Volkswagen St (VW) Aktie

A very good morning, good evening or good afternoon to everyone from every from wherever you have dialed in, and welcome to our investor and analyst conference call following yesterday's announcement of the Supervisory Board approval of the group target picture 2030.

With me today are Oliver Blume, our CEO; and Arno Antlitz, our CFO, COO. Our agenda is straightforward. Oli will guide you through the agreement and the core elements of the group target picture 2030 followed by a Q&A session.

And with that, Oliver, I'll hand it over to you. SP629595711 Yes. Thank you.

Thank you, Rolf, and hello to everyone on the call. Thanks for joining. Let's come directly to our update. As you know, over the past years, Volkswagen Group has made significant progress across products like in design concepts quality, technologies, software, ADAS or regions like China and of course, our performance programs to strengthen our financial portfolio. At the same time, the environment around us has fundamentally changed. And as a result, measures and structures that were sufficient in the past are no longer sufficient today.

This is not only about Volkswagen Group. This is affecting the whole industry. But at Volkswagen Group, we decided to act timely and comprehensively. To master the challenges in our environment in the industrial transformation, we must make Volkswagen Group more competitive, faster, simpler and ultimately, we must take -- make Volkswagen Group stronger for the long term. There's no alternative, and there is no time to waste. This exactly is exactly what the Volkswagen group target picture 2030 is about.

Our group target picture is not a simple cost reduction program it's far more than that is our plan for the future, a comprehensive transformation plan for the Volkswagen Group. Our plan combines 12 initiatives across 3 core areas: technology, performance and steering. Together, these initiatives address all key dimensions of our future competitiveness from products and technology platforms to operational excellence and organizational effectiveness, governance, portfolio management and regional growth opportunities.

This is what we, as a Management Board presented to the Supervisory Board yesterday. And following intense but constructive decisions, the Supervisory Board approved the group target picture 2030 and most importantly, with no ascending road. This is a strong sign for the future of Volkswagen Group. The changes in our industry require decisive action, and they require a comprehensive transformation of our group. Between the Management Board and the Supervisory Board, they a shared understanding of the challenges ahead, and there's a shared commitment to address them.

Our common objective is clear. to make Volkswagen Group and its brands stronger, more competitive, more effective and better positioned for the future. Implementation will now be driven jointly by the Executive Board of our brands, our subsidiaries and our employee representatives because lasting transformation can only be achieved together. The group target picture is built around a clear financial framework. Our planning assumptions reflect the realities in our market environment. an annual sales volume of 9 million vehicles is a premise for our future structures and cost base. Without additional far-reaching measures such a market environment in the long run would not allow us to generate sufficient returns.

Our ambition is clear by 2030, we target an operating margin of 8% to 10%, assuming flat volumes and revenues. This is equivalent to an operating profit of about EUR 31 billion in the midpoint, as a result of our measures, we would expect overhead costs to be reduced to a level of EUR 37 billion, down from EUR 48 billion in 2025 and the current planning round and equal to 12% of automotive revenues. Investment spending will become significantly more focused and disciplined. We agree on an investment plan to selling EUR 135 billion for the 5-year period from 2027 to 2031. And another step down by about EUR 30 billion compared to the current planning round. This framework creates the foundation for sustainable value creation and long-term financial strength.

Let me now quickly guide you through the core elements of our future plan. A key element is significantly more focused product portfolio and a consolidated technology footprint. By 2035, we will have streamlined our model portfolio by around 50% and reduced component variety by 75%. At the same time, Volkswagen Group will have systematically tailored its platforms. electric electronic architectures, ADAS and software and concentrated them to the end to the needs of each Western and Eastern Hemisphere. This is not a story about doing less. It's a story about focusing on what matters most.

The prioritized models aim to axle in design and technology and win in the markets. by concentrating resources on fewer, stronger products, we will increase scale, reduce costs, improve efficiency and accelerate innovation. The result will be better products for our customers, stronger brands, and sustainable value creation. Moving on to our production network. Our markets have changed structurally. This is true, in particular, for our home market Europe. Our objective is straightforward, establishing a production structure that is competitive on a sustainable basis.

As a consequence excess capacity at Volkswagen Group of more than 500,000 vehicles must be addressed. This is acknowledged by the Supervisory Board. Based on current cost structures, a competitive future production allocation for the [ BMB -- Annika ], Hannover and [ Nakasone plant ] cannot currently be secured on a stated basis from '31 to 2034.

Within the next 6 to 12 months, the plants have the opportunity to develop sustainable and competitive concepts and cost structures. There is no restricted to the Antonio Hannover and Nakasone plant, but a task for the whole production network. In parallel and in addition, alternative uses for these 4 plants are being assessed.

Operational excellence is one of our key value creation levers within the group target picture. The objective is not cost reduction for its own sake. Our objective is to build a faster, leaner and more competitive Volkswagen Group. Across R&D, procurement, production, quality sales and admin functions, we see significant opportunities to simplify processes and improve speed and competitiveness. As part of the plan, we will also establish leaner leadership structures with clear accountability and shorter decision-making path, a group-wide performance and incentive system for executives will further strengthen accountability, both for individual results and for the collective performance of the group.

And beyond the programs already underway, including 50,000 positions in Germany and an additional about 20,000 globally what we agreed already in '24, further adjustments to the group's global workforce capacity will be required to achieve the objectives of a transformation and safeguard Volkswagen's long-term competitiveness. According to the analysis underlying the future plan 2030, a group-wide workforce adjustment of approximately 50,000 positions will be necessary and implemented including a reduction of management roles by 1/4.

Our transformation also requires a sharper way of steering the group Volkswagen's future organization must be faster, simpler and more accountable. We therefore intend to strengthen clear responsibilities, reduce organizational complexity and accelerate decision-making. Which of this, the Supervisory Board has provided the Executive Board with a mandate to develop a model for valve decision-making and leaner group structure. The portfolio of shareholdings and business businesses will be assessed even more rigorously. We will retain only various with a clear strategic and financial contribution to the core automotive business. nonstrategic activities will be divested or realigned.

The group target picture also defines a clear regional strategy. Europe is our home market and our ambition is to strengthen our leadership position. In China, our objective is equally clear. We want to remain the #1 foreign automotive manufacturer. We achieved this we're consistently implementing our in-China for-China strategy and increasingly leveraging China as a technology and export hub. In North America, we are resetting the business for profitable growth. This includes a stronger localization strategy, a sharper product focus and a more targeted regional approach. We will present the details in due course while executing differs by region.

The principle remains the same everywhere. Local markets require local solutions. At the same time, local scale must be leveraged wherever it creates competitive advantage. This chart at the end, summarizes the group target picture 2030 across all operational and financial categories, products and technologies over operational excellence, the group governance. It highlights the major milestones and KPIs we aim to achieve.

In short, 9% margin, EUR 31 billion operating profit with 9 million vehicles sold and with an investment budget of EUR 135 billion. Volkswagen Group aims to be the leading global automotive tech driver and a consequent implementation of the group target picture will be the key enabler. We have unique strengths to achieve this ambition, iconic brand that excites, competence that leads and scale that wins. The group target picture transforms these strengths into a clear road map for action. We are focusing on our automotive core. We are simplifying structures. We are accelerating decision-making and we are investing in the technologies and products that will define the future of mobility.

Ladies and gentlemen, the agreement and the approval of the future plan 2030 by the Supervisory Board mark a decisive step in the transformation of Volkswagen Group. It's in an important signal. We are taking responsibility for the future of our group, for our people, our partners and for industrial value creation worldwide. But let me be very clear. This is only the beginning, the real work starts now.

On the other side, we can build on a strong track record Think of our comprehensive plan presented in June 2023 in our Capital Markets Day, our top 10 programs implemented since then and, not to forget, the December 2024 agreements of VW, Audi, Porsche and Carrier.

With yesterday's resolution, the future plan 2030 moves into execution. measures already underway will be pursued with full consistency and the next steps will be initiated immediately. Where agreements with employee representatives are required, we will involve the responsible bodies and enter to discussions promptly responsibly. The Executive Board will overtake responsibility for implementation with clear governance, clear accountability and the necessary pace. Supervisory Board will remain closely involved and will be regularly updated on progress.

Together, we will make Volkswagen Group stronger, more competitive and better positioned for long-term success. With this, thank you very much, and I hand back over to Rolf again.

Thank you, Oli. In all the -- my useless -- useful recklessness, I forgot about to point out the disclaimer on Page 2. Please read it carefully to yourself as it covers today's presentation. And talking about staying lean and efficient organization, we were just reminding ourselves that such a call in the past would have at least required a back office of 30 people. Today, it's only Oli, Arno, Lars and myself. So another proof point actually that we can learn and that we can act efficiently. So with that, reminding you, if you want to raise a question, please press star followed by one andone and then you can qualify yourself for the queue here in the Q&A.

And I see the first question coming from Tim Rokossa from Deutsche Bank. Tim, please mute yourself and start with the first question.

Yes. Thank you very much, Oli, Arno, Rolf and Lars. And I think we can forgive you for getting that slide we're all a bit excited today. Let me start with a bit of a statement, please. I want to really congratulate you for getting this approved. I do certainly think that there wasn't a single market participant who believe that this is the base case yesterday. And from what I can judge and hear from investors, it's the right thing to do for Volkswagen for the German auto industry. So congratulations, Oli, Arno and everyone on your team in Volks, but also particularly on the other powerful stakeholders who are not speaking on the call today who understand what does it take here and what needs to be done.

And now my 2 questions, please, Oli, I think probably to you. The biggest question is whether the Supervisory Board has now approved something that is actual change or merely kicked off a process for further discussions and potentially problems down the road. Investors will want to understand which elements of the plan are now effectively locked in and would still require further negotiations. If you could clarify that, please?

And Arno probably to you. Can you provide us with as many numbers as you can at this point to help us follow spreadsheets and educate investors on the value of your equity. Obviously, it's the beginning of a no negotiation. I'm well aware you can't give us definitive numbers, but any sort of rough estimate what this may cost you? And then also, obviously, when we think about more details on the bridge from today's profitability to the 2030 ambition would be really interesting.

Yes. Tim, and thanks for your questions. And may I start with your first one. Overall, everything is locked in and Supervisory Board joined our proposal. We already presented in July, now with even more detail. And that's about a complete agreement to our proposals and approaches, especially on the KPIs coming from the profit margin, then the FCA of EUR 135 million up to the additional workforce reduction. And also the activities we are driving now with our plans to reduce furthermore, 500,000 units per year as capacity in Europe is following step, everything what we have done during the last 2 years.

The only thing where we got a mandate and haven't taken a final decision in terms of the group structure. But this is clear, this requires activities now on tax level, legal levels and financials. This has to be worked out up to the next month, and we will come back in '27 with a proposal for the structure. And important, there is that we have the clear mandate from the Supervisory Board to do so. And summing up, everything is locked into and now it's up to us to realize the majority of the program is responsibility of the board. And there, we have taken already important decisions like the product portfolio is then technologies and so on. And now we are focusing on the points which we agreed together with also the workers' representatives.

Also, thanks, Tim, for your words from my side. Perhaps if you talk about the program, first and foremost, there are elements that are not quantified, but they are at least as important as the quantified ones, for example, taking out complexity, taking out layers become faster, become leaner, and other elements are clear improvement, which Oliver just mentioned under the topic of operational excellence. And under this operational excellence topics, some we need to compensate for potentially negative developments. We expect to 2030 and some will be clear improvement versus today.

And having said that, I would like to give you really a very rough estimate how you could think about like a potential very rough EBIT bridge. And Rolf, I think we meet each other in Paris over -- on October 12, and then we're really happy to give a little bit more details. But on a very rough basis, if we start today at about 1.5% margin. That's EUR 320 billion turnover, like let's start with EUR 50 billion, and we want to explain a bridge to EUR 30 billion, so 4.5% to 9%.

As we said, we are conservative on the volume or, I would say, more robust, not like as in the past, where we went for volume growth, which for certain reasons didn't materialize. So volume stable. We expect some pressure on pricing. And on the other hand, part of the improvement program will be incentive optimization based on AI and improvements in the area of sales. and others to compensate for that pressure as good as possible. Then obviously, we have some deterioration of mix due to the ramp-up of the BVs. We want to go to roughly 40% debt mix in 2030 Europe from today, roughly 20% to 50%, although the margins of the BBs become better over time, they are still margin-dilutive. And here, we want to compensate from some elements of the program, material cost improvement, quality improvement, obviously, material cost improvement without deteriorating the product substance of the cars and then comes overhead cost.

Overhead cost should be a real improvement versus today. We go from 16% to 12% in terms of sales. which is basically driven by the reduction of people in that area, about roughly 50,000 worldwide, half of that in Germany, the other weren't outside Germany. And last element, let's not forget, today, we have some loss-making units, which we are expecting significant positive contributions in the future. For example, Scout, we have framed up costs there. Here, it's still negative, battery still negative, and we expect them to turn at least positive towards 2030, which should bring another 1 to 2 percentage points, and that is basically the bridge from today to 2030 to the 9%.

Thank you, Tim. And the next question comes from Pattrick Hummel from UBS. Patrick, please are mute yourself...

Thank you very much, Rolf. And yes, hi, everybody. And of course, also congrats well then from my side, I was certainly amongst those who didn't expect such a comprehensive agreement right in the first meeting, so well done. Oli, in the Q2 earnings call, I asked you about the EU and PHEV tariffs. Now you obviously produced a lot of headlines that probably raised the sense of urgency in Brussels and elsewhere in Europe about measures to protect the European industry. So I'm just curious in your really high-level thoughts about the meetings you have or will have in the coming months, what we can realistically expect out of Brussels and national governments in Europe that would also back up your restructuring plan? Because if the headwinds of the Chinese OEMs keep intensifying fast, your pressure on the top line might just be way bigger and we will never get even close to the 9% margin because, obviously, even flat sales is quite punchy assumption to take if you look at the breathtaking speed of market share gains by the Chinese. So any color on that, greatly appreciate it.

The second one would be for Arno. Just thinking about the charges arising from this exercise. First, you're going to have that 50,000 head count reduction in overhead that's going to come at a cost I'm pretty sure you're not going to give me a number, but am I right in understanding that if and when you take a decision on the future of the plants that are in question that would be a second wave of restructuring potentially required and a second wave of cash out. So just to conceptually understand what we can expect by when? How much more time do you have to take a decision on those plans?

Yes, Patrick, let me start with your first question. And they think we especially as the biggest company in Europe, play an important role also to achieve at the end, better environment solutions coming from the politics. And let me start with Germany. There, I'm personally in a close contact with the chancellor. And his team to think about and decide what has to be done and everything we announced now also situation plants in Germany. I would like to lead this more to a German discussion, German industry discussion what has to be done. And when we talk about cost reductions, we have 3 levels.

The first level is our homework, it's efficiency, productivity, where we have to do also workforce reduction, what we have decided right now. Next level is what we have to negotiate with our labor unions, but also with game to tackle labor costs and what we have on the tariff level there. And the third level is what has to be done on a governmental level. And that's what we will deal now to bring this to a conclusion. And there, I'm completely in line also with lower Saxony as part of our Supervisory Board. Now to touch these points, what's necessary for Germany and also other companies at the end, we will benefit I'm also in contact with my colleagues from the other OEMs or with suppliers. That's a German level, we have to do. And we see ourselves there. It's the main driver also for ours. In Europe, also, we aim for a more European focused industry politic, which starts with a made in Europe approach with an obligation to bring investments to Europe is advantages SCN to act in the market. And this is in favor for us with a strong European footprint. It is about a clever tax policy. For example, this is already implemented for the electric vehicles. and the plug-in hybrids are still without taxes for the Chinese. And you can read this clearly, the market share, the Chinese plug-in hybrids have already in Europe over 30%. It has to be done. And the next point is on regulations, CO2 and there we are also in good talks to achieve leveraging for '28 to 2032 as we agreed at the end for the period, '25 to '27, so many, many topics to do different levels, Germany and Europe. And then I hand over to Arno.

Patrick, as you expected, it's really too early to give you a specific number there. It obviously depends on the specific decisions, unit per unit and on -- really on the specific measures. Let's start with the current program. Volkswagen achieved the 35,000 and also that's 50,000 in Germany from the first agreement until June 2026, we achieved 17,000 and also the past to the 50,000 these effects will still come in the next year, and we'll have a positive contribution. And the costs incurred with that mostly based on early retirement programs are already included in our P&L outlook.

Just to remind you, it's about 0.5 billion, 500,000 a year in Volkswagen -- alone, we assume for these early retirement programs, and they are part of their outlook and basically also part of the bridge already. So if you talk the next, let's say, 50,000. And as I said, like 50% will be roughly in Germany. The other half will be broad. As you know, Germany, there are several elements several instruments, some are more expensive than others -- retirement programs are not as expensive as severance packages and also abroad, it's normally not as expensive as in Germany is headcount. So it really depends on that. And in terms of the plant, so we said currently, we have currently have no allocation in the planning for these 4 plants. But we still look on in parallel on alternative measures or internal users to use them. And this is also too early then to give you a figure there because depending on potential future uses of these plants, we can also significantly reduce the potential one-off. So yes, I don't want to disappoint you, but as you said, it's too early to give you concrete figure. But on the other hand, we have some examples in the past like Brazil or others. So perhaps you could...

Am I right in assuming Arno that you can't wait until 2031 until basically the product roll-offs begin to take a decision on those plants. That would happen earlier, I guess, much earlier.

We need decisions on this plant earlier. For the time being, we have no allocation. We work on different scenarios. But as you said, if you want to have the additional uses, for example, like the discussion we have on Ozempic. Of course, we have to start earlier. And this is also good news. We are discussing these topics early, so we have a lot of time to find alternative solutions.

Thank you, Patrick, and we continue with Horst Schneider from Bank of America. Horst?

Happy weekend or Happy Friday. I think you are happy. I have got a few questions. Maybe first of all, on what that implies now for 2026. I mean I think your 2026 guidance looks tight at the moment? You also said that it's more likely that you achieved the lower end of the guidance range. So first of all, since we are now here on this call, can you make any statement on this guidance, anything changed over summer. It's more maybe a trading update but then also on the implications of the restructuring, I understand that you cannot give us any number right now. But of course, it matters if you book the costs in 2026 or not, especially in the context of the Evolent disposal. So in other words, you maybe want to use the evidence proceeds to pay these restructuring costs or if that not happens, it could imply then that your dividend is a lot higher. So whatever you can say on that on 2026 would be helpful.

Then the second question that I have that is on your volume assumption because you say volume assumption, you took a cautious approach, conservative approach. Your plan with flat sales. When I look at my forecast, I have got 1 million unit less for 2030. So I'm forecasting 8 million units because I expect a bigger decline in China. So what would be the consequence of that? If it's just -- if it's 8 million instead of 9 million, that would force you to trigger more restructuring? Or since it's just China, it's not expensive restructuring. So what if you do not sell 9 million units, what would imply going forward?

And also with regard to the press, and that's my last question. We have seen a lot of press rumors flying around the last few days. Is it true that the SSP platform gets again delayed, [ handled ] written that it's now 2029 or mid-2029, which would imply that Audi gets all the great vehicles only 1.5 years later, maybe you can also clean up with that several month.

Horst, may I start and then happy Friday to you to your question on volume. We distinguish in between China and rest of the world. And the China decline we see already are this year. is at equity. And so it does not affect directly our financial figures slightly indirectly, but the main part is that equity. And we see up to 2030, a stable situation in Europe. Also with our product offensive, we are implementing and then opportunities also with cost reductions and our guideline not to increase pricing. So that's stable. And we see growth opportunities in North America and growth opportunities in terms of export from China. So we think with this million, it's more an overall globally orientation, but we have to go into details over the regions, which affects directly our balance sheet. So we think with this planning, our cost structure is robust and feasible.

But Oliver, just on China, since you say it does not matter that much because the JV. But in China, for China, these models are owned by the 100% owned JV by Volkswagen. So it is fully consolidated in the future or not.

You're right. But that is only a part or a smaller part of our business in China beside of our JVs. But you have to take into account the opportunities we do have now as maybe the only international player having this China footprint. We are able to act like a Chinese OEM. And that's what we see now. We expect this year over 10 million exported cars from China. And now our ramp-ups, we are in the same condition like all the Chinese OEMs with the same cost base, it's a technology profile. And this gives us a completely different opportunity thinking for example to the Global South. Australia where the Chinese are already very successful -- also into India. India is protected against the Chinese. It's a kind of hedging than Africa and South America. And also in Europe, some models could fit into Europe as well. Now that's a unique opportunity in terms of that.

Yes, in terms of 2026, the SRS meeting was about the group target picture 2030. So hopefully understanding that we're not talking about today and also, as I said, in terms of individual measures and accounting recognition, it's really too early to add what Oliver said, we did distinguish between China for China and the rest of the world because the topic of capacity and overcapacity, how robust it is of our footprint it really depends on whether we plan for the right volume in Europe and specifically, yes, in South America much more robust than in the past. And yes, China also matters. We have our JV in [ Anhui ] with 4 models, but the majority is still in our -- JVs. And yes, that's a topic there. And I think Oliver, there was a third question in terms of SSP platform.

Yes. I, at least, I don't know any delay. And the point said that our SSP platform, we're making very good progress is directly linked to our activities at within joint venture that we are running on time. This is people at form is running on time. I can -- nothing says about...

