's very important that we can provide competitive and effective electric bus solutions for the Japanese market, and this is what we are working on.

So just as Deppen-san has responded, that will also be my answer too. Currently, we are not have any detailed plans like what will happen to JBS and what we will do with our products. It is just too early in the timing. We will start -- be exploring various opportunities but Deppen-san and myself, we -- what we both are thinking of is that including both trucks and buses under this new companies, when we think about the management of the new companies, we always want to place importance on developing these new companies being rooted in the Japanese market. And so when we say the Japanese market, it's not only the trucks, but the Japanese buses will also be important for us. But how we will work on this is something we will consider very carefully step by step after the new company is formed, and our decisions will come in their respective timings.

Thank you very much for your response. Thank you, everyone. Thank you, everyone, for the many questions. And since it is time, we would like to end the Q&A session. Can you stand all the participants on the stage? Will you all rise? Thank you very much, everyone, for joining us today and please step down from the stage, please. Once again, ladies and gentlemen, thank you for joining us today despite your occupied schedule. And for those in this venue, just inform you, we have a photo session after this. Once we have done the preparations, we will come back. Thank you.