But the plan is also made up on the -- from a perspective that SSP comes in '28, there's no delay in model launches. And you also say today that this should ramp up on time as you always said, right?

And the first product, Audi on the Rivian software architecture we are developing together in this joint venture.

Thank you, Horst. And the next one in line is Harald Hendrikse from Citigroup.

Yes. Again, as per my note this morning, congratulations. I'm 100% sure that you are managing this more proactively than I have seen at Volkswagen for 30 years. And so both for you and but also, I think, some credit for the unions and even the politicians, which I mean very low is to give them any credit, but the fact that this has gone through unanimously is huge for the industry for you and to bonus for Germany.

Two questions. One, how conservative, Oli, is this plan? Can you talk a little bit more detail? Obviously, we're super concerned about China market share losses. How much market share gains by the Chinese are you assuming? How much of a loss of underlying market share for Volkswagen are you assuming in the plan in terms of total volumes? Obviously, we understand what you're doing with capacity. Pricing, what assumptions are you making on a 5-year pricing view for Europe. All of those questions, raw material prices are obviously going to go up. So we know what all the headwinds are. We don't know 100% clear what you have actually assumed in the plan, and I think that's really, really important, a conservative plan is obviously worth a lot more money than a less conservative one.

Secondly, on the cash side, obviously, last year, the cash surprise on the upside, you're talking about a EUR 6 billion annual reduction in CapEx and R&D. The EBIT plan is obviously huge. I'm sure nobody is pricing that in today. But if we add all of this up, we're going to potentially add up to some really big free cash flow numbers. So on the cash flow, maybe, Arno, you can talk about this. What is the target cash flow if you do achieve the 2030 targets. And then secondly, selling all the assets that you have, we've had this conversation in the past, you've just raised EUR 7 billion from Evolent. How much money do you think you can raise from asset sales to further improve the net liquidity and net cash position in the business to provide even more support to the downside?

Yes, let me provide some key figures. As we talked before, starting with a volume, 9 million globally. This assumes about 2.7 million in China without the export opportunities. and 6.4 million in rest of the world. And our cost structures, we will bring to a breakeven point, which is aligned to around 8 million cars and distinguishing the different regions of the world, as I explained before. other framework conditions for our planning are stable pricing without increasing pricing.

And then we are calculating with a best growth to around 40% share in 2030 in total deliveries and in Europe, over 50%. And -- then other criteria is that we have in our planning up to now, no change in the CO2 regulation. We will achieve what I answered before this could be a positive effect. Also no change in tariff regime, especially in the U.S. And then another point is linked to our cost portfolio is to invest ratio of sales revenue to fall to 9%. And all these effects bring us to a breakeven situation up to 8 million cars around the world, but focusing especially the rest of the world, which is linked directly to our business case. And then handing over to Arno.

Yes. In terms of cash flow, when we -- you remember back then in Okla, when we present our first Capital Markets Day, we said look there to streams of improvement first margin. And the second is cash conversion rate, which we define basically a percentage of cash we convert from EBIT. And this is really something we still stick to that and we made strategic plan back then, we said we came from more 13%, 14%, 13% and 10% to 11% and then finally, 9% in 2030 on the CapEx combined, and that should lead us to really more than -- almost doubling the cash conversion rate to 60%. So if you do the math, it's -- don't get me wrong, it's still 4 years out, but if you take the target of EUR 30 billion of EBIT, 9% over the sales, you deduct our finco because that's not automotive and you take 60% cash conversion rate. So it's roughly like 50%. This is what we aim for. And we are on the path and you need basically the 2 levels, improved margin. This was more or less EBIT I just said. And then obviously, cash flow and the net cash flow is driven by the upfront investments where we committed to that 9% for 2030. But it's much more than that. It sounds easy. It's more like a huge comprehensive program in terms of more energy in the group.

Shortening the model range, taking out duplication of most engines on the technology side. And last but indeed, it's also a cultural change. We really achieved a cultural change on the cash flow as well. Two years ago, we included in the bonus scheme for all the managers, not only EBIT, but cash flow and yes, it worked out quite well last year, and we had also until the first 6 months pretty decent cash flow. So this is basically these are the elements we want to deliver on towards 2030.

And I think your second question was what to do -- with how to use these proceeds. And there are always 3 elements. First and foremost, in different times, one element is strengthening the balance sheet. We see some competitors. They have a much stronger balance sheet in terms of net liquidity on hand divided by sales. We have EUR 34 billion, which is really solid, but others are stronger on that, and that obviously also translates into the rating, which is important for [ finco ].

The second element, we always look on the hybrid bonds, what to do with that. And first, obviously, we have our dividend policy with a payout of more than 30%. And so these are the elements, and we will look on the way from here to 2030, how to use this 3 elements.

Thank you, Harald. And maybe one word on the stable pricing. Yes, of course, we know that is a bold assumption, but it meant a little bit norms. So we -- of course, we expect prices to be under pressure -- but what we aim for is obviously to work against that with intelligently steering our tacticals we use -- so we are not ignorant of the fact that, in particular, in the volume business, there will be some pressure on the pricing side.

And with that, we continue in the Q&A with Tom Narayan from Road Bank of Canada.

Congratulations. The first one of the comments on the model portfolio, the reduction, I think, by 50%, complexity by 75% by 2035. I guess -- and I know you're still figuring this out, but I mean, where could this be specifically, is it specific brands? And then North America, I think you talked about focusing on the most profitable segments. Is this like a mix thing like SUVs, for example? Or does this mean leaning on certain brands? And then alternative uses for the plants. I know you said you haven't figured this out yet, could this include collaborating with the Chinese OEMs for the use of this plant?

And then lastly, focus on core automotive. We do know automakers, notably, Tesla, are investing heavily in nonautomotive or endeavors -- we know you're doing robotaxi. But does this mean you would not consider things like defense, energy storage, humanoid robotics? I know those things may sound kind of science fiction, but [ $1.6 trillion ] of market cap suggests potentially otherwise. Those are my questions.

Yes, Tom, let me start with your question on our product portfolio and to explain all of you how we have handled this -- and all the decisions are -- or most of the decisions are already taken. First of all, we defined some Gordon rules for our brands. what product portfolio should fit for the brands, then we defined clearly in which segments, the brands have to act. Also including lighthouse projects for our brands. And then we decided where to cut derivatives where today we have substitution in some segments to streamline our product portfolio. This is already done, and we know brand by brand, clearly, where to go, the same as options we are offering. And there are key examples we have in brands sometimes like only more than 1,000 variants of seats. And we pushed this down to lower than 100 and the hundreds or thousands of examples what we are tackling right now, the majority is kicked off, but I'm still work to do then come into the regions, also with a very focused product portfolio for the regions. And there we checked the profit pools, especially Utah North America important profit pools already not -- still not played by Volkswagen Group, especially rugged Series and pickups.

And there, you know about the activities in scout, but more than this and also that we see opportunity for OEM for Volkswagen, especially to bring cars on non-leather frames very tailor-made for the U.S. as concept, but also at the end, being produced in the U.S. And that's our more regional approach which we started in China for China, but also now more focused in North America for North America because it's an important growth market for us. talking about collaboration with Chinese OEM.

My answer is we are a Chinese OEM. And so we don't need any collaboration. What we have done, of course, with hoping in terms of software. But this was only the foundation for our own electric electronic platform. We developed 100% by our own and which we launched already at the end of last year. And for the future, we are a Chinese OEM.

Then you touched at the end of your question, growth opportunities. And of course, this is one initiative in our target plan for the future. And there, we have different elements. One element is regional growth. North America, then export from China and also opportunities in India.

Second, our services for our customers, like insurance business, also fleet business play a role there after sales and things like this and also to improve the loyalty to our dealer network, which we drive also very close together with our financial services.

And the third pillar is about growing industries. And there, we have great opportunities to go into energy storages. We have already implemented in serious production and working first energy storage systems, and this is closely linked to our power core initiatives where we produce our own battery sales. Now that's a great opportunity for us. Then have defense business, what we are doing now first, for example, the plant in [ Osnabruck ], but with more opportunities, you touched robots.

There, we have unique opportunities because we have all the use cases in our company and then bringing this to other companies as well in scaling the business. Other opportunities are circular economy, which we already kicked off, which will start in October. There, we have legal requirements on the one hand side, but on the other side, also opportunities for other companies. And then other opportunities or semiconductors also where we see opportunities, only giving you some examples what we are doing in terms of growth opportunities.

Just a clarification, the alternative uses for the plants, and that's where I was talking about the need collaboration, the potential for collaborating in Europe and your plants -- is that something you would consider?

There's no need because we have Chinese products. And when we see the opportunity first as expert, but later, maybe it's localization, we can take our own product. And just remember, up to the end of next year, we will launch around 30 new products in China, especially on the NAV level. There are some interesting ones. We haven't got in Europe. We won't cannibalize European products, but there are segments which are not played by ourselves in Europe. And these products, we will check first as an export and then for localization. And therefore, there's no need to collaboration with the Chinese players.

Tom, I would like to follow up on what Oliver just said, to give you an example and how that translates also into a chance on the mix because we said mix is negative, obviously, product mix due to the BVs. But for example, if you look at U.S., Currently, huge volume is [ cedar ] and towers, which is the entry-level small SUV. And you could imagine you don't need much fantasy that these margins are not great, bringing them from Mexico to U.S. under the current tariff scheme.

And so we looked at, as Oliver said, that the profit pools, and we bring this out, which is from our siting perspective, one of the most promising segment and also for brand Volkswagen, it's too early to make an announcement, but also in brand Volkswagen, we move into the segments, which are more promising in terms of margin.

And let's not forget, Audi. Audi has a huge product momentum in terms of Q7, Q8 and Q9, which we also targeted to the U.S. market. Yes, from today's perspective, some tariffs, but still with promising margin. So there are a lot of elements that are very concrete to behind that initiative targeting more attractive segments.

Then we continue in the Q&A queue with Christian Frenes from Goldmans.

Hello. Yes, we can Yes. Congratulations to Oli, Arno and Rolf and Lars, for this important announcement. Just a couple of clean-up questions on my part. First of all, your press release talks about 12 initiatives. I only counted 9 bullet points. So were some of those initiatives bundled together in the bullet points? Or are we missing free initiatives?

No. You have to take the overall target picture and the financials. This is important. And then you come to 12.

Yes. Okay. And then second question, just on China very quickly. The 9 million units includes 2.7 million units in China. Can you outline what you think the market share would be in your China ICE and China BEV markets, respectively, just broadly in 2030? What's the sort of underlying assumption?

Yes, it's about 70%, we needed to check the number [indiscernible] 70% NAVs and 30% ICE, but you know about the high dynamic we have faced right now in China, and that has to be adapted, not like all the others do. But from today's perspective, this could be a realistic number and our product portfolio is prepared on this. But we have also the flexibility in terms of I hybrids, and range extenders in our portfolio beside of the clear bet. That's what we developed during the last 2 or 3 years and now ramping up the whole product portfolio.

And then just to clarify this point. I mean it seems very clear from the title, but I just want to make sure the 50,000 of job reductions that is being talked about -- is that pre-2030? Can you just confirm that?

Yes. It's by 2030, we reduced 50,000 more. And this is especially in admin functions, management, we will reduce 5,500 managers, and that's 1 quarter of our management profile. And 1,100, we have already done this year. That shows that we haven't waited for overall decisions. Everything we could do by our own, is decided in implementation. And we can say that the half of this 50,000 are in Germany and the other half internationally. And this comes to our reduction. We are doing already the 50,000 from our agreements from '24 in Volkswagen, Audi, Porsche and Carrier in Germany, plus globally. And so the first step to have the figures clear, 70,000 first agreements and then 50,000 more up to the end of this as clear and this is without any plant closures but the plant closures are later than 2030. And therefore, I think the Swiss number 120,000 globally. This is a concrete number.

Okay. And just one more on the production structure. You mentioned that the EG Metal negotiations on tariff structure are ongoing. Should we expect a decision that coincides with the June 2027 date that was mentioned for the production structure, I would imagine that they're related?

Now we -- what we are doing, all activities we are driving is about 170 companies. And now from Monday on, the teams sit together. And then we make a specific plan for each of our companies. The biggest ones you know, Volkswagen auto has done already, some decisions, but overall decisions could be added to the Porsche agreement. We opened this in the decision. And so we will have specific solutions, but also general solutions, what I explained before in these 3 levels, our own homework, then things labor costs we deal with our labor unions and game. And then overall, generally, what could be decided with the government. And on these 3 levels, we are working and we expect also labor cost reductions.

Just one more. Just what happens if in June 2027, no alternative uses are found for the factories?

The task is to build now an optimized European production footprint. And Germany is one part of this. We have a clear cost target which has to be reduced in Germany. And so where we can't find a solution for any plant, we have to close the plant. But to close the plant, is a last decision-making point because it's a more most cost-effective point. And therefore, I always talk about intelligent solutions. And there, first of all, focuses on improved competitiveness. We already achieved last year, a reduction of our plant costs of over 20%, which we haven't achieved the 20 years before. That's a great achievement, but it's not enough. And we will continue to do so. First, competitiveness and competitiveness at the end serves also for other industrial solutions.

Then we kick off what Arno mentioned, other industrial solutions for our plants, then we take opportunities maybe with Chinese products from Volkswagen Group, we can bring ever. And at the end, we built this European production footprint profile. But the goal at the end is very clear. to furthermore reduce 500,000 units a year to adapt our production profile to the market demand. And on the other side, to reduce the cost gap of EUR 1.5 billion. That's our target. And the last decision would be a plant closure. But if there is no other option, we will do it.

That's very clear. Thanks for elaborating on all of those questions. I will -- I had one more quick one, which is the group structure on modern group governance and standard tax practice was mentioned in that bullet point. I'm just wondering if you could elaborate on that. That's my final question.

Yes. There we have different points. There are some process and steering topics. We are up to implement then to reduce our reporting structures and all the rest we do have in between Supervisory Board and the Management Board. We have a lot of topics to make it leaner, more efficient and quicker also compared on benchmark level.

The bigger one is to order the structure of the bigger companies like Volkswagen, our business or our component business. And there, we got the mandate to work it out. And there, we have a lot of aspects in terms of taxes, legal requirements or financial requirements. It will take us around a year, and we will come back with a concrete detailed concept to the Site Supervisory Board. But having clear in mind what we want to do, a more efficient structure, which we can drive with more transparent. And this has to be cited at the end by the Supervisory Board, but in 2027.

And Christian, for transparency, you have the 12 initiatives on Slide 4 and what you were likely referring to was Slide 12, where there is an excerpt of these 12 initiatives as a summary slide for the operational and financial categories. Hope that helps.

And we continue with Daniel Schwarz from [ Mesa ], Daniel?

The question I discussed most today was why did the unions be on this. So the management got its way on most matters. There seems to be no guarantee to the Works Council and not even concessions on the dividend side. In the weeks or last few weeks, unions made clear that they disagree with your assessment or maybe not even with your assessment, but with the measures you were proposing. So maybe can you share what was important for the unions in the negotiations? And related to that, is a potential carve-out of Volkswagen Brand and the components off the table? Or could this still come back on the agenda in the new structure?

And my second question is basically 3-page draft resolution or usage that's in the media today that mentioned that EUR 4.8 billion cost improvement is coming from deconsolidation. Just for my understanding, does it mean you are selling or closing companies that are today EUR 4.8 billion loss making? And yet, can you confirm that? And my last question is -- you mentioned the importance of the credit rating for Finco. I assume that means financial services, that's definitely not one of the 600 to 700 companies you are looking at for potential separation from Volkswagen. That's always part of the automotive core business. Is that right?

Daniel, just -- we would not comment on what has been or might have been published in the media what you call the close as there for your understanding and hand over for the -- answering the other questions to Oli and Arno.

Yes. What should have driven our workers council to agree. And you know we have had intense but at the other side, also constructive discussions. On the one hand side, they have seen our results from the H1 this year. where you can see compared to the competition, our improvement, especially in the automotive part of our business. This results of our progress from the last years. And there you can see it very, very clearly on the other side. Also our workers' council is aware.

The current framework conditions, geopolitical crisis, trade barriers, regulations, market disruptions and everything we have to spend in the transformation. And therefore, I think at the end, I think our target picture, has got a very professional structure. It's got very profound and detailed at the end, the arguments we presented were winning -- and our workers' council has understood that also they have to take over responsibility for the future of our company. positive is that we have a strong base. We have everything in our hands. But now we have to take the decisions for future robust company. There is no time to wait -- and therefore, I'm very happy that we were able to convince them to agree -- and about half out there, the decision we have taken is a mandate for the management board to work on a concept to present this concept in '27 because there are a lot of details behind and so we are not able to decide it directly with all these tax, legal and financial implications. But the mandate is there, and we are up to start...

I can take the last one. Concerning our finco, Volkswagen Financial Services, we see the Volkswagen Financial Services as an integral part of the group going forward. And even more, we see that as a as the strength we have that we can rely on the products like we're seeing financing going forward. But that doesn't mean that our finger needing to also improve. Become leaner, become more efficient and also in terms of focusing on the core, we started in the Finally, we had units that deal with charging, others with payment, micro payments, which were not the core. So we Fincos to core, but the program has equivalent elements on the finger side to become there also leaner and more focused.

Thanl you, Daniel. And we continue with the -- with Jose Asumendi from JPMorgan. Jose, welcome.

Thank you, Rolf. Many congratulations to the team for the agreement presented. Just 2 questions, please. Arnd, can you elaborate a bit more on balance sheet, net liquidity in whichever metrics you want to look at it, maybe net cash flow on net financial position to sales as a ratio or a liquidity in general. And I'm trying to understand ultimately the minimum liquidity required. And how do we think about the restructuring cash outflows in the next 2 or 3 years? I know it's difficult to quantify, but we're getting a lot of questions on the balance sheet on liquidity and then on the magnitude of restructuring cash outflows for the next years? And then also on dividends, despite all the work necessary workwear be doing in the next year. So the dividend policy remains unchanged.

And then second, Oli, please, if you could comment on -- we're seeing a lot of announcements around different plants in Europe, announcements around the brands like SEA, the plant in Bratislava, the consequences of moving production out of RatisLava for the postal group, all the -- and I guess it's not easy just to pinpoint which actions specifically you want to take. But when should we expect at least directionally to see an acceleration of the measures being taken? Is it as early as or do you think it's more of a 2027 that we will see some of these industrial actions taken in '27 costs?

Yes, thanks for the question. Yes, I made some comments on that elements already. I've full understanding that there's a lot of interest in these topics, but I cannot be more concrete because we just don't have just concrete decisions basically on certain decisions where we have like restructuring measures. And so we can only comment on them once we took the decision and we booked the measures. And on the liquidity, I basically gave you the path into the future, we want to strengthen net liquidity by much stronger net cash flow and that strong on the cash flow is the 2 elements increase the margin to the 9% and then basically optimize the CapEx combined and so increased cash conversion rate. And on the dividend, it's also it's really -- we have our dividend policy. There are a lot of elements you named Evolent, we have potential restructuring. So it's really also the early.

The dividend for next year, we will decide next year once we release the full year results and they are really ask for understanding that this is where we currently stand and if you can give you more color than I did. Principle is clear, we are fully committed to deliver on the program, deliver on the margin to make the group more robust. And one element of robustness is a balance sheet, as I said, but we also have a look into other elements like our shareholders and also we look on the hybrids.

Jose, coming to your second question about our production footprint. First of all, I don't care about the media and the majority of the articles speculations and wrong information and maybe interest driven. What we have published is to clarify our production footprint in terms of competitiveness. That's the headline of everything. And all of our European plants got the same chance to get there. And so we are pushing competitiveness. That's important.

And also the European German plant. And at the end, Bratislava is an important plant with a very good cost level. So we'll play a role in our production footprint for sure in the future. And we will publish this in '27 step-by-step when we will have taken the decisions in our option room, we are already started to build. In terms of SIAT as a company, we will modify SIAT S.A. But on the other side, what is also clear that we have a certain product portfolio with at joining up to 2030. And on the other side, we are very happy about the development with Cupra, more attractive, higher profit margins. And our focus for the future will lie on Coupa and modify the company structure of sales to be leaner and then we're more focused on where we have the best profit pools.

Thank you, Jose. So we have 2 remaining questions here in the queue, and we continue with Mike Tyndall from HSBC. Mike, please move yourself and go ahead.

Two, if you don't mind, and I apologize in advance slightly challenged questions. But just to understand a bit more about what you're thinking. If I think about flat volumes on 50% fewer nameplates, my math is saying that, that means significant growth for the remaining models, the ones that will actually survive. Have I got that right? And what will drive growth for those particular name plates.

And then the second question, I don't know how to articulate this in a very nice way, but this is not the first time we've heard about too many steering wheels and too many options. And I wonder if you go back to the culture change that you talked about with regards to cash flow. How do you get a culture change in terms of complexity? Because it feels like rightly, you've identified complexity as a problem, you're addressing it. But there does tend to be this relapse after a certain period of time. I wonder how you stopped that happening going forward.

Good afternoon. in terms of volumes. First of all, on the one hand side, our cost structure is focused on this volume model we already talked about. On the other side, we will have 2 different views on this. We have a very ambitious sales volume planning. And this is independent from our cost structure. And our main goal is to bring down our breakeven points, therefore, is important to deal this with a more conservative sales planning.

Those opportunities we see, especially in North America, we see growth opportunities with export from China. And we are also taking India. These are the main areas and in other regions like Europe, we want to stay stable. And important is once again 2 different layers and perspectives. One is ambitious sales planning and on the other side, our cost structure in terms of improving our breakeven situation. In terms of options, of course, this is a cultural change, and we have already implemented.

And on the one hand side, is more a strategic approach for our engineering departments. On the one hand side, reduce massively the manpower of our engineering departments, making them leaner -- and one point is there a one-for-all approach. And where we already started and have a lot of fields there, where we develop in one area for all brands in the group. And this is benefiting from our scale opportunities. In cultural change, this was important to change. And we have done this with a board. We have never had before. It's a technology board on top level where we met during the last months weekly or every second week to take decisions beside of our normal meeting structure.

And this was important to take quick decisions and to take some beside of all the existing meeting structures and complex engineering organization on small circle. And once having taken the decisions the organizations will follow. And now we are on the point we will do or continue with this meeting some months, but then we will go back to the main meeting structure, but now with a decision-making concept and structure, which is completely different than we have done in the past.

Michael, you challenge us on the models, and I would like to give you an example, which I just used in the current presentation. Look, if you look at the past, and I'm sure you know our model, ASV is a very important segment in Europe. In the past, Volkswagen had the T1. Then we added the T1 on old space, okay. And currently, if you look at the segment, we have the T1, the Thai Ron, the ID4 and ID5. And Audi, Q3, Q3 bought back in the past. Now Q3, Q3 bought back, Q4 each run, Q4 each run. And there are not so many additional customers. So we are really confident with targeted models that are really perfectly targeted to the segment groups and differentiated within the group, we can address this segment with significantly less models and be even more successful because they are more targeted less overlap but didn't even talk [indiscernible] and also taking out complexity means like a better scale, potentially also better material cost because you get scale at the suppliers and the cars have then a better cost base and then potentially be even more successful. This is one example why we are convinced that this will work.

And there are no 2 additional questions. The next one is Michael Punzet from DZ Bank. Michael, please go ahead.

Yes, Mike have some questions regarding Triton. If I take into account your numbers, the numbers you gave us EUR 31 billion in EBIT and 9% margin implies a revenue level of EUR 340 million to EUR 350 million, which implies for me that trade is still on a full consolidated level part of your company. Maybe you can explain a bit what is the rationale behind that? Because I see only a limited synergy potential from between trucks and cars. And in the past, you said when I remember correctly that you stick for a 75% stake in trading to secure the rating of Triton still true until 2030?

Now you're quite right that part of our target picture 2030, Trading is part of the group. We not -- it's the same participation like today, but we always said we want to stay a responsible shareholder. This is like basically a potential of that we go down to 75% plus 1 share but this is what is currently reflected in the target picture. And so with 75% trade would be still fully consolidated and this is reflected in our target picture with a 10% margin.

Thank you, Michael. And now the very last one, we have in the queue is John Marco from Neuberger. John Marco?

So a question on profitability improvement as rating agencies particular S&P feature looking to see an improvement in profitability potentially already in the next 12, 18 months. So what you can say about the improvement you can achieve based on the agreed plan into the next 12, 18 months, which would be the easiest wins and if you can quantify some uplift. And on the same -- on the other side of the equation, the restructuring charges, can you provide an indication whether the bulk of the restructuring will be likely booked already this year, so will affect this year balance sheet unless the next or it is too early to say because, of course, this would be relevant also for rating agencies and the assessment of profitability improvement into next year? And then the other question is just a clarification on the potential carve-out assessment you are you are mandated to do. Is this mostly on component or there are other parts of the business I didn't catch that.

Obviously, it depends on the kind of material -- on the time of cost. The material cost will be more gradually with contributions the bigger contributions more coming later, for example, it depends on battery, on chemistry, but also on the changes of the cars. Others depend on when we get the agreement and we can like and move on restructuring.

For example, our retirement program is basically an element rather linear year per year. we moved the Gulf to Mexico, which is part of the old program, which is more like a step down in terms of cost. So I would say what we could agree on this takes now a little bit so much time we could give a little bit more color on that in October. And then obviously, for '27, we need to wait until we at the end of the year and give you then the concrete guidance for '27, but we can give a little bit more color on the bridge I just discussed of an hour ago, which effects would materialize in which degree when -- for example, we talked about Scout and carried improvement versus a negative position today. So let's agree that we give a little bit more color in Paris.

And Jean-Marc, coming to your second question about our mandate, and this is focusing the group structure, general and in concrete, Main issues are VW cars together with the brand group core and our component business, together with Powercor. But when they will raise other opportunities, we will touch them also. And first of all, this is important to check the legal -- the tax and the financial structure behind. That's by far complex this has to work out. But the mandate is more general. But we have some areas of interest there.

Thank you, Gian Marco. There is no one left in the queue. So we are almost on time, only 5 minutes late. Thanks for the very vivid discussion. Thank you, Olu and Arno, actually for answering all the questions here in the conference call. The next occasion to meet with us is, as Arno has mentioned several times around the Paris Motor Show, which will be on October 12. So we will have Arno and Oli around and Thomas Schaffer, and there will be the opportunity to drive the Urban Best family cars in Paris. So a very exciting event. We look very much forward to meet you there. And if you have not registered, please use the opportunity and do that in due time. And yes, that brings us now to say thank you again. Please follow up with the IR team here in Volkswagen. If there is anything unanswered. And we wish you a very good Friday afternoon and a very good weekend. Thank you.

Goodbye to all of you and see you soon.

Thanks very much your time.

Good morning, and thank you for standing by. Welcome to the Volkswagen Group H1 2026 Results Conference Call.

[Operator Instructions]

We will first take questions from investors and analysts, after a short break, followed by a separate Q&A session for members of the media.

[Operator Instructions]

Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Dr. Sebastian Rudolph, Vice President, Global Group Communications, Volkswagen AG. Please go ahead.

Thank you, and good morning, everyone. A warm welcome to the half year 2026 results call of Volkswagen Group. This is a joint call for both the media as well as investors and analysts, moderated by Rolf Woller, our Head of Group Treasury and IR; and myself, Sebastian Rudolph. With us today are Oliver Blume, our CEO of Volkswagen Group; and Arno Antlitz, our CFO and COO of Volkswagen Group.

A few remarks before we start. You should have received the press release, the interim financial report and all other related materials, which were published this morning. If you do not have them yet, you can find all documents on our website or just drop us an e-mail.

Now let me hand over to Rolf, the floor is yours.

Thank you, Sebastian. Good morning to everyone on the call. Thank you for joining us today. Let's have a look at our agenda. Oliver will start with the key developments of the first half year, and Arno will then take you through the half year financial results and the full year outlook for 2026. And I will hand it back to Oli who will guide you through the current status of the group target picture 2030. Following their presentations, we will first host a Q&A session for the investor and analyst community, which will be hosted by myself.

And after the session and a short break, we will continue with the media Q&A moderated by Sebastian. Since our call will include forward-looking statements, the safe harbor language and other cautionary statements are on this slide, you should currently see on the screen will govern today's presentation. As usual, I encourage you to read the disclaimer carefully as all forward-looking statements are qualified by this language. In the interest of time, I will not read it out loud.

With that, I hand it over to Oli. Oli, please go ahead.

Thank you, Rolf, and good morning, and also a warm welcome to everyone on this call. Let me start by providing you with an overview of key developments of the first half year. We are operating, as you know, in a more than challenging environment. Major markets face weak consumer confidence, subdued demand and intense competition. In China, the market declined by 20% in half year 1, further increasing excess capacity, everything in spite of over 500 new models arrived in half year 1 in the market. As a result, Chinese OEMs have sharply increased exports, adding pressure in Europe. U.S. tariffs create a significant burden and restrict international trade in our home market, regulatory requirements and high energy costs add further pressure. This affects not only Volkswagen but the European auto industry as a whole. We at Volkswagen are acting early on and decisively.

Before I take you through our group target picture 2030, let me start where we stand after the first 6 months of 2026. In the environment described, group deliveries came in 6% lower at 4.1 million vehicles, but underlying demand for Volkswagen is stronger than the headline figures suggest. Europe remained positive, with deliveries up 3% in our home market. We thus retained the clear #1 position. North America returned to growth with volumes increasing 8% despite continued BEV weakness and supported by the new models. South America also delivered solid growth of 9%.

In China, deliveries declined 37% in quarter 2 and 26% in half year 1 reflecting very weak consumer sentiment, the end of subsidies and the ongoing model transition. In light of a weak NAV market in quarter 1, we started the year as #1 in China. After 6 months in 2026, we continue to be strongly positioned in the top 3. Excluding our China JVs, deliveries increased 2% year-on-year, the first 6 months and by 3% in the second quarter stand-alone. Our renewed SUV portfolio is creating momentum across key markets. In North America, Tiguan and Atlas supported growth, while T-Cross and Audi Q3 continue to drive volumes in Europe. Even in China, initial customer response to locally developed models such as Audi, E7X and Volkswagen ID.ERA 9X is encouraging, strengthening our confidence in the -- in China for China strategy.

We are not standing still. The ID.Cross is complementing the electric urban car family in Europe. The vehicle was just introduced to the market. Order intake remains strong and increased 4% year-on-year to 2.1 million vehicles in half year 1. As a result, the order book grew to around 1.1 million vehicles at the end of June, providing visibility of more than 3 months of sales. We are especially encouraged by the strong momentum in our BEV order book, which increased by 57% year-on-year to 330,000 vehicles. BEV now account for 31% of the European order book, up from 22% at year-end 2025.

A major contributor is our new electric urban car family. For the first time, Volkswagen Group has a comprehensive and highly competitive offering in the entry-level BEV segment opening up a large customer group that we were previously unable to address effectively. The Volkswagen ID.Polo, Å koda Epiq and Cupra Raval have already generated more than 70,000 orders within weeks of launch even before entry level variants become available. Together with the recently launched ID.Cross, this provides a strong foundation for future BEV growth and market share gains in Europe. This shows how our platform strategy is working. One platform shared by 3 brands across 4 models, unique cars and highly differentiated, yet about 80% shared parts produced together in 2 factories in Spain, overall, realizing synergies of more than EUR 600 million.

Importantly, this will also put us in a better position to reduce the remaining gap to the CO2 targets in Europe. And in such demand environment, Volkswagen Group held up also financially. The group generated stable sales revenue of EUR 158 billion. Operating profit amounted to EUR 5.9 billion, corresponding to a 3.8% margin. Excluding restructuring costs and the ID.4 related write-off in the U.S., the margin reached 4.3%. The consistent implementation of our performance programs is increasingly visible in our results.

Over the past years, these measures have enabled us to weather substantial market-related headwinds with a cumulative headwind in a double-digit billion euro range to date. At the same time, cash generation remained strong with EUR 3.2 billion automotive net cash flow in half year 1, up EUR 4.5 billion year-over-year. Net industrial liquidity amounted to EUR 32.7 billion. This is providing us with a solid base to stay successful in the market environment and to decisively push ahead with our group target picture.

Looking at the results of our passenger car business, the operating profit increased from EUR 4.4 billion to EUR 4.8 billion in half year 1. This Brand Group Core, Volkswagen brand stayed firmly on the path of improved efficiency while simultaneously advancing the largest product campaign in its history. The Brand Group Core margin, excluding special effects, improved to 5.9% in half year 1 2026. Brand Group Core Progressive increased results with improved performance in Europe, overweighting the headwinds in China and the U.S.

In half year 2, the operating margin is expected to accelerate to 6% to 8%. Brand Group Progressive should benefit from product launches such as the new Q7, Q9 and RS5 models as well as continued cost work. At Porsche, we undertook a comprehensive restructuring and repositioning in 2025, including a sharper focus on our core business and expanded cost program. As forecast, the restructuring measures are beginning to gain traction with operating profit increasing to more than EUR 1 billion in the first half year 2026. On reported basis, results were up by 45% to a corresponding margin of 8%.

With that, I hand over to Arno for a more detailed presentation of our financial results.

Yes. Thank you, Oliver, and good morning, everyone. Ladies and gentlemen, the market environment has remained challenging in recent months, and pressure has intensified. The ongoing conflict in the Middle East continues to create volatility. In China, the overall market is down by 20%. Chinese competitors not only export their vehicles to Europe, but they also export competitive pressure.

In this environment, we continue to manage the situation with discipline while consistently advancing the implementation of our strategic initiatives. We continue ramping up our attractive new vehicle portfolio, both electric and combustion engine models. We continue to reduce investment spending and overhead costs while workforce reduction is progressing as planned. Automotive net cash flow was strong at EUR 3.2 billion in the first half of the year, EUR 4.5 billion above the first 6 months of 2025 and the announced sale of 51% of Everllence with expected proceeds of around EUR 7.4 billion is further evidence of our active portfolio management.

But despite this progress, our operating margin is still not at the sustainable level at 3.8% after 6 months or 4.3% before special effects. Results clearly reflect the environment we are operating in and the challenges in our business model and an overly high cost structure. The 4% margin shows that the cost reductions currently agreed under the existing programs are not sufficient in today's economic and competitive environment. In short, the half year results are another wake-up call for action. We must accelerate and broaden our efforts to lower our cost base structurally, generate adequate returns and safeguard the delivery on our financial ambitions. This requires structural and sustainable improvements across group improving vehicle cost structures without compromising product substance, reducing overhead costs, increasing plant efficiency and accelerating technology development and decision-making.

Requisites are clear. To achieve this, we need to substantially lower complexity and faster execution across our product base and technology platforms, our portfolio of participations and our leadership and decision-making structures. These are the areas addressed by the group target picture 2030 Oliver will present later. What matters now is swift and disciplined and consistent implementation.

With that, let us dive straight into the operating and financial performance of the first half of the year. Vehicle sales totaled 4 million units in the first 6 months, 8% below the prior year level or 1% higher excluding the China joint ventures. Group sales revenue remained broadly stable on EUR 158 billion as growth in Financial Services offset lower revenue in passenger cars. The operating result came in to EUR 5.9 billion, 12% below H1 2025, corresponding to a margin of 3.8% in Q2 alone, the margin stood at 4.2%.

H1 results were burdened by special effects of around EUR 0.9 billion, equivalent to approximately 50 basis points of margin. Excluding these effects, operating profit reached EUR 6.9 billion and the operating margin was 4.3%, slightly below the midpoint of our full year outlook range. Profit before tax declined by 26% to EUR 4.8 billion in the first half of 2026, and this was driven by the lower operating result and a negative swing in our other financial results, mainly due to valuation effects and impairments on participations and shareholdings.

Profit after tax decreased to EUR 3.1 billion. Automotive net cash flow increased to a solid EUR 3.2 billion compared with an outflow of EUR 1.4 billion in the prior year period. Excluding M&A, clean net cash flow increased to EUR 3.7 billion, and cash out for M&A amounted to EUR 0.4 billion. This includes EUR 0.9 billion for the investment in Rivian, partially offset by EUR 0.5 billion cash inflow from trade disposal of stake in Sinotruk.

This development underlines our continued M&A discipline. Automotive net liquidity at the end of the June came in at EUR 1.8 billion -- came in at EUR 2.7 billion. Net cash flow of EUR 3.2 billion more than offset dividends to shareholders and hybrid bonds, interest payments totaling EUR 3.1 billion. Overall, automotive net liquidity remained very solid at EUR 32.7 billion at the end of June.

Moving on to the performance of the divisions in the first 6 months of 2026. Passenger cars recorded an operating profit of EUR 4.8 billion, some 8% up on H1 2025 and corresponding to a margin of 4.1%. Commercial vehicles were impacted by costs related to restructuring and alignment measures booked in the first quarter, supported by a stronger Q2, the operating result came in 24% lower year-on-year at EUR 0.9 billion. Financial Services delivered a robust performance with EUR 0.9 billion operating profit roughly on par with prior year period.

Looking at the profit bridge of the passenger car business area, volume and other had a negative impact of minus EUR 0.7 billion compared with the same period last year. Price mix had a negative impact of around minus EUR 1.6 billion. This was mainly due to higher incentive levels for electric vehicles and an unfavorable regional and product mix. Product costs were slightly down by EUR 0.3 billion due to higher raw material costs and increased memory chips and logistics prices. Fixed cost and others had a positive effect of EUR 2 billion supported by improved overhead costs and significantly lower restructuring compared to last year.

Fixed costs continue to be supported by further improvements of automotive overhead costs. Overhead costs were reduced by EUR 0.7 billion, supported by strict cost discipline across the organization. The overhead cost ratio improved by 20 basis points. The development of overhead costs was supported by the continued reduction of workforce which is progressing according to plan and is delivering tangible results across the group. Under the current agreement, we decided in 2024 to reduce head count at Volkswagen AG by 35,000, including Audi, Porsche and CARIAD, we are planning to reduce head count by 50,000 in the German entities by 2030. Reduction refers to the manufacturing as well as the administrative part of our business in Germany. So far, roughly 21,000 employees have already left the company in Germany for the most part in the context of early retirement schemes.

But despite all the progress made so far, SG&A costs remain a major central gap versus automotive peers and this gap amounts to roughly 30%. It's largely driven by the complexity of the group structure across all levels, creating a clear cost disadvantage. And sustainably closing this gap is essential to strengthen our financial robustness. Under the group target picture 2030, we aim to reduce overhead costs globally by around EUR 11 billion. Consistent execution would bring the overhead cost ratio in the Automotive division down to around 12% by 2030 from roughly 16% today.

That 4 percentage point improvement would translate directly into a 4 percentage point margin uplift. Since personnel cost account roughly 60% of total overhead cost, closing the gap to competition would imply a further workforce reduction of around 50,000 employees in addition to the current program mostly in the administrative areas of the group worldwide.

Turning to the development of the brand groups, the platforms as well as the financial services. Brand Group Core delivered a performance on last year's level in the first 6 months of 2026. Vehicle sales and sales revenue were up by 3% and 1%, respectively. Operating result came in broadly stable at EUR 3.6 billion and a margin of 4.9%. Brand Group Progressive reported market decline in sales by 8% and sales revenue by 10%, reflecting weaker volumes in China and the U.S. Nevertheless, operating result came in broadly stable compared to prior year period at EUR 1.1 billion. This corresponds to a margin of 3.8%, up by 50 basis points.

Results in H1 2025 had been impacted by restructuring charges and higher costs related to U.S. tariffs which posted a smaller headwind to results in the first half 2026. Despite the pronounced decline in vehicle sales, Porsche Automotive business delivered strongly improved financial results. Operating profit came in 45% higher year-on-year at EUR 1.2 billion, corresponding to a margin of 8%. Porsche will report half year results on July 29.

Let's have a closer look at the brands in the Brand Group Core. Volkswagen recorded an operating margin of 2.4%, broadly on par with the prior year level. If adjusting for nonrecurring effects, operating margin stood at 3.8%. Skoda continues to show impressively what can be achieved in a highly competitive environment based on strong product and a competitive cost base. The operating margin of 8.5% in the first 6 months of 2026 give us confidence that we are on the right track.

CARIAD sales revenue increased by 44% to EUR 0.8 billion, backed by increased volume of the 1.1 and 1.2 software stacks. Operating results improved by EUR 0.3 billion to minus EUR 0.9 million. PowerCo kept the operating results broadly stable despite the ongoing production ramp-up at the Salzgitter plant and continued construction works at the Valencia and St. Thomas sites.

After a slow start to the year, industrial operations of TRATON caught up in the second quarter. Overall sales revenue in H1 was slightly down on lower unit sales and operating result came in at EUR 0.9 billion, 24% below the prior year level and operating margin stood at 4.5%. Lower volumes, costs related to U.S. tariffs and special effects negatively impacted the results.

The Financial Services business delivered a robust performance. Contract volumes increased by around 3% in the first half of the year. At the same time, residual value risk slightly increased. The credit loss ratio was broadly stable on a solid level and operating profit at EUR 0.9 billion was slightly down compared to the prior year period. Investments CapEx and R&D in the Automotive division were further reduced by EUR 1.5 billion to EUR 14.8 billion in the first half of the year. This corresponds to an investment ratio of 10.6%, 80 basis points below the level recorded in H1 2025.

Going forward, we will focus our resources more consistently on the areas that matter most for the future competitiveness and value creation. At the same time, we will lose complexity in our product portfolio and variance, leverage group synergies more systematically and provide an asset-light approach, where appropriate, aiming for an investment ratio of around 9% in 2030.

China's automotive market has come under increasingly stronger measures since the beginning of the year. Factors including charge -- changes in subsidy and tax policies, rising fuel prices and ongoing price competition have impacted consumer confidence. In this weak market environment, our unit sales were 31% lower year-on-year at 0.9 million vehicles. At the same time, Volkswagen Group China continues its model offensive under the In China, for China strategy. To counter this pressure, Volkswagen Group China intensifies its cost work and was able to compensate for parts of the pressure. As a result, the proportionate operating profit of our joint venture activities in China amounting to EUR 184 million in the first half of 2026.

Before moving on to the outlook, let me briefly comment on the agreed sales of 51% in Everllence. The agreement with Bain Capital is a result of a highly competitive and transparent bidding process based on clearly defined criteria. The winning bid prevailed in a compelling combination of ambitious growth, committed future investment in Everllence and an attractive valuation. The transaction is expected to generate proceeds of around EUR 7.4 billion for the Volkswagen Group. Beyond the financial benefits, this step further sharpened our focus on the automotive core business and support a more efficient allocation of capital.

This brings me to the financial outlook for the full year 2026. Against the backdrop of development in the first half year, we now expect sales revenue to be up minus 3% below the previous year. At the same time, we continue to expect operating return on sales in the range between 4% and 5.5%. And building on a strong cash flow in the first half year, we continue to expect automotive net cash flow to range between EUR 3 billion and EUR 6 billion and net liquidity in a bandwidth of EUR 32 billion to EUR 34 billion.

Ladies and gentlemen, since the launch of Volkswagen [ TOP-10 ] Program, the world has changed fundamentally. In this environment, it's not enough to just incrementally step up cost measures. We need a fundamental change in our business model with a pronounced step-up of structural and lasting improvements of cost competitiveness of our products. In terms of overhead cost reduction and efficiency improvement in our plants and in terms of speed. And to achieve this, we must significantly reduce the complexity of our business or better of this company.

Did we convince if we are able to simplify our business, we will become more agile in adapting to the world around us. These are the priorities we will address with determination over the coming months to achieve our long-term targets for 2030, group operating margin of 8% to 10%; automotive cash conversion of above 60%; and overhead cost ratio of 12%; and an investment ratio of around 9%. Together, these targets form a comprehensive framework to lead the Volkswagen Group for the successful future.

With that, I hand back to Oliver.

Yes. Thank you very much, Arno. 3 years ago, we set out an ambitious transformation agenda. Until today, we have demonstrated tangible progress across all key pillars of our strategy. In short, progress delivered, major operational targets achieved, promises kept. Products, software and technologies in the regions and with our performance programs. But reality is that the automotive industry is faced with fundamental challenges, geopolitics, trade barriers, regulatory pressure, adverse demand trends, technological disruption and precedented competitive intensity.

These factors are reshaping our industry across all major regions. And they are not cyclical, they are increasingly structural. The measures that were adequate in the past are no longer allowing us to achieve our goals. Therefore, the group target picture 2030 represents the next phase of our transformation. This is not just a cost reduction program. It is a comprehensive plan with a holistic approach to make Volkswagen faster, more resilient, more competitive and even more innovative.

The program compromises 12 fields of action clustered into 3 main areas: technology, performance, group steering. Let me highlight some of the initiatives that we have decided and started to implement. Covering key vehicle segments with fewer models thereby creating significant added value for our customers. That is what we want to achieve. To that end, we will streamline our model lineup by up to 50%. This allows us to consolidate our development and production resources, to focus our expenditure on even higher level innovation, equipment and quality of our cars, to reduce segment overlaps and substitution by doing so, reduce complexity and cost and ultimately increase the volume and profit per model.

Every remaining model shall lead its segment in driving and technology experience. At the same time, we have looked through all parts and supplies and found that we could reduce the number of available equipment options by up to 75% without compromising product substance. Implementation has already started, depending on the component, complexity will be reduced by up to 90%, for example, in seats, variants, windscreens and similar parts. Customers will continue to have a meaningful choice. We are cutting what is not ordered and we scaled what customer demands. A key element of our technology strategy is the consolidation of platforms. Electric electronic architectures and software stacks into 2 regional technology ecosystems, one for the Western Hemisphere and one for the Eastern Hemisphere.

This allows us to tailor solutions to local customer requirements while reducing complexity, eliminating duplicate developments and improving investment efficiency. At the same time, we maintain our ambition of technology leadership by focusing resources on scalable technologies and selective partnerships such as Rivian and CARIZON. And we are fully on track in all these activities. The goal is not to create more technology ecosystems but fewer and stronger ones. The objective is simple, maximize synergies globally by localizing where it creates customer value.

In the West, we built on Rivian partnership in the RV Tech joint venture; in the East on China electric electronic architecture and CARIZON ecosystem. We, therefore, intend to make full use of our presence to fill market gaps, for example, serving the global south from our China hub. As the only international player, we are able to act like a Chinese OEM in terms of technology and cost base, going global from China. By further streamlining our technical capacities, we are aligning our production network to the changed market environment. Our cost base will be aligned to a production volume of 9 million units per year. Prior to the COVID pandemic, the company was invested for production capacity of approximately 12 million vehicles per year.

During the past year, we have already made significant progress with a reduction of 2 million units. We are currently discussing a further reduction of technical capacities by more than 500,000 vehicles in each China and Europe. Our target is to lower the breakeven point to a production level of less than 8 million units. Operational excellence is about tackling the structural cost and complexity embedded across the group. We are focusing on 6 key levers: R&D, procurement, production, quality, sales and overhead. Through greater standardization, increased scale effects, simpler processes and higher productivity, we aim to reduce structural costs while improving speed and competitiveness.

Sometimes, the simple things have the greatest impact, simplifying technical specifications and purchasing processes, consequently use AI to support the development process or in-product testing, implement use of shared services across the group and eliminate consequently dual work within the organization. And we need to consequently look for growth opportunities in parallel. First, in regions, for example, in North America, India and the global South are tomorrow's growth engines for us.

Second, market instruments. Fleet business, used cars, aftersales and the insurance business offer growth opportunities we want to further exploit for Volkswagen. And third, technologies. We are moving decisively into future-oriented fields, including circular economy, SoCs, energy storage or robotics. This is how we are turning our engineering strength into entirely new sources of value creation and competitiveness. With consistent implementation across all action fields of our group target picture, we are safeguarding achievement of our 2030 ambition and operating return on sales of 8% to 20% by 2030.

And over the past months, the program has been developed and detailed. The setup is in place. Objectives are defined, initial measures have been established. In the months ahead, measures will be further specified across all 12 initiatives with implementing already -- implementation already started in parallel. The entire process is supported by close tracking at group and brand level complemented by regular reporting to the Board. You will have noted that while the announced initiatives are already far reaching, not all potential fields of action are finally agreed. We are in constructive dialogue and plan to obtain outstanding approvals as fast as possible.

Let me conclude the presentation with 3 main messages. First, the underlying demand picture is stronger than headline deliveries suggest as we continue our model offensive. Excluding China, vehicle deliveries increased by 2%. Our enhanced model lineup is resonating well with customers. The European order book rose to more than 1 million vehicles with particular strength in battery electric vehicles. It's a strong early momentum of the electric urban car family and customer response to our newly launched China models like ID.ERA 9X or E7X from Audi are encouraging.

Second, despite a highly challenging environment, particularly in China, the group held well with regards to financial performance in the first half year. We continue to act from a position of strength with a very solid net liquidity position and strong net cash generation, and we confirm the full year outlook for operating margin, net cash flow and net liquidity. Third, we have launched a truly unparalleled far-reaching corporate program, our group target picture of 2030. And we have got our foot on the gas pedal. We are aligning our products, technologies and structures to succeed in the new market realities.

We are reducing complexity, accelerating execution, improving competitiveness and allocating capital more selectively, and we are sizing growth opportunities in key future fields.

In short, while market conditions remain extremely tough, we act early on and we see encouraging progress in the areas that matter most. This gives us conviction to successfully master the next phase of Volkswagen's transformation.

With that, I hand back to Rolf.

Thank you, Oli. Thank you, Arno. And with this, we conclude the prepared remarks, and let us now move to the Q&A session. [Operator Instructions] Looking here at the queue, I have the first question coming from Tim Rokossa from Deutsche Bank. Tim, please go ahead.

Yes. So first of all, Oli, Arno, Rolf, I think I speak for the capital markets in general, when I say that we appreciate that you, against, all of this pressure start the 2030 program despite having just shortly launched the other one. It would be nice if it wasn't needed, but in this world, it clearly is. To my questions. The first 1 is the discussions in the press often focus on plant closures when we discuss about the 2030 plan. I agree that a plant closure would obviously be a pretty powerful message. But at the same time, I don't think it's feasible to assume that, that would be possible post or pre-2030 and we are discussing about a 2030 plan here. So could you just confirm that plant closures are not needed to achieve the 2030 targets that you also just spoke about?

And secondly, never easy with you guys, given all of the complexity, but I think drilling it down to the key issues, one of the key issue for the group is Audi right now. And I had the question again this morning from a lot of investors, if Audi with this model initiative isn't working, will it ever? And what do you say to people when you think about this? When should we get our hopes up again for Audi?

Yes, Tim, thanks for your remarks and your questions. And first of all, I think we have built during the last 3 years, a foundation for everything to come. And now we are a more stable situation in terms of product, technology also in regions and especially the performance programs which helps us to compensate the major parts of the headwinds we have faced. And now we are entering in the next phase of our transformation with our target picture 2030.

We have the need because of the risk scenario, and we are acting early. And to say it very clear, this is not only a cost reduction program. It's a comprehensive program which touches all fields of our company. It's the deepest and the most innovative program we have ever implemented in the history of Volkswagen Group. And so for us, it's very motivating that we have already started with a lot of fields. One part, of course, is to adapting furthermore our capacities. And we were able to reduce already during the last 2 years to reduce 2 million of capacities with around 7 plant closures we have done. And now we have a work to do of over 500,000 in China and also in Europe. And on the one hand side, in our existing plants, especially in Germany, we have models in production and we need these models. And so it's not realistic to talk about plant closures up to the end of this decade on the one hand side.

On the other side, to close a plant is also the last solution. First, we will focus on competitiveness and this in a European context. And there, we have opportunities. And when I talk about intelligent solutions, we also can consider, for example, for a different industrial usage or opportunities also more in the future to pick some of our Volkswagen Group products from China to bring them in plants in Europe. But step by step, first focus is on competitiveness. And at the end, the last option would be to close a plant. We have done this during the last 2 years in some cases and this is always the consideration we have to take.

Coming to Audi. The response from the market is very positive on the new product, especially RS5, Q7 or then the Q9 and this will bring momentum. We started 3 years ago, a deep restructuring in Audi. And so now we can see step-by-step that Audi will recover. And now with the new product momentum and everything to come, it's quite promising, and we think that will be possible.

Thank you, Tim. And we have the next question coming from Horst Schneider from Bank of America.

Yes. I hope you can hear me. The first question that I have relates to the guidance for this year. So you kept the operating margin guidance unchanged and that implies that H2 needs to be stronger than H1. So maybe a question for Arno. Arno, maybe you can explain us what is getting better exactly in H2? It doesn't seem to be volume. So it should be maybe price mix or it should be other line of costs. So maybe you can provide more details on that.

Then maybe for Oli. Since you say you aim to reduce complexity of the group, do I get it right that this means also that you want to accelerate disposals? So maybe you can provide here more details also on the time line, how quick they're going to come. And if they come, we want to do then with the liquidity that you increase by that?

And the last one, of course, on restructuring. I know it's for you difficult to talk about that because in the end, you need the approval maybe also from the Works Council, and they probably also listen to this call. But maybe you can at least tell us what's the ambition on the time line. So by when can you basically, you think you can make an agreement? Or does it require, in the end, if it comes from bad to worse an AGM and that could basically extend the agreement to, I don't know, maybe even H1 '27.

Yes. Horst, I'll take the first question. Yes, obviously, it implies a better second half of the year, but there are some factors that gives us tailwind. First and foremost, obviously Audi. There, we expect a strong improvement in margin in the second half based on the product momentum, both in terms of model mix, they just launched their RS models and S models, which are really well received by the customers with good margins. And last but not least, we will launch a new Q7 and then at the end of the year, also Q9, which will -- in some of the markets. So that should give momentum at Audi.

And second, cost program, you saw the reduction on head count we achieved so far. I think we said 21,000 and we expect at least to end up with reduction of 25,000, 26,000 at the end of the year. So this should give also continuous tailwind. Last but not least, I'll take the third question as well. From today's perspective, we don't expect major restructuring in the second half of the year so far. And we had some -- quite some restructuring in the first half, for example, discontinuing of the ID.4 in the U.S. And so these are the effects we -- based on that, we're confident that we achieve a margin in the corridor.

But in the end, Arno, you expect Q3 is always weak, you expect now a very strong Q4, right?

Yes, exactly, as you know very well. Q3 is typically the quarter when we have the summer holidays in major German plants. So yes, as last year. And also as Audi, we expect a strong Q4.

And Horst, Oli speaking, coming to your second and third question. First of all, complexity. We are working on reducing complexity in terms of products, technologies, but also investment portfolio as we have done in the last weeks, which was Everllence. This was a very positive result. And all of this, and then we have further opportunities, as you know.

First of all, safeguarding our liquidity position and having their stability but also safeguarding an attractive dividend on the one hand side. And further on, it depends a bit on the steps we will do with our investment portfolio. We will consider how we will deal with other liquidity options. But early -- too early to predict. First of all, work has to be done. And then having the stability and offering opportunities also for our investors. And when you look to our cash flow situation, first half of this year, already a 5-point -- EUR 4.5 billion better than last year. That shows a stable situation. Also after the strong cash flow we have shown last year.

And so we keep on working on safeguarding our stable situation on cash flow liquidity then step-by-step to decide. Restructuring, the major part of our program is not part of being to agree of the Supervisory Board. And that is already in an execution and in all cost positions. To the main deeper restructuring, there, we are executing the agreement we have done in '24 already. It's 50,000 reduction of head count where 37,000 we have agreed contracts by our employees. It's well received. We are well on track. And in terms of the adoption of our production capacity, we are making good progress already EUR 2 million per year, we have already reduced. And there, you can see the speed only in 2 years, what we have done in the past, it wouldn't have been thinkable to come to this direction.

And now we are entering in the next period of transformation. I think we will come to a conclusion agreement during this year. We started 2 weeks ago with the first overall presentation in the Supervisory Board, and it's clear that there are some points to be discussed. In terms of plant utilization, what competitiveness means for our plants, especially in the European context and also for the overhead costs. There, we have set a clear benchmark where we want to go. And now we are working this out with all our brands, our organizations and regions. What's possible in terms of head count adoption and on the other side, in terms of labor costs, and at the end the product in between both of them will be the adoption of our costs.

So summing up, the major part of our target picture is already in execution, especially in terms of all the technologies, products and costs and the part of the restructuring has to be discussed furthermore, especially with workers union and our Supervisory Board, and then we will take decisions during this year.

Thank you, Horst. And we are moving on in the queue to José Asumendi from JPMorgan. Jose, please go ahead. .

A couple of questions, please. Oli, can you talk a little bit about the business model in China. I mean it's a difficult first half of the year. But obviously, you don't know what we have there to take down capacity, launch new vehicles, launch new products. Are you seeing signals of stabilization in the business model in China. Is this not a vote of confidence also when you're discussing with the unions that you're able to restructure the business and stabilize the business model in China, and this will have also -- as you bring these best practices into Europe or some of them at least, it will also help to improve the business in Europe, if you could talk about this, please?

And second, Arno, when we think about the different cost measures, what do you think is the biggest cost bucket? You see a big difference in terms of the competitiveness. I think you mentioned several of them, but the biggest one for you stands out. And when you think about the restructuring cash outflow we should be expecting over the next years. Can you give us any signals, any guidance? Or maybe talk about liquidity and the sale of Everllence, how that is going to be helping to potentially fund restructuring cash outflows on a 3-year view?

José, let me start with your first question. The environment in China is clear. First half of this year, the market overall went down of more than 20%. We have over 150 competitors in the market, and there have been over 500 new model launches in the first half year, yes. And that shows the tension in terms of competitiveness in the market. In spite of this, we started in first quarter as a market leader and second quarter or half year under top 3.

And this underlines the strong position of Volkswagen Group in China. We have done a huge restructuring during the last 3 years with our In China, for China business, with the engineering center the biggest one outside of Germany. We have brought to life our new electric electronic architecture and all the new products to start now on the market. Our intention is to launch over 30 models up to the end of next year. And the first market response is very positive. But this opens us other opportunities. I'm often asked, is it worth to invest in China? And my clear answer is, yes, It's, on the one hand side, China, it brings us on this technology level, and this cost level, we can see also our Chinese competition.

But on the other side, it opens us the same opportunities Chinese competitors are executing right now in other regions of the world. And for us, especially export opportunities to Southern Hemisphere, in Southeast Asia, Australia, India, South America and Africa, but also in Europe, where we are not present in some segments with products from Europe. We consider to bring our own products from China to Europe. And now this shows that we are the only international player who is in conditions to use all these global opportunities. What we have done in China our strength in core business in Europe. And on the other side, our corporations and businesses we are doing in the U.S. Combining this, this is a unique offer to the markets for the future.

Yes, José, thanks for the question. From -- if I look at our business, the biggest advantage is clearly reducing overhead cost so far. And if you look at our business and Oliver mentioned it. We are rather complex in front of the customer with a lot of models, a lot of offers, but we are also very complex internally. A lot of layers, a lot of entities and this weighs on our costs and also makes us slow in decision-making.

So I'm deeply convinced in simplifying our business. This is one of the biggest advantages and chances we have as a Volkswagen Group, become more leaner and more agile in adapting to the world around us. And also in terms of cost, we did an in-depth benchmark versus competition about SG&A and applied that to our overhead costs. And as you know, they are roughly EUR 45 billion today. And if we close the gap to competition, this is a chance of -- or an improvement of about EUR 10 billion to EUR 11 billion. And then we aim for overhead cost ratio from today 16% to 12%, which is a 4 percentage point improvement in an industry that makes only 4% to 5% to 6% to 7% margin.

So this is a magnitude we see there. But don't get me wrong. We need to improve our other costs as well. We need to improve our material costs without sacrificing product substance, as Oliver mentioned. And we also need to improve the efficiency and productivity in the plants. The competition is coming to Europe. Chinese competitions are building plants in Southern and Eastern Europe, and it's hard to compete with underutilized plants. So it's a comprehensive program that -- which addresses all the levels of cost in the company. But clearly, the biggest advantage is reducing complexity and overhead cost.

And in terms of restructuring, it's obviously too early to tell -- to give specific numbers. We need to wait until we have the detailed decisions and then come up with detailed figures on that. But what is very clear, when we look on a company with a net liquidity of more than EUR 30 billion, EUR 33 billion to EUR 34 billion and the proceeds of Everllence will give us a further positive effects on that topic. So we have a very solid balance sheet still. And we increased that robustness with a good cash flow first quarter, more than EUR 3 billion and we kept our outlook. So this is a company that will clearly be able to manage also the restructuring -- the potential restructuring measures.

Thank you, Jose. And we are moving on to Patrick Hummel from UBS.

My first question to you, Arno. Regarding the 50,000 headcount reduction or at least target picture that you painted, in the first wave, you've been using early retirement, which was, let's say, relatively straightforward and relatively low cost. This time, it seems to get more expensive. So I understand you can't give us any details, but is it fair to say that at least a significant share of the Everllence proceeds will be required for that restructuring?

And you said, Oli before actually that you expect a deal with the unions to be reached by the end of this year. But Arno, you said no restructuring you currently foresee for the second half. That sounds a little bit like contradicting. Should we expect that incremental restructuring to be booked this year or not? And what would be the impact, if I put it all together on the dividend? Is it fair to assume a flattish dividend trend? Is that what you're targeting? Could we see a cut in dividend? Any color you can give on that?

And the second one, just on the implementation of that restructuring. The Chinese are gaining share in Europe at the speed of light. It feels every 2 to 3 months, they're gaining 1 percentage point of market share in Europe. So if the implementation of what you're trying to do here is skewed towards the back end of the decade, it might not even be fast enough. So what can you actually do to get those headcount-related savings sooner rather than later?

And Oli, do you actually expect any support on the political front? It feels all very halfhearted so far on the Industrial Accelerator Act. It's not really banning Chinese cars from entering Europe. The plug-in hybrid tariff that's under discussion. Are these instruments that you think will change this market share shift trend? Or is it just fair to say for as long as China as the market is weak, these Chinese companies will push as much as they can into Europe?

Patrick, I'll take the first question, and then I hand over to Oliver. First and foremost, on the topic of restructuring.

Yes, we embarked on the first strategy, we agreed on 2024 with the restructuring of 50,000 headcount mainly in Germany in the indirect and direct areas, so administrative and manufacturing part of our business. And we use for the most of the time, early retirement schemes and they are in place. But let's not forget, they weighed on our margins and our result with EUR 400 million to EUR 500 million a year so far already. It's just not seen in the bridge because we spend every year roughly EUR 0.5 billion.

So if you take out the restructuring fees, our operative business is even stronger. So the second wave is, as I explained, is a benchmark on a worldwide basis. And so the second wave of up to 50,000 is mostly in the administrative side and on a worldwide basis. And it's really -- Patrick, it's too early. We have -- first, we have to identify where we want to reduce. On the other hand, there are also other potential. We are not looking for job reductions per se. We are looking for a much better cost base and the structural reduction of our cost base to be more competitive.

So there might be also elements in the labor cost that will help us there. And so this is where we stand. And let me be very precise. What I have to say is in the 4% to 5.5% margin guidance and outlook, obviously, in this guidance is no restructuring incurred. So if we have to decide on restructuring in the second half, this is clear that comes on top.

Patrick, coming to the second part of your question, how could the politics be supportive? Let me go to three approaches. First of all, we have to do our homework. We have done it already in terms of products. They are competitive. They are attractive for our customers. Our order intakes show this in spite of the competition we have faced right now and the deliveries also in Europe. What we have done to furthermore is cost work, reducing more and more our costs and bringing there in a better positioning, earning more money with our products, but that's our homework.

Second, we will benefit from our China opportunities. Yes you can see us also as a China player. And we can do the same like the Chinese do and having the same opportunities being competitive in terms of products, technologies and also costs also for exports.

Then the third aspect in terms of politics. We need a level playing field, not more, not less. And in some areas, it's already working. The regulations on BEV is working. There, we are competitive also in terms of pricing, where it's still not working are the plug-in hybrids, for example. And what has to be done is the made in Europe. And I think this will adapt the market. And I hope during the next month, the European politics with the support of the German politics will bring the European automotive market to a level playing field, which today does not exist.

At the end, with our homework we are doing right now and benefiting from the China business, I think we have the opportunities in Germany, but the politics have to accelerate the upcoming decisions in terms of plug-in hybrids, for example, and made in Europe strategy.

And Oli, maybe a quick word on the implementation time line of this upcoming program. Is that like a savings target that will only hit by 2030? Or is there a chance that we could hit that already in 2028, let's say?

No, not only 2028. I expect that the politics will react this year. We have no time to lose. And that's a clear expectation from an industry leader. The level playing field has to be built in Europe. That should be a European industry interest to do so. And then from '27 on, we will benefit from the current product portfolio and everything to come already and then step-by-step also with our Chinese opportunities. We are well prepared for everything to come, but the positive has to do with the work which we talked about.

And we are moving on in the queue to Mike Tyndall from HSBC.

I've got a few, if I can. Can we just talk a little bit about China as an export base? I think that story is changing because back in '24, it was China for China. In April, it was China to the global South, but we're now talking about China into Europe. Am I reading that right? And when will we see this tangibly happening? So that's question number one.

The second question is just around -- I know that when you were initially looking at plans for Osnabrück, you were looking for alternative uses. I'm curious whether or not some of the people that approached you at that time said Osnabrück doesn't fit, but we like Hannover, we like Emden. Is -- what's the potential for finding alternative uses for some of those German plants?

And then the last one, a very quick one, just in terms of disposals. I just wonder if you can talk at all about TRATON. TRATON clearly having a pretty good run at this point in time. And I know you've sort of said before that you would like to reduce your stake. I wonder if you could just give us sort of an update on that.

Yes, Mike, that's correct that we started in China for China, then 3 years ago, still with different market conditions but the advantage now is that we brought ourselves in the same competitive situations where many Chinese competitors are. So Volkswagen Group in China is a China player. And so with the changed market conditions that the market is going down, the margins are under pressure. This opens us for us the same what Chinese OEMs are doing in terms of export.

And furthermore, it opens us opportunities we have never had in the past because of our cost structure and not having the right product for the Southern Hemisphere, but also for Europe. We can benefit in terms of our complete products we have there in China, but also in terms of technologies, thinking about autonomous driving, this could be an option. And maybe also for our existing combustion engine product portfolio. So we have many, many opportunities, also benefiting from engineering, from parts we are producing there in China with our own organizations, processes we can adapt. That's many, many advantages.

Talking about the time line, we are implementing right now our experiences from China to Europe in terms of products that need a bit of time. We need to ramp up the current product portfolio in China. And I think it would be realistic in '28 with complete products, technologies, maybe, but we have to do it step by step.

Now we already launched the first models in the last month in China. Many attractive products on our own platform, the CSP platform are entering in the market in China in '27. But this offers opportunities up to, I would say, realistically from '28.

Talking about Osnabrück, there, we are in very advanced negotiations with defense industry. That's not a secret, but we can't deep dive any furthermore there. It's confidential, but we expect a decision during this year.

Talking about other plans. First of all, as I said before, is European competitiveness. That's a headline. Then second step is, do we have usage for -- with other products and then also use it in an industrial context. And therefore, also we will check each plant where we have need for action, what opportunities we would have. And every plant has got different conditions. And so we have to develop a specific plan, and that's what we are kicking off right now. We have done, I think, very hard and deep work during the last 2 years to reduce capacities to 2 million cars a year. This is not a small part of capacity reduction and also the 50,000 of headcount reduction we are doing which is well on track. And now we are entering in the next phase, which has to be done to be more competitive as we are today.

Yes. And in terms of TRATON in our target picture, it's clearly what we continue to say in the past. We want to stay a responsible shareholder with 75% plus 1 share, and we are on the way to that. And we are aware of the current share price performance, which reflects the very good performance at TRATON and the strategic positive outlook and also the good work of the management team, but this is where we stand today, and we can only announce the next steps once we have decided on them.

And we are moving on. And Stephen is the next one, Stephen Reitman from Bernstein.

I have a question about China again. You made roughly about EUR 200 million or so in the first half of the year and your guidance for the full year is basically EUR 200 million to EUR 600 million, so basically from flat to EUR 400 million. I just want to look at your -- how you judge your progress so far. You talk about your -- the new models you've launched with Audi, the UNYX models and such like in the models from Audi. What would be -- how would you judge how successful they are? What kind of volume numbers are you looking at? Because obviously, the figures we're seeing when we look on a monthly basis of registration is still very low. And there's also quite a lot of volatility where sometimes they appear to have initially 1 month, which is quite good and then kind of like tailing off, I think, again, and we've seen that with the Audi model, the S5.

But also now we're seeing other pick up a bit. What would you be your criteria for success given the fact that the volume seems to be very low relative to some of the launches that are -- or the models that we're seeing from the Chinese brands?

And secondly, more a philosophical question about the expectation of change within the Volkswagen Group. It seems to me that probably the most -- one of the successful periods of change in terms of cost reduction and reorientation of the company happened in the 1990s, but that really occurred when the company basically went to loss and it seemed that really you've reached the end of the road, and that caused a situation maybe where you can actually make the changes.

At the moment, your numbers, you say are not satisfactory, and I think most people would agree with that, but they're still -- you're generating reasonable free cash flow. Margins are still -- your guidance is still quite positive as well. Do you feel there's sufficient urgency is fully appreciated by all the parties that they need to make the sacrifices that you're seeking?

Yes. Maybe I can start with our model launches in China. Maybe Arno can add some aspects in terms of the financials. And then I would talk about if there is sufficient urgency, what we are playing right now. About the China models, what we can say that the first response we are getting, first of all, media tests, the Audi E5 was voted as the Car of the year in China is very, very positive.

In concrete, talking about the ERA 9X, we have over 10,000 deliveries right now since the launch. That's very, very positive. And also the UNYX 07 was around 6,000 and we see a very positive opportunity with the UNYX 08, which is a product which starts with around CNY 200,000 and offering already our new electric-electronic architecture. And the response on the Audi E7X is also positive. We delivered over 4,000 units in June. And we are ranked among the top 10 -- top 3 in the range of CNY 300,000 level.

So you can see in between the competition, which is by far very, very strong. We are very well positioned and many more to come, expecting now our first premium platform with the CSP, we will launch in '27. There are opportunities. But we have the market conditions I talked before. And so we will use these opportunities also for export. And then they're coming to higher volumes with the help of the export. Maybe Arno.

Yes. In terms of financials, obviously, the guidance for this year is EUR 200 million to EUR 600 million proportion of this result. And going forward, it will heavily depend on our plan to catch up market share in the electric segment. We are still a clear market leader in combustion engine. And we bring, as Oliver said, 20 new models this year, very attractive, both in terms of features, but also in terms of cost and technology to the market. And next year, again, 20 new models. And based on that, the team wants to achieve towards 2030 share between 10% and 12%. And based on that, we gave our outlook some months ago that we want to achieve EUR 1.6 billion to EUR 2 billion proportion operative result in 2030. And this is the way we need to go.

Coming, Stephen, to second part of your question, is there sufficient urgency recognized by all the stakeholders? You brought the comparison to the '90s where Volkswagen Group was in the losses, and you can't compare the situation of today with the '90s. That's correct.

When you look on the one hand side to the profit margins, our long-term average profit margin since the '90s was exactly on 4%. This year, our expectation is to be better than the average profit margin we have seen since 1990 up today. But on the other side, this is not a guarantee. And the environment has never been as heavy as we have faced today.

As I said before, we are able to compensate a double-digit billion euro year-by-year by our cost work we have implemented already during the last 3 years. And that's how we work to do this. But without this, we would have been in a completely different situation right now. But when we look to the future, we have more and more risk coming. You know the pressure in China and the more than 150 competitors and all are coming to the market with a low cost positioning, and we have to face this position. And this means that we have to reduce even furthermore, if we want or not, our cost position.

And all stakeholders, and I can confirm this because we have done also a belief out it, are aware that we are in this risk scenario, not only Volkswagen Group, the whole industry, but we are reacting now. That's maybe the difference comparing to others. We are after the first period of transformation, looking back to the last 3 years, and now we are entering already in the next phase. And then we have now to negotiate all the cornerstones of our plan of the Target Picture 2030. And I can confirm the major part of the program is already in execution. And the second step of the restructuring has to be done. That's clear, but the urgency is recognized by all stakeholders.

Thank you, Stephen. And we have to hurry up a little bit given the time line. We have two remaining questions in the queue. And the first one comes from Christian Frenes from Goldman Sachs.

I'll try to keep it brief. First of all, in terms of China stabilization, it sounds like that question has already been answered. It's 2028, you expect stabilization. I'm wondering, as we think about Audi specifically, which you also referenced earlier in the second half and also 2027, should we expect stabilization in Audi within China when you think about operating profitability to happen before '28 already? And how do we think about that for the second half, for example? Because in Audi, obviously, the implication is for margin improvement in the second half overall. I'm just wondering what role Audi China plays within that? That's my first question.

Christian, only one comment to China. When I talk about 2028, I talk more about to benefit from the Chinese development in other regions of the world. And it will start for some regions in the Southern Hemisphere already in '27. But in '28, I think we will be in full swing with all the product launches we will have ahead, especially in this year and next year. That's what I mean talking about 2028. It's not a stabilization. I think the stabilization starts right now with all the new products to come, while we are still stable in terms of our combustion engine business as market leader with over 22% of market share. And maybe, Arno, you can elaborate a bit on the Audi situation and the margin in the second half and maybe talking about the residual values.

No I think we addressed Audi already and the tailwind basically from the product momentum. As we said, Audi is ramping up Q7, Q9 brand new and then also the model launches on the S and RS models from headwind. This should really help Audi for the second half of the year. Obviously, Audi also embarked on a strategy to significantly reduce costs, specifically overhead costs, which should also be part of a much stronger second half of the year. And also overall, Audi and specifically a part of the group, what we haven't talked about so far, the successful ramp-up of BEVs weighs on our margin so far, but it's also a chance in terms of CO2 fines from today's perspective over the 3-year period, there might be also a financial chance in the second half of the year that we need not to book any provisions for CO2 fines in Europe anymore. So these are the major effects.

Okay. And then my second question is on restructuring, broadly speaking. You have -- I think you talked -- mentioned the 8 million capacity goal longer term. Could you elaborate if you export from the Global South, the China model, just thinking maybe, for example, Latin America, should we -- is this implying then that you would close capacity presumably in China and because you have capacity, obviously, in Latin America? Or how do we think about that?

And also on the topic of closing factories, obviously, you've had a Supervisory Board meeting. Is this topic over now? Or should there be more to come? And maybe a third point here, we've seen also a different model that Stellantis has talked about with basically partnering up with Chinese OEMs to share capacity. Is this also an option for you? Or is this not really a strategy?

Yes, giving you some figures. We will adapt our cost structure on around 9 million cars that we think will be realistic in the next years, especially looking to 2030, also with our opportunities we have in the Southern Hemisphere I talked about. The intention is to bring down our breakeven situation lower than 8 million to have a margin there and a robustness at the 9 million cost structure, under 8 million, the breakeven situation.

In terms of adapting capacities, we have still the need coming from over 12 million a year and we want to bring it down to 9 million. We are already working on 10 million. We were able to reduce 2 million during the last 2 years. We have closed around 7 factories already. And looking ahead, that's what I said before. We will adapt capacities, but we also think in improving competitiveness of our plants and also thinking about a different use in an industry context.

And then the last part of your question was if we are considering something like Stellantis, we're in different conditions. We have the opportunities of our own business we have built in China and we don't need to think about other competitors to bring them in our plant. We have our own products there in China. And when there are opportunities and on the other side, also the need for a plant, we could do it. And that's a major difference to all the other international players that we are a Chinese -- like all the other Chinese OEMs, a China player. And this, we could use for export on the one hand side, but also for plant utilization in Europe.

Christian, one remark in Audi transparency. Knowing that Audi has their own conference call, next week, and we don't want to take too much information here or give too much information on Audi there. We want to leave it to Jürgen Rittersberger, but you should expect that Audi takes down their guidance from 6% to 8% to 5% to 7%, which is still a significant uplift from the first half. So all the measures and all the tailwind topics they are in place. And also rest assured, this 5% to 7% margin, which would be an uplift in the second quarter is also included in our group outlook for the full year.

Okay. In light of the time, I'm super sorry, Daniel and Philippe, I see you still in the queue, but we have to make a cut here on the analyst side and we will, without doing a break, directly hand over to the media question session.

Thank you for your understanding. And Daniel and Philippe, please reach out to the IR team, and we will make sure that all your questions will get answered.

Okay. Thanks, Rolf, and we go right away in the media call. As we have some English-speaking colleagues, we stick to English. Happy to get your questions. And the first goes to Christina from Reuters. You could also speak in German, though, but vice versa.

Thanks for the first question. I was wondering on your elaboration, Oliver Blume, on Chinese cars for German plants. I understand the first step would be to import the cars. The second could be to produce them here. What does that mean for your development operations in Europe?

And on the margin outlook, I'm a little bit wondering because the margin was so bad or the income was worse in the first half of the year. What is driving your optimism for the second half? What should really uplift the margin towards the end of the year? And do you have a first visibility towards next year?

Okay. May I start with your first question in terms of China products. Of course, what I explained in the analyst call is that we are now in a very great situation as an international player, benefiting from our Chinese achievements, having products like Chinese competitors in terms of technology and cost, which brings us in a situation to the exports.

First of all, to the Southern Hemisphere, where already Chinese OEMs are winning market shares. And this brings us in the same situation. In Europe, we would bring and would bring only products and segments which are not invested with European products. And so these exports won't inflect or won't have an impact on our European development, completely different cars and the single segment.

And you are right, we will do the step. First, export, then checking how is the response in the market. And we have already a good feeling what works, looking to the Chinese competitors. But we will carefully plan in which segments we will enter. And then this might open also opportunity to build 1 or 2 products there in European plants. Yes. And to elaborate more the margin situation, Arno, I would like to hand over to you.

Yes. Thank you very much for this question Christina. As I said, first and foremost, every business starts with the products. We see some product momentum at Audi. Also on the whole group, we talked about a very successful new urban electric car family, which I will elaborate on in a minute. The product momentum at Audi should drive margins there and see improved margins in the second half of the year. As I said before, the updated margin guidance would be 5% to 7%, which is significantly stronger than in the first half of the year, cost work. We will continue our cost work, specifically on overhead costs, also on productivity in the plant. And hopefully, we see even first effects on the transformation program in 2026 already.

As Oliver said, we don't wait. We started working already. And so there are 2 technical effects. Let me call them technical effects. One effect is we had restructuring burden of about EUR 1 billion in the first half of the year, which we, from today's perspective, don't foresee. And last but not least, we also booked CO2 provisions for not meeting the CO2 guidance, but with a very encouraging order intake of the new urban electric car family, we have already 70,000 orders on hand.

Our renewed outlook for the 3-year period it seems that we do not need to book this restructuring, this CO2 provisions in the second half of the year or even can we see some of the reversals. In all fairness, as you know, the margin dilution effect of the electric cars ramping up will also be a headwind. But at least we see a compensation on the relief on the CO2 burdens.

And given you are adding 3 examples of the restructuring work we have implemented already during the last years. On the one hand side, you can see the progress in terms of overhead costs. You can see the progress of the restructuring we have done in Brand Group Core, not only on the products, but also on the results and especially at Porsche, where we have done a huge restructuring last year. And there, you can see already the results.

We have promised already last year on a profit margin level on 8% half year 1 and in terms of operating profit of 45% better than last year. And there you can mention already all the effects we have implemented last year or in the other years before for the other aspects. There are some arguments which will pay off now step by step.

The next question goes to the Financial Times, Sebastien Ash please.

You can hear me I just had a couple of questions. The first one was about Chinese competition. I think you both mentioned the idea that Chinese manufacturers were exporting competitive pressures increasingly to Europe. I'm wondering whether you can elaborate on that point a little bit. How are you seeing that at this point in time? And how do you expect that to affect your business in the future? Is it going to be through prices? Or would it be harder to kind of sustain the same market share going forward?

And yes, then secondly, I wanted to ask a question about U.S. tariffs. In your forecast, you say it's based on the current tariff situation in international markets. I mean, overnight, we've had what seems like potentially significant change. I'm wondering whether that was factored into the forecast and then whether you have any thoughts on, yes, what the most recent announcements, what effect they could have on Volkswagen?

Sebastian, may I start with your first question, and then I hand over to Arno to elaborate a bit to Jason on tariffs. Chinese competition in Europe, yes. And it's heavy. It's heavier than we expected some years before. The market share already is over 8% of Chinese OEMs in Europe. And in some segments like the plug-in hybrids, which are not protected with tariffs right now, which has to be done. But hasn't been done in the past. There, the market shares already over 30%.

And so first of all, there has to be built a level playing field. That is a task for the European Union to establish quickly. And then the Chinese competitors are there because they have the pressure in their home market in China and export is the only opportunity to be successful. And therefore, we think even if we would have a level playing field in Europe, we have faced this strong competition there. So that's a need for us to enter now in the second period of our transformation plan to reduce even more our costs.

Beside of this, and that is the positive aspect. Is that our products are so attractive. We are by far market leader for combustion engines. We are by far market leader for the electric cars. We have the strong order intake for our urban car family with over 70,000 orders only in the first weeks.

We have products or the strongest positioned player in the BEV model. For example, the Škoda Elroq is #2 top BEV model in Europe. And now with the promising new models to come, we have opportunities. On the one hand side, level playing field, politics, cost our homework and then to continue with our strong momentum we need. And then I think we could face the Chinese competition, but they are there, and that's the biggest risk for the whole European automotive industry. Arno. Then I hand over to Arno for the tariffs.

Yes, Sebastien, on the tariff side, as we communicated several times, so the tariff situation is really one of the factors besides the competition in China for our premium OEMs and also the competitive pressure in Europe, Oliver elaborated on that we have to step up our restructuring efforts in order to stay competitive. And we still continue to calculate with a burden of EUR 4 billion to EUR 5 billion on a yearly basis and that burden consists of basically the tariffs we pay but let's not forget, we also have a significant impact on the volume.

First and foremost, we had to take out some of the entry-level models from Mexico that we export from Mexico to U.S. like Jetta, Taos, which are not profitable anymore. And also from Europe, we had to increase prices to at least partially offset the tariff. Look, we are in an industry with 4% to 5% margin, and we talk about 50% tariffs from Europe. So we increased prices. And so we have also lower exports from Europe to U.S., which also in turn puts pressure on plant utilization and the volumes in Europe.

And from today's perspective, we expect this burden to continue. And this is why it's so important that we make progress on the restructuring program we just discussed, both in terms of cost and in terms of capacity utilization and efficiency in our plants.

Now we go to the FAZ.NET Christian Müßgens.

Two questions, if I may. The first would be on the Porsche agreement on cost reduction that we saw this week. There was an agreement regarding the cost-cutting program. Even as talks will continue until Monday, it seems like they are -- they reach an agreement, and there has been a lot of talk about this agreement being difficult for VW because it entails like, I don't know, significant concessions for the labor representatives in Stuttgart.

And the question is to Oliver Blume, do you foresee any impact on VW and on the negotiations that you are having in Wolfsburg with the cost-cutting program for the Volkswagen concern and maybe is it an option for you to extend an employment guarantee to Audi and VW as well? I don't know I'm just speculating. Could you elaborate a little bit on the Porsche effect?

And the second would be just could you give some examples of which models, concrete models you want to cut out of the portfolio in the group? Are there any A or A0 models from SEAT or CUPRA that you are cutting? Can you give some specific examples?

Yes. May I start with the Porsche situation. First of all, what is important from our group view is that we have agreed the profit margins we want to achieve in each brand and brand group in 2030. This is our guideline. And at the end, the situation of each brand is a bit specific. In terms of restructuring, the major restructuring at Porsche, we have done last year. And in terms of overhead adoption, Porsche is doing a 2-step approach.

The first step, we have implemented already last year. And now they are entering in the second step. This is work in progress. They have presented this in the Supervisory Board this week, but there's still work to do. And so I can't go into any details. But from the group view, it's important at the end to achieve the margin corridor, which leads at the end to the margin we have as a target for the group published in between 8% and 10% profit margin in 2030.

Talking about products, concrete products. First of all, to say what we want to do. We want to focus our expenditures on clear focused products to improve innovations, to improve technologies, to improve equipment and to improve quality for the single product. Then to achieve higher volume with a more focused product. And with this, at the end, to achieve a higher profit margin per product. Yes, that's the attention there. And we know from today that we have substitutions in some segments in between the brands. We have a high number of derivatives. And there we will cut at first with the derivatives. And then we will come to a number of products, which still will be by far higher than what we see as the competition. But for us, it will be major reduction of up to 50% of our products. But where we will start are the derivatives and there we have the plan up to 2035.

It's a longer progress because we have our current portfolio currently in production and in the market. And then step by step, we will clean it up and reduce complexity. And there, it's too early to predict. We have clear ideas where we want to tackle, where we have substitution in between the brands. But today, I want to address some concrete products. But at the end, the customers will benefit. We will benefit in terms of profit margin. And at the end, also the investors will benefit from higher profit margins.

Then we go to the Handelsblatt, Lazar Backovic, please.

I have two questions, first to Oliver Blume and the second one to Arno Antlitz. Oliver, following up on the question of Christian Müßgens. I mean, could you imagine offering extending employment guarantees at Volkswagen AG? Or would that be incompatible with your group restructuring plans? That would be interesting to know, not only in the light of Porsche, but yes, if you could just imagine doing so?

And the second question would be to Arno. It's a question on the proceeds from the Everllence transaction. How should investors think about the use of those funds should they primarily expect a stronger automotive cash flow? Or will be a significant portion of that needed for finance restructuring measures such as, I don't know, programs for [indiscernible], I would say, and transformation costs. That would be also interesting to know the share of how you use the money from the Everllence transaction?

Let me start with your first question. It's too early to talk about employment guarantee. We know the situation we are faced with a huge risk scenario, especially in Europe being faced with the Chinese competitors. And so we will do it step by step. 2 weeks ago, we have been, for the first time in the Supervisory Board to present the overall transformation plan and with our group target picture of 2030. There are some points to elaborate and to discuss furthermore. And this -- one of these points are the adoption of overhead.

And there, we are deep diving now into brands in our subsidiaries, but also in the regions. And at the end, it will be a combination in terms of overhead adoption and labor cost. And at the end, we have to talk about how to deal. And what you have seen in '24 already, where we came to a very positive agreement at the end, which we are executing right now, making good progress. And so we will enter in the next phase of transformation, having done all the analysis and then to talk about the conditions. And there, it's too early to talk about employment guarantees. And Arno, maybe you can pick the second part of the question.

Yes, in principle, it's also I have to say it's too early to talk about the restructuring, potential structuring we have to book because we have to decide on the measures first. But in terms of situation of the group, I mentioned before, we have a net liquidity on hand of EUR 32 billion, which is a solid balance sheet and the process from Everllence will further increase this net liquidity, obviously, depending on when we close the deal, currently, we have signing -- so-called signing and the proceeds we get when we close the deal.

And then we really need to decide on restructuring measures, but we also look at minimizing restructuring measures for obvious reasons because it's also money that is outflowing. And so we try to optimize that as well. But what we can say from today's perspective, there will be restructuring efforts and measures incurred, and we can finance this restructuring, which is also a strong message to the market.

The next question goes to Bloomberg, William.

I just have a question on asset disposals. There was a statement after -- there's a line in your statement after the Supervisory Board meeting about focusing on automobiles. Does that mean that Ducati is up for sale and when you might start a sales process for that company, which is hugely successful in motorsport and would be attractive asset for many people, I think.

Okay. We do not enter right now in the details of the plan. We haven't an overall agreement to our restructuring plan. What we are checking, of course, is our investment portfolio, as we talked about right now about Everllence. And also, we always think about how we will develop our brands. Do we need an investor or something like this. But right now, we do not enter in any details because we haven't done right now an external information on this. Internally, we are doing information frequently for our management, for our employees, but also for our labor representatives. But in details, we are still not in conditions.

Two weeks ago, we started our first overall presentation and then step-by-step up to the moment when we have an overall agreement, we will do an external communication of the whole group target picture 2030.

Then we have Christoph [indiscernible].

Regarding politics, you didn't mention the phasing out of ICEs, the plan of the European Union. You just said that you're optimistic that there will be no fines in the years to come. Isn't it that high on your mind anymore that there needs to be a change in this regulation concerning phasing out ICEs by 2030?

Yes. On the one hand side, we are well prepared with our product portfolio, which I already mentioned in terms of deliveries, we can see this year and also the order intakes, which are very promising, which brings us to a situation to being able to manage the current CO2 regulations. But looking further to 2030, I think there's still need for reaction. And there, we are aiming for a more flexible averaging what they implemented in between '25 and '27. If not, the whole industry would be affected. And we have to achieve at the end a regulation, which is linked to the real market development.

Also, we are very successful right now. We have a BEV market share of around 20%, a bit more than 20% in Europe but by far, not what is now in the regulations in 2030. And this has to be worked out. Now we have some brands which are on a higher level like Porsche, for example, who is very successful in terms of electrification, which is higher than 30%. And when you add the plug-in hybrids over 50% in Europe already, but this is linked to the successful Porsche electrification strategy.

But overall, in average, we are still only on a level of around 20%. And we are by far market leader. And therefore, when you're a market leader, you should expect that you have no problem with CO2. And with the current regulations in 2030, we have still problems. And so we need the averaging, which has to be done by the European Union.

I would like to confirm what Oliver just said. When I was referring to the CO2 topic, as Oliver said, it's '25 to '27 this period. The significant step down in 2030 and beyond will put burden on our balance sheet because from today's perspective, we need to sell more electric cars than the customers will accept or would like to buy naturally. So this would be still a burden, and we need to discuss this 2030 step, as Oliver mentioned.

We have time for 3 more questions, starting with Paulina Wirminghausen from Süddeutsche Zeitung.

Mr. Blume, first, regarding the group target picture, you have just said that you expect to see significant progress on this by the end of the year. Could you elaborate on that? And isn't that an overly optimistic assumption given the resistance you are facing?

Yes. We elaborated a complete group target picture during the last month with our Management Board and with very clear positions, clear answers what has to be done in Volkswagen Group. You know about the foundation we have laid during the last years, which brought us in a stable situation and our financial figures show in terms, especially comparing with the competition that we are still in a stable situation, but this is not a guarantee for the future in the overall environment.

And once again, this is not a Volkswagen crisis. It is an industry crisis we have faced. Because of China, the market went down and the Chinese competitors in Europe, the shrink market in Europe, the tariffs, the regulations we talked about, and that's the industry crisis. And Volkswagen, it's doing quite well in this industry, but only because we laid the foundation during the last years. And now working from this foundation, we are entering in the next period of transformation, our target picture of 2030. And we are already executing. The major part of the program. We do not need any agreement from our Supervisory Board, especially in terms of what we are doing in products, in technologies, what we are doing in engineering costs, what we are doing in material costs, sales costs and so on.

There are many fields we are already working, but there are some points which has to be agreed in the Supervisory Board. And that's my expectation that we will come to a conclusion during next year as soon as possible. What we do not have is time, and we want to accelerate also these topics, but the major part is already in a ramping up period. And you can see our activities already in our expectation for the end of this year that we announced that our results will be over last year, and this is a result of our efforts we implemented during the last years.

The second last question goes to Wall Street Journal and Stephen Wilmot, please.

Firstly, I wanted to ask about the 8% to 10% margin target. Where does this come from given that it's a number that Volkswagen hasn't achieved in decades? Is it the result of your benchmarking exercise? It seems more in line with targets that you get from premium players, whereas Volkswagen is 75% or so volume more mass market brands. So just if you could talk through how you think about that target, which is obviously underpinning a lot of what's going on at the moment.

And the second question was in terms of your China product push, the results so far, I think you said 6,000 or so sales so far for the UNYX 7. Typically, the Chinese brands, they're reporting sort of 10,000-plus sales in their first sales month when they do these launches, there's a huge emphasis on the initial sales push. We haven't really seen that at Volkswagen [indiscernible]. Can you just talk through how you're seeing those initial results? Are you targeting a more gradual ramp-up than your Chinese peers would normally do? Or yes, can you just speak to the kind of, I guess, slightly low figures that we're seeing from Volkswagen [indiscernible] after the initial push?

Stephen, I'll take the first question on the margin target. Technically, yes, I could say it's derived from benchmarks where typically other OEMs in this industry want to be at the end of the decade. But more importantly, if you look at ourselves, we need a robust level of earnings and a robust level of productivity in this uncertain environment. Look, if you shoot only for 4% and something goes wrong or there's tariffs included here or there are some decisions there, you're under pressure. And we want to achieve and we are motivated and committed to achieve a margin target of 8% to 10% in order to be much more robust to be able to invest also in innovation in the future. And it's also possible.

We talk not only about a program that reduces costs or reduce some of the models is a fundamental change of our business where we invest in technology, we streamline the model range, but we take out significant level of complexity and out of our company, and we want to streamline our company both in terms of cost, but in terms of -- also in speed of decision-making. So it's derived from competitive benchmarks. It's necessary in order to be robust to move robustly into the future, and it's achievable if we implement our transformation program consequently and with speed.

Coming to the sales figures in China, you always have to look at the market and the competition. Starting with the ERA, the ERA I talked about that we have delivered already over 10,000 units. And the ERA is #1 in the market of extended range full-size SUVs, #1. Are the figures as high as we used to see them years ago in China? No. But that's about that we have over 150 competitors there in the market. And for us, the orientation is to be on the top of the market. Second example is the Audi E7X, which is above the top 3 in the market.

And when you look to the UNYX 07, that's correct that we have delivered orders, orders placed because we entered in the market by the end of May of 6,000 units. It's successful. But there we have the situation. We have still only a smaller number of dealerships and dealer network, and we have to expand to come to higher numbers. But it was a very positive start also to compare with the competition. And there, always to differentiate in between the situation we have seen with low competition in the last decades in China and now with a very high competition. And there, we have to be successful. That's one part.

And the other part then benefiting from these models also for other regions of the world. This is now the new China thinking where we have unique opportunities as an international player being -- or having a big footprint in China.

Then we take the last one for today is an overtime question, Lutz, from Capital..

Can you hear me? Two questions, in fact. First, you were talking a lot about China, but I still don't fully get where your confidence comes from. So is it still the perspective to get back to EUR 1.5 billion of profit in the forthcoming years? And will that only come from this export perspective you cited? And you also mentioned the competition and the situation in the Chinese market overall. I heard He Xiaopeng last week and also he was speaking about the market as being brutal.

So is that realistic to compare yourself with a Chinese player as the Chinese players are saying themselves that they are in a difficult situation in the moment. So can you come back to this perspective of EUR 1.5 billion to EUR 2 billion profits from China in the coming years?

And the second question, you also made the comparison to the situation in the '90s of the Volkswagen Group and said it's not comparable at all because on the one hand, you are better off now in terms of profitability. And in the other hand, the market conditions are worse than there was. But nevertheless, can you learn something from how this situation was solved then?

Lutz. So I'll take the first question. Look, when I said the targets or the ambition we just communicated some weeks ago in China. They obviously depend on the successful ramp-up of our new energy vehicles, which some of them we mentioned already like the others, they have to still like being ramped up throughout this year and next year. We bring in total 20 new models this year and next year. Obviously, it depends on the recovery of the overall market and then our potential market share we want to achieve at the end of the decade of 10% to 12% because then we -- obviously, we want to keep our market share in the combustion engine, but the combustion engine market will go down and with the 20 new models this year and 20 new models next year in the new energy vehicle segment, we want to regain share to 10% to 12%.

And this then all factors into the roughly EUR 1.5 billion to EUR 2 billion and obviously, depending on overall situation and obviously depending on the overall market, but this is basically factored in this plan. So the key element is the successful ramp-up of our -- in China for China developed new energy vehicles with very good product substance and a much better cost base, which should give us then the contributions towards the end of 2030.

And coming to your second part of the question, always, you can learn from the past. And what our colleagues have done in the '90s was a great, great work. The conditions were a bit different, but they focused on cost reductions, for example, material cost reductions initiated [indiscernible] Lopez. And Mr. Mr. Piëch focused on the right products. And the main deficit has been on products and costs.

And on the other side, there was a regular competition in the market, not as tough as today. And you have been in growing markets in this period. The situation today is different. The business is more complex. Technologies are more complex. Our group is much bigger than it used to be in the '90s. And we are in an environment where we, on the one hand side, have a lot of financial headwinds, double-digit billion euros, we have to compensate what we are doing already. We wouldn't have this headwind, we would have been in a completely different situation right now. We have a very tough competition only from China, over 150 new companies entering into the market, what we can mention already in Europe also.

Then we have the trade barriers, we have the regulation and so on. But we have to face them. And what we have done in the last year, we built a foundation for Volkswagen Group with all the restructurings we have done. We brought ourselves now in a strong position in terms of products, technologies and also the software strategy will help us in the future. We have the battery business. We need to manage the transformation. And then we can link also to some achievements from the '90s, especially when I look to the material cost. There's a huge need for us to improve. And there, for example, we can pick some aspects they have done in the '90s. But you can't compare the situation because the environment is completely different, more complex and even more and more challenging.

And with this, I say thank you to Oliver Blume and Arno Antlitz for all the answers and all the information, also to my colleague, Rolf, and we're at the end of this call. I wish you a good day, a good weekend and see you soon. Bye-bye.

This concludes today's conference call. Thank you for participating. You may now disconnect.

Hello. And a very warm welcome here from Wolfsburg, out of our Studio 35. It looks very familiar to most of you who follow us very frequently. A very warm welcome to our eighth sustainability conference with the dedicated purpose we are giving insights in our ESG strategy. We have a very interesting lineup of speakers today. We will start with a very well-known face. Dirk Voeste, who will give us an update on the regenerate+ strategy. And then that will be followed by a presentation held by Guido Eickenroth who will tell us about how sustainability and our overall business model go hand-in-hand when it comes to making the Volkswagen system a little more sustainable. And then we have a deep dive session which is presented by Andreas Walingen and it's all about circular economy, and he will present our latest and greatest on that topic.

We will finish the presentation today with a brief wrap-up on where we stand on our green issuance bond framework followed by certain deep dive also into our Raw Materials Report 2025. How is PowerCo handling the raw material risk in their procurement processes and last topic will then be an update on our most relevant ESG topics within Volkswagen Group. What has changed over the last 12 months.

And before I hand it over to Dirk, I have to bore you unfortunately with a disclaimer. Please read it carefully, all forward-looking statements and the safe harbor language and other cautionary statement on the slide will go on today's presentation. And as said, I encourage you to read it because I will not read it for you in the interest of time and not to bore you today.

So with that, I welcome Dirk here on stage to give us an update on regenerate+. Very good to see you, Dirk. And the clicker, and please go ahead.

Hello, and thank you, and a warm welcome from my side as well. Thanks for joining us for an update on regenerate+, our sustainability strategy. And with this said, it has a title, a subtitle for this year, moving what matters to really look and in the next half hour, we will look into the details, which we believe are really mattering which we are driving and which we are taking thereof. But before that, again, let's have a short view on sustainability. Currently in the times we are receiving quite a lot of questions, is sustainability is still relevant? Is it really embedded into our strategy? Are those targets really met? Where are we on sustainability, and not only for Volkswagen Group but also certainly for other entities and firms and companies around this world. .

And let me firmly state, sustainability will not go away. And we're already seeing it, looking at climate change and others, it is driving businesses, it is driving businesses impact, opportunities and challenges. It won't go away. Super important in sustainability is that opportunities and challenges are balancing out. So for us, and I think we are strongly confirmed, this one is we are standing on the right side of the balance. And certainly, and I think Guido will -- and Andreas will later talk about circular economy, sustainability is a business driver. And circular economy, you will see it as a prime example, how we're combining nature topics, people, society together with business topics in really driving all the future business profit pools in this end.

And with this said, you may recall our vision again here firmly restating our vision becoming a enabling positive mobility provider. This is our vision. This is our aim. Of course, we know it will be difficult. But we still are very much of the opinion and very clear we need to start in touch again, be it with circular economy, but certainly also with the initiatives we are driving on the societal aspect.

Our regenerate+ strategy is built on 4 dimensions. Normally, you would see 3 dimensions in sustainability, but with around 670,000 people around the world, it is very important that our people have a face, have a name and also embedded in our holistic approach in sustainability. So we have 4 dimensions, nature, our people, society and business. And within those 4 dimensions, you know and you will see later on, we have each 3 KPIs where we are measuring our success, where we are looking at our strategy and how the implementation success. We have integrated regenerate+ into our group strategy. So it's a fundamental pillar of Volkswagen Group's group strategy and certainly a strong commitment and strategy and a framework for the group and the respective brands.

Those are the 12 KPIs and in the next minute, we will walk through the individual KPIs in nature or people and society. They are stick. We have numbers to it. You would see progress, which we have achieved in 2025. So reporting on this one today. But you will also hear where we are stocking and what work we still have to do. So let's go deep by -- climate. Strong progress in our own facilities, 60% reduction of CO2 emissions in this end. We are above target. We set ourselves a target with 50%, but we're very much on track for our 2040 target to become net carbon neutral for our own production sites. We will talk about circular economy resources, but only as a glimpse. Here is an ambition level for 2040. And certainly, what you will hear later on from Guido and from Andreas, where we already have recycled material in our vehicles, where do we have it in our plans, what are we really doing?

So from my end, this will be my circular economy contribution, but there is much more to hear it in the next presentations. And certainly, about ecosystems and we are learning more and more the importance about nature, how nature is impacting our business and how our businesses are impacting nature. And we promised to have an indicator. We are still working on it, to be honest, it's not so easy. We are linked to, of course, the disclosure. We are linked to all our reporting. We're linked to the respective initiatives, and we will have an indicator on biodiversity by the end of the year.

So next year, once we see each other again or you see me more or less, again, we will present the biodiversity indicator. What we could say is -- and we'll come to this in a minute, we have still the biodiversity fund. So we're really pushing towards positivity and contributions to nature and ecosystems. Talking about climate and climate change. And we all observe it. You know it from your assets, from the way how your assets are insured or valued in nature and climate go hand-in-hand and they really -- we need to take care of. And certainly, what we are seeing here is we are still committed to our ambition by 2050 to become net carbon neutral. You're seeing that we are certified with SBTi until 2030.

And with the current discussion with the SBTi, we are still waiting for the final standard to be issued in the automotive and mobility sector. We are also in very good discussions, intensive discussions with SBTi because as you probably know, they are also currently restructuring themselves and they're also looking at their respective offers. We are confident that we will work on this pathway until 2030, let's say, certified. We talked about 2040 already. And when we talk later about our electromobility successes and the ramp-up, you'll see that we're also on track for the decarbonization pathway.

Some more details and you'll find all the details when you look it up either in the ESG factbook or if you see on our web pages, you see the progress report, you will find all the data and presentations in there as well within our asset Scope 1 and 2, we are significantly above target. When we look at Scope 3, the use phase, we are on track for 2030, roughly nearly 18% by 2025, aiming for 30% in 2030. Ecosystems, we talked about. We have the biodiversity fund. We have initiatives within our own assets. We have initiatives along our supply chain, where we're strongly working with our suppliers to improve their environmental footprint, also particularly in their footprint. And of course, we are close to launch our biodiversity fund within the next weeks, and please follow up on this one as well.

And it's not only the larger things which we're driving. And here is an example from this spring where we had volunteer days of tree planting. And certainly, you could say tree planting is not the most creative one, but it's an important tool. Why is it an important tool. It combines values to society. It combines value to nature together with our people. So it is strongly bringing the topic of nature to our people. It's engaging, and you saw that we have more 100 employees only with this one initiative very close by to Wolfsburg, a great success, explaining about the nature, explaining about our business model and certainly bring people together currently in this dynamic time, super important.

Those initiatives are going all over the globe. It is not only Wolfsburg, it's not only Germany. It is South Africa, it is China, it is U.S., it is Brazil and all over the world, which I think is where you see sustainability is more and more getting embedded into our own company. When you talk our people, we'll talk a little bit about the targets on the right side, women and international management, training of our employees is very, very important. Here you see we had 21 -- on average, 21.6% of training hours per employee really bring them from an analog into a digital world and maybe even put them into an AI world and certainly from a combustion engine into an electromobility world, I think when you take our people along, we've given them the targets. We're giving them the opportunities even in these dynamic times to train themselves to really be and have the capacities to join with us on the transformation of this one.

Accident frequency is still high. We are aiming for below 1. We have implemented certain measures, and I would like to give you one measure on the next slide. You will see it on the lower part, it is the so-called health care run. Here is a picture of 2025. The recent health care run took place last weekend, more than 2,500 people, including families here again. So societal aspect took care promoting health, putting -- making and bringing activities together and really not only forming the unity in the team, but also promoting what can be done with health, be it at their own stage by health care, but also certainly within the company and ourselves. Very important topic.

On the left-hand side, you see the diversity index. And you see with portion of women in management, we are on track to our 2028 target by roughly being 23.3%. And on the right side, you see our target is 28.1%, degree of internationalization in top management. We are above target and you may ask the question, why is our target below what we have already achieved. Please keep in mind, we are currently going through some also significant restructuring where we believe this 28.1% is an ambitious target, which we want to leave by 2028. If we see that we are really on track, certainly, we will revisit the target.

Society and on society, it is on one side, what we do with society with neighborhood and engagement, but it also includes our supply chain, our value chain. And here, you see that roughly 87% have a positive performance. Our relevant Tier 1 suppliers have a positive performance. In the S rating, we are shooting for 95% knowing with roughly 60,000 Tier 1 suppliers. There is a yearly turnover and 100% cannot really be achieved. That's why we believe higher than 95% is approximately the 100%, which we need to achieve. We will see it in a minute.

We will also see, again, here the reputation KPI, and I have a slide in a second and certainly about the projects worldwide. I indicated this already, more than 200 projects worldwide roughly EUR 74 million in donations and Sustainability Impact Fund with about around EUR 20 million per year. This fund is dedicated to activities driven by our company within the company and within society. So there are interesting models in there, for example, long term business opportunities and sustainability, there are efficient gains in it, but there are also societal engagement topics in there. So really, as we understand sustainability, very broad, holistic.

And maybe let's make a short pause. And you may ask yourself the question, what is our definition on sustainability. And sustainability can be defined in various ways coming from the very, let's say, dogmatic brown land definition into value creation definition, but sustainability also in our way, we're looking at it is business continuity. So how can we implement those initiatives drive in KPIs that Volkswagen in the mid and long run is also successful. So sustainability is an underlying function of business continuity. And that's why I think it is super important to see not only the investments we do in our own assets, we need to look at the investments and the work we do with our supply chain, with our stakeholders and certainly also with society and societal impact. So let's dive deeper a little bit into the supply chain.

We do the S rating for quite some units. We published the data. And you see that we have continuously improved our rating roughly 87% last year with our target of being above 95%. So we are really on track. Why is this S rating so important. It offers us the opportunity with our relevant Tier 1 suppliers to talk about where they are good at, where improvements are needed and what we need to do. But we really want and do work with our Tier 1 suppliers in driving a topic towards an increased sustainability in their own asset, but also in the whole supply chain.

The global reputation KPI. It's a KPI, which you know from our reports since 2017, we are reporting it. We have set up or revised the whole questionnaires. It is done with 2 universities scientifically based, and we are coming with key questions, trust, likeability and recognition. And those 3 elements are building the reputation KPI. We are roughly at 89% globally. But you see on the lower part, it differs from country to country. For example, with Germany, around 81%, to Brazil to 96%. Mexico, of course, was a highlight of 100% and U.S. was a laggard of 73%. This data and the knowledge what individual stakeholders, media, customers, opinion makers but also investors, analysts, are giving us, it helps us to see where can we position ourselves better. It helps us to go back to our production, our technical development, how can we make our offer even better and certainly what is missing and what we should do.

So this is a super helpful tool for us to understand how are we perceived, how is our reputation, but also data driven, what and should be improved in order to drive reputation and certainly our position. And we talked about the societal impact, more than 200 global projects. Here on the left-hand side, you see how it differs from region. It is really international. It is not a German topic. It is really broad in driving this topic. And on the right side, you see more details on the Impact Fund, up to EUR 25 million in the year of '28, '29. Last year, we funded 15 projects globally, so we get started. And in 2026, we put it on hold, referring to our economic situation. But we will apply -- or new projects will be applied for next year we'll keep on running again. And again, it restates our commitment to sustainability. It restates the Board's commitment to sustainability, but it also -- and you can see it really as a prime example, we stay on track, we stay on target, but of course, we're also reflecting our economic situation.

When you talk about business, how much money are we making with sustainability. And we promised last year that we are coming with the KPI. And this year, it's the first time we will present it to you. It's our sustainable revenues, all revenues, which we are doing with sustainable sales or in business fields. We'll come to this in a minute. We still have investment, the Leitmotif venture capital fund was roughly USD 300 million investing into startups in the area of decarbonization and circular economy. Our BEV share, a clear commitment to electromobility. And certainly, as Rolf has pointed out already in his initial speech, we will talk about green bonds. And here, again, with our target of 50% total outstanding volumes through green bonds last year, in year 2025, 31.5% of those shares have been green bonds, which have been issued.

Let's dive deeper. And you've seen the -- you know the last slides last year, the first time in Europe, more vehicles with an electric engine have been sold than combustion engines. And I'd say the -- the association -- the European Association of Automotive have published the figures for the first quarter, 20% true BEVs, only 30% combustion engine cars and the rest, plug-in hybrids and hybrids have been sold in the first quarter in Europe, which means electromobility is making its way through. And what we also know from our own data, once people have driven an electric vehicle, 80%, 90% will stay.

So what we're really seeing even in the past, we have anticipated the ramp-up curve differently. We are now seeing it is really coming, we are coming with the ID.2 or the ID. Polo. You saw the recent announcement of the Raval. We are now coming with this urban street -- urban car family. So we are really, let's say, having the right product. We promised to be below EUR 25,000. We delivered on our promise, and we will also deliver on our promise with the ID. for everyone or it will be called most slightly different in the next year with a car below EUR 20,000. That's coming, sustainable revenues.

What is a sustainable revenue? What we did is we looked into our sales in 19.9% of our sales, roughly EUR 64 billion are dedicated to sustainable revenues, which includes BEVs, PHEVs and REVs. But it also includes mobility services or emergency vehicles, et cetera. So what we did is, together with our council, and I come with it for the -- to this topic in a minute, together with our council, we reviewed a new methodology, which is based on EU taxonomy and other issued and published methodologies in order to describe sustainability, so it's to come up with a framework. The framework is published in the white paper. You will see the white paper and you can find the white paper either in the ESG factbook or on our web page. Happy also to provide you with further details, if you wish, come up with a 4-tier segmentation, how we are looking at our sales with transformers, enablers and certainly true sustainability sales and the overarching merged into 19.9%.

We don't have a target or ambition level yet. It's the first time we have come with this number to present you, roughly 20% of our sales are sustainable -- accounting to sustainable and certainly in the next year, we will come with a different ambition level. Very important, this paper has been published. It's available. It has been vetted with our Sustainability Council, with experts in the field, and we feel it's a very strong and robust methodology, which is appreciated, and we're getting very, very positive feedback on this methodology.

Again, a very clear commitment from our end to be transparent and driving our business towards increased, let's say, level of sustainability. And certainly, I think when you talk about the strategy, it's a question how you implement it. Where do you create value? And in the next minutes, I will focus on 2 aspects: ESG, where do we -- and stakeholder engagement. Of course, we talk about value creation impact, and maybe there will be further questions from your end. Happy to answer them in the Q&A session. The ESG ratings, and we still stick to our 3 major ESG raters, MSCI, Sustainalytics and ISS.

You see our trajectory from 2020 until 2025, and the trend where we are seeing improved rating, but keeping them on the MSCI level. Sustainalytics, yes, we still -- we are doing good on the trend, we are even improving. So here again, we believe, yes, a little bit more can be done. And certainly, with ISS, we want and will maintain the prime status. So overall, I think a very realistic picture reflecting our ambition, very solid with tick in improvement as well. But you also know the discussions around the raters, the rating agencies and the respective questions around it.

Our Group Sustainability Council, and you see here quite a number of people. Why? It is because our -- it is different than what you normally know as a council. Normally, councils are set up to counsel and advice of the Board of Directors, smaller group, very often very close by. And very often, it is very difficult that those discussions trickle down in an organization. In our case, our Board is strongly committed to sustainability. They don't need the extra advice in talking about the importance of sustainability. We are much more looking into an area, how can we utilize those expert levels in driving projects and improving our strategy.

And that's why we have, we call it, sustainability practice groups. They're helping us to advise on strategic frames. They give us external expertise, honest feedback, business value because they are trusted experts and drives those topics. And certainly, they increase the reputation and credibility. So let's see what they did in the last year. The full council, and they are consisting out of 4 practice groups. And of course, whereas 1 practice group for nature, 1 for our people, 1 for society and 1 for business. And each practice group, and you see there are 3 external experts and 3 internal experts. So the discussion already happens on expert level on the topic. So there is an immediate feedback on projects, questions, strategies, and it don't need to -- it doesn't need to trickle down from the Board of Directors. We're really having the expertise where we really need it.

And you see here what in the last years have been done, the advice of our group strategy. And then we talked about mobility services, megatrends, but also they helped us on the reputation study, the materiality analysis. And as I mentioned, certainly also in the reputation and the revenue KPI. The individual working groups worked on various topics. For example, our people was the whole area of the participation, international messaging, but also on our HR strategy in itself. When you look at across these groups, it was about CO2 emission, the regulations, it was about ecosystem services. It was circular economy, very, very strong because circular economy goes beyond all 4 dimensions, and Guido and Andreas will talk about it in more detail. And they advised us and challenged us on our decarbonization strategy. So very, very broad overall.

And then certainly, we use individual experts in their opinion on specific questions. And here you see the numbers of the external as well as internal experts, and you see here Rebecca Shaw from the World Wildlife Fund or you see on the right side, William toch from transport and environment. Mia group known from a German aspect or Aron Cramer, CEO of BSR. So very broad expertise on this field. But again, it's a completely new setup. The -- we have 2 meetings face-to-face meeting every year. But I would say, rather monthly meetings within the respective team. So very, let's say, interactive, very engaging. And what we are getting out of is a lot of impulses, a lot of challenges and very, very important, very detailed topics, very detailed expertise on the respective projects, which we can then use and really drive our projects forward.

So a new way of sustainable council. And again, a systematic approach, how we're implementing our strategy, regenerate+ with our vision. And then our 4 dimensions, again, you will see it here again. So very consistent how we implement and translate our strategy into our real world. And then again, for the third year, we had our Group Sustainability Forum, around 100 participations in their 60% external, 60% entities of the group worldwide and roughly 30% of internals engaging panel discussions, very open dialogues on topics on circular economy. AI is a big topic, of course, of this day. And certainly, we use this opportunity this time to also invite my Dirk's 40 colleagues, and we had a CSO meeting at this port on top of it.

So Volkswagen is really positioned not only in a content provider, but also engaging with society, engaging with experts, really getting external know-how into our own strategy, questioning our own position, questioning our strategy, improving our strategy and making it really robust. And you see here, again, super positive feedback from all participants, very, very active social media accounts around it, wonderful speakers, provocative speakers as well would really make a difference. And you see it run a little bit like Mr. James Bond, the forum will return in spring '27 because it is a format and it also shows our commitment to sustainability and engagement with society.

A few last slides. Coming to the end of the presentation, just to remind you, yes, we have the sustainability report. Our ESG effect, which I'm sure you all know, it has been updated, I think, 2 days ago. One day ago, I think, 1 day ago, so with the latest figures, you will see the white paper, you see the revenue figures in there. They're all in there. And certainly, when you want to read more about the individual figures, I talked about they are in the progress report. Run it up. Again, it is very, very important, and we talked about, particularly in this uncertain dynamic times, we need to empower people and take them along with it. We need from a business perspective, but also from a nature perspective, protect our resources. And you will later on how circular economy will help us, particularly also to make us as a company and also as a region, much more sovereign and independent, we have regenerate with strong progress. We talk about climate change, climate neutrality is achievable.

We are on track. So the economy is about it. It's about regeneration, but very, very important, it's about people and bring them together to shape our sustainable future together. Again, moving what matters. And with this one, looking forward to your questions, to your comments and happy to answer them.

Thank you, Dirk. Very insightful, as always. Yes, we are opening the Q&A session. We will -- one is now and then the next one after Andreas and Guido's presentation and then at the very end of the section. And we have here the first one coming in from Justin from Hermes. You mentioned SBTi. Could you confirm the plan for SBTi renewal as the current SBTi contract expires in 2027. To start with, an easy one.

Highly appreciate it. Since more than 2 years, we are waiting for the final standard of SBTi. And there is always an intermediate coming. We have now, I think we are in discussion with SBTi, which I think also had a structure change that the -- there will be -- end of this year, there should be the final draft, which we are waiting for. So our commitment is to go further with the SBTi, but we're also looking left and right around the corner what other standards are also available in this regard.

So let's see what the final standard will be. But certainly, let's say, looking into a recertification commitment. However, it is strongly dependent how the final standard of SBTi will look like, what we are currently seeing is and I had a discussion with the new CEO of SBTi, we are seeing a much more pragmatic and also business-oriented view.

Thank you, Dirk. Sounds reasonable to me. First, now actually what you commit, yes, before you commit to. The next question here would be from Sarah, TEFIO, I hope I spell or pronounce the name correctly. Can you share where or how policy engagement shows up in the regenerate+ program?

Yes. And it is not a claim in itself. But when you look at, for example, our BEV ramp up, when you look at circular economy, in all those topics we have are very, very engaged in policy engagement or with this policy and policy makers and governments. Be it, for example, we're looking at in harmonization of the waste legislations. We are looking at product passes when we talk circular economy. We're also looking at CBAM, ETS and ETS2, where we're also engaging. And certainly, I think we're looking at Filip compliance. The various buckets we are in or if I can mention another example, biodiversity disclosure protocols. We are in those working groups either through associations and/or individually to see what we can do, not to either make it pragmatic and applicable in this regard. So it fits into all the respective baskets. It is not a single column, but it's really content-driven together with our verse colleagues around the world.

Very good. So next question is unfortunately -- you present a Paris-aligned decarbonization strategy. Yet delivery depends heavily on future BEV ramp up. External factors like grid decarbonization and long-dated targets such as 2040, 2050 net neutrality, what gives you confidence this pathway is actually executable and not another case of front-loaded ambition within back-loaded delivery risk.

Next time, we need to underline risk. That's a different target. Really the confidence is, when I'm looking at our current portfolio and BEVs, which we bring on the market, the urban car family is one topic broadly getting into it. When I'm looking at the ID.1, which will come '27, '28, strong topic and a strong component. When I'm looking at the overall portfolio, and you know that as well, not only in Volkswagen, but in Audi, in China, what we are doing all over the world, the projects are now coming. So that gives me a strong confidence. What also gives me confidence when I'm looking at our own assets, we talked about this one. We are already above and before the standard. So those measures are really being implemented. Will it be easy ride, right? No, it won't be an easy ride, right? But I think we're tackling it bit by bit, and we are confident that we are driving it in this way.

I think I would want to present and agree. You mentioned before that the Irma electric car family are going to sell EUR 25,000 and then the ID. for everyone next year at EUR 20,000. I mean we can keep in mind, obviously, that there is currently subsidies paid across Europe, take France, Germany, you can be eligible for subsidies of up to EUR 6,000. So it wouldn't mean actually they get an entry-level BEV car, Volkswagen quality already for less than EUR 20,000, yes. So -- and in particular, in a segment here, which has been largely abandoned during the Corona pandemic situation, so 0 entry level.

It was a segment which was almost 1.6 million units in size. So I think we made the mistake to be fair 2020, that we assumed a rather linear increase in battery electric vehicle penetration. And with all innovation curves, we have basically seen in the past, they are not moving linear. They are moving in certain ups and downs. But at least from today's perspective, we can say by all what we know, we are really moving in the right direction. And this holds then also true for our sustainable revenues.

Absolutely. And you see it also, and we see just given a little bit more tension for Andreas and Guido, but also circular economy presents decarbonization because the circular material has less carbon footprint. So you see more and more initiatives are really, let's say, paying into the same direction. So we are confident that we'll make it. But certainly, I think it won't be an easy ride, but I think ready to take it.

Very good. Dirk, there is no further question. I mean there is plenty of time here to think over your questions. I said this session runs until 5 in the evening. So -- and then we will have several Q&A rounds where you can address additional questions. But for now, I would like to thank you again. We will see you later on.

The next speaker, and I'm very glad to introduce, you know we always want to have a changeover in all the experts we have in Volkswagen Group to provide you always with an updated and also fresh angle of the sustainability efforts we are having in Volkswagen. So it's my pleasure to have today Guido Eickenroth, he is Head of Volkswagen Group Sustainability Strategy and Decarbonization and he will tell you why circular economy matters and what our strategy is on circular economy. Very good to have you. Thank you.

Okay. So also welcome from my side. I'll try to make also some new points that Dirk already pointed out a lot of topics regarding circular economy and the activities. No, that's the wrong slide. Okay. Here we are. So let's talk about also the -- from Dirk mentioned challenges and opportunities when we talk also about circular economy because we see really this is a kind of a huge driver also for our business options and alternatives that we also see in the area of sustainability and circular economy. .

When we go through the slide, and then we see here on the left side, the increase in resilience. Resilience Is quite often in discussion at the moment. But also, yes, from the raw material side, virgin material side to be more independent, be more resilient, what is happening also in the raw material markets. But also when it comes to circularity, it's getting more and more important because we see also the increasing demand on circular materials, and we need to be sure that we have the right volumes and the right quality also for this reticles in the market and also available for our products. And therefore, it's getting more and more important. It's not only a buzzword anymore.

On the other hand, we have a lot of untapped profit pools. And then what I mean with that, when we talk about, for instance, special parts of circular economy, for instance, the used parts areas, where we see really used parts that maybe have another life and have more options to be used again have more potential also to be in the market. It's at the moment, also in '23 was EUR 100 billion market only in the European market. So that's a massive demand and a lot of potential is there to use this more. And on the other side, and this is exactly where the point sustainability and business comes together is the acceleration of nature action.

Because if we're using and Dirk pointed already out that we have also less carbon footprint when we use, for instance, used parts and then other material and keep them longer in the life cycle. So we have then the aspects on the profit side, but of course, on the nature side as well because we save a lot of carbon footprint when we use these things in a different way. The uncertain legislation or the legislation topic itself, of course, is important. And there was also a small -- short analysis from the hansplast last year prepared that the ask also companies in the German market, and there was 80% of these companies was pushed circular economy actions, regulatory frameworks that there may be in place or will be coming in the next years.

But should be definitely not the only push in a circular economy business, we also should also focus on the other side because it's pretty much related to the legislation topic at the moment from the European perspective. But on the other side, and this indicates a little bit the market dimensions, we have also China. China has this not in the legislation at the moment, but they have it in a 5-year plan implemented. So that sees and indicates also how important is that from their side, not only for legislation, also making this be more resilient and really have also a sustainable business is also from the economic perspective, very, very, very important.

But -- so when we look what we are doing now also in our current portfolio, and this is very important as well because the only thing what we get in the next years back for recycling and other alternatives, is that what we bring now in our cars. And here, some samples of our current portfolio, just some samples here with the ID.7, for instance, with a lot of recycled PET bottles in the interior material. That's very important because interior plastics are very sensitive from the consumer perspective as well. We have in our T-Roc at the moment, the highest -- quarter for polymers. We have up to 40-kilo in that car. That's really a good step forward.

And also on the CUPRA side, we have also implemented and built in this car, a lot of polymers. That is not a lighthouse, that is really bringing it in the mass market of volume cars. That's the way forward, how we bring these polymers and our products because when it's in our products, that's really going to happen. On the other side, we're facing a lot of complexity. And as an OEM, and you see here the loop from the circular economy business, and I will go through a little bit more a detailed picture. On the upper side of this loop, you really can see the business, how we do as today. It's a linear business. We're designing cars, we're producing cars, we're purchasing material as it is. So we sell them -- we sell the cars. And then, of course, we treat them with spare parts and servicing a long time in the market lifetime.

But at a certain time point, the lifetime is over of this vehicle, and then it's really out of our focus at the moment. And that will change dramatically when we talk about circular economy business and then really kicks the lower part in to make the business really circular. And circular is one very, very important gate point. You see here on a green circle, that it's take back and buy back because this is a decision point where really circular economy starts. We need to evaluate what we should do with the car, what should we do with the materials inside. Do we give them a second life in terms of using that parts or when we talk about electric cars, bring them these batteries a second life in the market and energy storage or anything else.

So we have a lot of more possibilities and options to really think about the material used in these vehicles. And then it comes to lower part where we really get the cars back and have maybe use the material, and we have a real end of life of the vehicle, then we use the materials for circular materials and recycling activities. So -- but at the end, we have a strong focus on strengthening the values, have the synergies in our company, and that is the point where circular economy is very important because it's a scaling business. We talk about of 10 brands and then in the group. And if we work all together, we have a huge network around the world, not only in Europe, around the world, a lot of dealers that we also need all incorporated in this kind of process.

And on the other side, we're really focused on costs, not make things on different perspective twice, really focused on that structure how we organize circular economy business, and I will also come in a second to that. And also the partnerships and activities is very important and very new to circular economy because it's a new orientation also in the market. I will also come in a second to that. So when we come to the structure point that I mentioned because circular economy business is not only recycling because a lot of people think when we talk about circular economy, it's only using circular materials and then recycling, using PET bottles and so on, but it's much, much more.

And this is the point where we really say, okay, from our company perspective, it's very, very important that we have all in the company with over 650,000 people around the world. We have a clear picture, what is circular economy, what is behind it. And we have here our main blocks from the circular economy perspective coming from the production, for sure, it's clear, but also the vehicle side, I mentioned that we bring with redesign and reduce and avoid also new aspects in our vehicle development and our production in the cars but also think about revitalized programs and repair programs, but also talk about refuse. And this is very difficult for an automotive company to talk about maybe to produce less. Not -- it's not less, produce it in a different way with a different purpose.

Use it also more efficient and we have here in sample where we have more also activities to have 1 vehicle that's used by much more people than only 1 or 2 person. This is all aspects of circular economy. Battery side, I just mentioned that will also change, and Dirk also said that we have a clear indication in which direction e-mobility will go also within the next years. it's important for reducing also our footprint from the use phase, but battery replace and dematic role when it comes to CO2 footprint from the supply chain because it starts with a huge footprint. And we have a circular economy huge potential to reduce this footprint also of the battery, and that will be the game changer also for the future.

Parts I addressed already the topic that we have a huge demand here and potential in the market. But what we should not forget is digitalization and people because without digitalization and digital product passports and then also AI solutions in market evaluation and volume evaluation for recycled materials and so on, it will not work with our digitalization. And if we do not change the mindset of our people coming back to our strategy regenerate+, our internal people, how we treat, how we handle the usage of our materials of our cars as well, but also the external. We need to do a lot of education. So what is really behind circular economy.

And therefore, it's very important to get also the company when we talk about people, the whole company behind this picture with all the brands all over the world say, okay, this is the frame set that we have the same understanding about this. This is the way how we can incorporate this. And that brings me actually to the next page, how we framed our circular economy strategy, making circularity the new normal in mobility. It's a claim where we really see it must be in our product, must be in our core processes, must be in our heart and our genius that we have it in our company fully established because only then it will work. And this shows then also the indication when we use the full power of circular economy if we use the whole volume, the whole network, all the people behind that topic. But of course, new business model sounds that easy. It's also a lot of development work to get new ways established, how to use things in a different way, break also processes, creating new processes, integrate all our strategies and our corporate strategy, bring them in there.

It's a core potential, save resources, reducing cost I mentioned already, but also strengthening innovation, and I will give also in a second example where we start to do that. And partnerships as well as the rest. The whole circle and the reduce and grow part that covers the circular economy strategy need to be valued for over 1 million cars that we get back through this cycle. When we talk in the end of next decade, this is the volume that we at least need only fulfill the polymer quarters for the European market. So we see there is a huge potential behind on one side, from the parts side but all the other business activities, but also to ensure our future business.

What is new in a market situation? So we have different partners now, that changes. We have close contact to waste and disposal companies and recyclers. Of course, we know them that they're all in the market, and we work somehow together, but the collaboration in this situation is completely different because we need really to work much, much closer to see what kind of material we build today in our cars, what comes in the next 10, 15, 20 years back in the market, how we are going to recycle this material and then use this also for our new car. So that will be a huge challenge. And we should also say circular economy, we will not work alone. So it's not our own thing. That's an economy. It's a global thing with all partners in the market and the communication and how we work together is not a circle, not circular economy and circular communication, it's really a network. It's a new ecosystem, what is established.

And therefore, I will also give some samples how we, as a Volkswagen group start to establish this kind of new way of communication. So we have here only some samples because we do a lot of things in the circular economy area. But when we go through this and from Volkswagen, where we have vehicle recycling, take back dismantling, using used parts, activities, and this is really how we're going to practice and Andreas will also tell us in a second much, much more detail how we start these activities also with here stated, our group of competent center for circular economy.

But also, we have these kind of small branches with start-ups working together. Porsche has a very great start-up collaboration with a small battery recycler and an -- so they really were close together how to optimize the processes, how to really get the material back in the series, and this is very important. And also, of course, we have the battery recycling technology from the PowerCo and Audi has also project running over the whole value from circular economy perspective.

So this is what we are doing. We are definitely at the beginning. But I want to close my presentation with some statements. And these are very important also to summarize a little bit what I have talked with in the last minutes. So strengthening resilience and sustainability is a key opportunity for circular economy, be more independent, be more sustainable that is the purpose also behind it. Circular business model opened new and lasting profit pools for the Volkswagen Group is really using material more efficient and also have our used parts business, for instance, implemented using other lifetime models that we not have at the moment on the radar.

And last but not least, our strategy and implementation parts space are key to leveraging the scale and our innovation in the business. And this is what I mean. We have a framework with our reduce and grow strategy for circular economy that is working all over the group and with all the brands together.

Thank you for now and Andreas, this stages yours for going a bit more in detail.

Thank you very much, Guido. Thank you, Guido, and welcome also from my side. I'm very happy to share some insights on how we are implementing the circular economy strategy. I think you just learned how important it is for our regenerate+ strategy and also for the framework Guido just set out, our reduce and grow strategy. And I would like to give you an insight on how are we addressing this and make it very tangible that we come from a strategy point of view into the execution and how we implement circular economy in our business operations. .

And I'll give you to make it as tangible as possible. I'll give you some insights on how we are setting up a group circular economy where we combine all the competencies we need for circular economy to scale it and bring it to the success story for the whole group, integrating all the good efforts we have at the brand. And before we started this group activity at the circular economy hub, we decided to take a look at the customers and at the profit pools. And how can we use our strategy, just Guido just outlined, how can we use them into business fields? And this is exactly what we did here on the chart. You see we have new cars where we produce and we sell them.

There's a European market for that, like 13 million, 14 million cars on average. And of course, our redesign activities with used materials, recycled materials are going to fill in there. But on the other hand side, we widened our scope on to a much broader perspective where we see there's a huge car park in Europe. For example, over 300 million cars are on the road, and they're getting older and they're getting -- and they're looking for repairment and parts. So we see repairment and refurbishment for younger cars and also for reused and remanufactured parts there's a huge potential in the market as there's a huge car park in line.

And we see, of course, there's also a number of end-of-life vehicles, roughly 4 million to 6 million cars are scrapped in Europe to recycle them, to get the materials, bring them back into the loop in order to secure them. So this is how we address the -- our strategy to business fields. And with -- in this setup, we set up the Circular Economy hub in order to really learn and scale the activities here. And for us, it's very important that we start on operating level, so that we get as fast as possible in doing things and implementing things. So after a short test phase last year, we are right in the middle of preparation. We are actively dismantling cars at Spico plant already in order to learn and prepare to scale. And '27, we want to really go on a bigger number in order to process cars, get the materials get the used parts and get the business going. And in order to give you an idea of what is our vision to this circular economy, I will show you a short video.

[Presentation]

All right. I think it shows a good view on how our vision is for group Circular Economy hub. We're right in the transformation phase, and we're working on that. And at the end of the year, we go live with this approach. And we're happy that we're also supported by the state of Saxony because we see this as an industry push where politics regulatory frameworks and industry partners work together. This is very important to set up an ecosystem where circular economy takes off and scales successfully. That's why I think it's an important sign that also we get support from our local governments.

And what is also very important, maybe the key to all that is our people. We need convinced and committed people. I talked to a lot of people before we installed this. And then he said, okay, it's not about so much technology because we got very good ideas and engineers to do so, but it's very important to take the people to this idea to get them committed and convinced that they're really working on this circular economy momentum we are building up. And so we have a dedicated information platform set up. So we have awareness and senility workshops going on where we involve the people and our engineers and experience center to really get a circular economy tangible for the people and to get more qualification into this and bring new ideas to our operating model.

An operating model is a good example to give you a very concrete number of what is our idea of scaling and material we like to gather in such a circular economy. We have a modular setup where we can raise capacity from step to step. The more we learn, the better we get, the more we automate, and we set like 4,000 cars at the first stage, 8,000, 50,000 cars. So we ramp it up, the better we get the business balance and the more we get inside. So -- and to give you an idea of how much material and parts we process in such a hub, we've given you some numbers here for to give some rough numbers.

For example, we will receive at least 300 tonnes of qualified recycled polymer that will be implemented in new cars, for example. 3,000 to 5,000 battery packs, so really a huge part of batteries we're receiving back. 450,000 parts, used parts, we could sell to our customers and offer them and 15,000 cars roughly assumed to 15,000 tonnes of scrap materials, basically, steel and aluminum. And that's very important for us to close the loop and steel and aluminum and not to forget about copper, for example, and also other raw materials. So you see that we're really bringing some materials in our cycle and also some parts and remanufactured parts to our customers.

So we combine the profits of the used parts together with the raw material resilience at one side. But of course, 15,000 is probably one of the biggest sites in Germany and at quite a big site in Europe. But for a size of the Volkswagen Group, we need scale. And the success factor from our perspective, circular economy is scaling. And to scale this, we will prepare for scaling in the 2030s to set up an idea of a partner network where we implement those strategies and scale together with partner across Europe.

And to give you an idea of what do I mean by scaling on that and what do we need, I would take this, for example, of the upcoming regulation that is going to be discussed on the European level, and we assume that it will take place in this year and it will be effective in 2032. Let me walk you through these numbers sometimes rather complex. So it says -- the regulation says use recycled materials. And they start with polymers. So it says -- the regulation says use 15% of post-consumer reticles for your cars. And out of this 15%, you need 20% coming from -- not your own but from automotive cars. So that means really to close an automotive loop.

So it is not industry scrap, it's really post-consumer scrap. And even further, it is automotive closed loop. Those 20%, for example, relate to roughly 10 kilograms per new car. So that means in every new car we are building in 2032 going forward, we need 10 kilograms of recycled automotive loop. And the regulation sees that is going to scale up the volume that's going to be needed. They say 25% in the following years. And they're also thinking about aluminum and steel. So it's just an example of how this will impact the automotive industry, us and also our partners. Because how do we get those automotive closed-loop materials?

Take a look at the recycling cycle of cars. To make it very concrete you have at the bottom, you have an old car, like Volkswagen car but could be any cars. Of course, they have an average less plastic than today's cars, but you get qualified recycled materials out of those old cars for roughly only 30 kilograms. So only 30 kilograms are really qualified to be used to our new cars in terms of quality, safety and all standards we need. So those 30 kilograms relate to new parts we are designing together with our engineering team to bring them by circular design into our new cars. And the numbers that relate to, given 30 kilograms on the one hand side and 10 kilograms you need on the other, this reflects to an easy number of what you say, you need 1 old car to get prepared for 3 new cars.

So this gives you an idea of how many cars we need to be processed throughout our system in order to meet those requirements and also to make our decarbonization strategy feasible. And also polymers are the start, and we see aluminum and steel coming up. And talking about ELVs to be even more specific, where do those ELVs come from? We did an analysis on that. Those are public numbers based on 2023, that they don't change that much in the area. You see that in Europe, we have roughly 4 million to 5 million ELVs processed in the European Union. And you see also that they are distributed all over Europe.

This means from a regional perspective, we need regional partners to process those ELVs and they not necessarily have to be in Germany because in Germany, we have the specific situation that we are, by far, not really developed in this market. For example, I really take a close look at France at many times and talk to the colleagues there. They have processed roughly 1 million ELV cars per year. The legislation really supports them or -- and they get used parts in there. So it's almost 4x as many cars processed in France than in Germany, giving the same size of the market and the same maturity of the industry. So there's potential in that.

But it also means that we need a regional network because it doesn't make economically and ecologically no sense to bring a car an old car from Spain, for example, to Germany, or from the Eastern part of Europe to the southern part. So it's going to be regional and ecologically. And on the other hand side, it has to be a technology network. We have technologies well established. I think for steel, aluminum and copper, there's an existing structure. It's pretty common for our industry and other industries to use scrap and for steel and aluminum. But we have to take into account those decarbonization effects that we can leverage into our products and our decarbonization strategy.

Battery is a total different game, and we still have to develop this game for batteries. As you are familiar, the battery industry just setting up in Europe. And before we discuss a reverse takeback from recycling for batteries, we also have to install the supply chain in Europe again. Otherwise, we're just processing the materials and ship them down to Asia or China, this can't be the idea for made in Europe or recycled in Europe.

And on polymers, to be quite open, it's very important that we get cost priority. Otherwise, it's very difficult to process this polymer into our cars. And we have to find smart solutions and circular design approaches to implement this into our new cars. And what do I mean by that? And this is where the loop is going to close, and this is why we need competencies here at the group circular economy hub we have at spico. We really learned to dismantle the cars to increase the striking efficiency to bring the material back to our new parts and design them as good as possible into new approaches to bring them into our cars. So that on the other hand side, we increased our recycling efficiency when we bring back our cost to our system.

So this is really what we learn and set up and build up and scale our group circularity hub, where all the companies come together but it's set to be by far larger network once we learned and control the system in order to prepare for the 2030 story and to fill our overarching strategy from regenerate+. But also the business logic, we've seen that the reduce and grow strategy. And to summarize it, to implement circular economy successfully at Volkswagen. Our focus is to scale circular economy for the whole group, with profitable circular business models to make it a circular business and secure raw material and improve our resilience based on the competencies we have, and drive new innovations with new partners. Thank you for your attention.

Thank you, Andreas. You stay in the middle. I stay here. I think I've really learned 2 things, right? One would be that the sustainability and profitable business models go hand in hand. And the other thing, obviously, that in Europe, you need the regulation to push things forward to bring it in the right direction for that circular economy approach, but it's also highly complicated and takes a lot of effort actually in order to be successful. Jumping directly into the Q&A session. There is a couple of questions. We have already lined up here.

And the first one goes to Guido. The question is which concrete group-wide KPIs will define success for the circular economy strategy? And will you set clear interim targets, for instance, for 2030 to track our progress.

That's a good question regarding the KPIs and the measurement, how successful we are. And I absolutely agree also that the KPIs and setting of the KPIs are absolutely relevant for steering and bringing the business in the right direction. From my perspective, so we are working on that. We are defining that KPIs. There are, of course, as well as all our competitors, some KPIs, circular revenues and circular material shares. So this is usually the common KPIs that everyone knows. But for us, it's much more important to have also a bit more detailed KPIs, not only to report them. Also, you saw the complexity of our structure and our company with all the brands behind how really to steal the activities that we have.

And therefore, we have different KPIs that we are currently developing. And as I mentioned, there will be 1 more for the communication part, but 1 more really for hard steering because circular material cannot be the 1 KPI for circular economy as we see all the strategies behind -- regarding decarbonization, much more also, when it comes to profitability, we need to have much, much more focus also on that KPIs really to steer the business in the right direction. For sure, we need to set also midterm targets for ourselves. And this is also what we're currently working on that also with our new product lineup because that will be very challenging also to bring it in the new products. So -- but clear KPI set we definitely will have in place.

Thank you, Guido. The next question would be here directly a reaction to Andreas presentation where it says, firstly, congratulations on getting ready to launch the spika factory this year. Would you consider an investor tour of the facility? I mean I would always be supportive depending on if we get an invite. But is that something we could imagine.

Honestly, we haven't thought about that yet. We're really due to making it happen this year. We're just building on that, but I'm very open to that. Let's discuss that and why not make it possible. It's not a secret something there. But give us this year that we really start up the operation that you can really see something going on, but we should really take this as a good proposal.

Well, then we thank you already for the invite. We will pull together the interest actually from the investor community, and then we will find a date. We cannot promise, look, we have summer break coming around the corner, but I would be pretty sure that after the summer break, we can find one or 2 spots where we can realize that. And thanks, Sarah for that very positive feedback.

Next question comes from Justin. And I think you -- both of you can then decide whether who takes which part of the question. He says, great to hear about the focus and activities in the circular economy. And there are a lot of projects. Do you have some overall group level targets on what the company wants to achieve over time and assess how well it's doing -- well, it's little bit going in the direction of the KPI, Guido. Maybe you start and if Andreas has something to add.

Exactly as you mentioned, it goes a bit in the direction of the KPIs, how really developing the KPIs and what the KPIs are really should indicate. Of course, it should be indicated also certain progress that we have in our company regarding circular economy activities. Otherwise, it will be very difficult really to measure also the progress. And -- so therefore, there will be definitely yes, and that we also have it then implemented. And also regarding -- on group level, for sure. But we need to have then kind of aggregation of the targets and have an overall ambition and the group target, having said that.

But at the end, the devil is in the detail. We need to have it really in a precise way to steer all these different business entities. And we talk about, for instance, the spika regarding getting the cars back, how much cars we get back, need to be steered also by the purchasing department, how much raw material or how much recycled material we need in the cars. So there are lots of -- and various of KPIs that they really need to good develop. And then also then at the end, of course, can be communicated and should be also.

But as I know that Justin is always very active in engaging. Justin, you are super welcomed in order to share with us best practice in this regard. We would be very happy to see how others are tracking in their circular economy efforts in order to see whether there is something actually we can adapt or amend or basically think over ourselves that. It will be greatly appreciated. Very good.

Then the next one comes from Bruno. Bruno Lapierre, very good to see you also participating in our conference. How do you track the capital required to put in place this circular strategy and its return for the group, will you communicate on the potential KPIs, Guido?.

So Dirk presented also in the beginning that we have our sustainable revenue KPIs. So now established. And this is, from our perspective, exactly the direction it should go. So that we really bring this together and also have an indication not only internally for management also for externally that you really see have kind of a feeling what we are doing and how successful we are doing that. And therefore, these KPIs are very important to that. So -- and then as I mentioned, so the circular -- there's a sustainable revenue KPIs goes exactly in that direction how we are going to push and make it also transparent to our external.

And I think given that we also report sustainable revenues, yes, you can be sure that the capital which is put there is, to a certain extent, tracked. And then I think you hinted to it here that we are looking at the profit pools and then obviously also how much we can earn in these profit pools would give us a certain angle on how to report on these KPIs potentially then also in the future. There's plenty of questions, and I'm reasonably thrilled. So you really had point here. How are learnings from spika being transferred to manufacturing sites in China, the U.S., Brazil, where Volkswagen has significant production, but no equivalent infrastructure. Andreas?

Yes. Thank you for this question. And this shows the potential, I think, for the group because we are really in exchange with all our plants and also with other regions, they have similar questions. How can we use used parts or remanufacture parts with circular material within our cars. And we have a constant exchange there. And sometimes we learn from them, for example, China's also really dedicated to a circular economy strategy on their global level. There are also activities in Brazil from a regulatory point of view. And we really exchange our knowledge and processes in order to get our knowledge and competitive advantage on the ground.

And it doesn't have to pit like on a one-to-one approach we set up at Spika, for example, to transform it to Brazil. So it always will be adapted to the local needs and local possibilities there. But the ideas and the technologies and the approaches there, it can really learn from each other and there's a really good exchange on it.

So thank you, Raphael, for that question. The next one would go, are you able to give an indication of what percentage of steel or aluminum would meet quality standards for reuse and end-of-life vehicles. And this question comes from Paul Britain. Would you be able.

I haven't something in mind, but I think it wouldn't be appropriate because that's really an engineering question. I would take it to my engineering colleagues and give you a feedback on that if that is sufficient. There's really quality standards from different perspectives, and that's something should be adequately answered.

Perfect. But Andreas, we would then basically collect your feedback and would share then with the group so that everyone can receive the answer. So the last question on that section, I see here on screen is coming from Justin again. And he says automotive companies were fined by the EU and the U.K. for collusion on end of life cycle -- on end-of-life recycling of vehicles. Is it clear how Volkswagen will avoid this kind of fine in the future while still working with competitors to facilitate recycling and reuse of competitive vehicles.

Yes. I think it's absolutely clear that we have our compliance guidelines and our antitrust colleagues that are really supporting us whenever we talk to or seeing -- looking for partners that we're in line with those guidelines. And this is why we have the standards for and why we get very good support from our also legal advisers.

Very good. So everything in place to make sure that we detract and act compliant. Andreas and Guido, I really thank you very much, very impressive presentation. No scripting. I think all of you might have seen it. So that means actually that they are really in detail on your daily work. Thanks for the contributions. We will collect feedback here from the community, and we'll share it afterwards. Thanks for now. And hopefully see you again in the future.

Perfect. Then we are very good on time. So we will continue with the last part of today's presentations. And I have the pleasure actually to summarize some of our progress and advancements we have made on several topics. I would like to start with Green Finance and the recent developments here. Dirk has presented it to you that it's one of our KPIs, part of the regenerate+. And in 2025, we were even able to overfulfill already our 2050 target that we did about EUR 20 billion in bond issuances this year and more than half of that was in the green.

For this year, and this is the latest we can share and based on our May statistics, which we have gathered. We will highly likely end up at higher than 40%. And -- so track very well when you look at the long-term scheme on our target to achieve by 2030, the higher than 80% share. You could now argue, well, it's not super ambitious if already by 2026, you meet the 2030 target level. But please bear in mind, yes, markets are not predictable. We have seen so many things and therefore, putting ourselves on a safe side. There is still a long way to go until we can meet the 2050 target and have 50% of all of our bonds being in green format, what we are making very good progress. And it's, as you all know, based on the EU taxonomy framework.

Moving over to a topic where I'm not the true expert in, to be fair. But sustainability and supply chain, I just simply found it's worth because we put recently out our Raw Materials Report 2025, and I can only recommend to you really to read it yourself. It's online, and you find it on the web page. But I just wanted to give a brief summary because that's such a frequent topic we get asked about in our meetings that I think it's worthwhile to give you a little of a summary of what you would find in this report. So this is not really to complain, but just to give you a little bit of a feeling of the scope we are talking about when we talk about supply chain in Volkswagen.

We have more than 63,000 direct suppliers. You can read in the Raw Materials Report, we could fill 2x the Wolfsburg Stadium of our soccer club here. if you would invite 1 representative from each and every first tier supplier. And for all of those who have participated from London, it would be 1x the Arsenal London soccer stadium, you could fill with that. And we would have to leave out about 2,500 people. They are coming from 93 different countries. And please bear in mind, we have in not all of our countries the same legal framework and regulatory framework. So this needs to be taken into consideration. And last not least, the tier chain can be as long as 9.

You heard it from Dirk. You heard it also from other colleagues. Corporation is here key, and conversation and being really in frequent exchange in order to manage such a huge supply chain. All of our efforts in Volkswagen Group are based on one policy, the responsible raw materials policy. And the responsible raw materials policy is, again, a footed on the global normative guidelines, in particular, the UN Universal Declaration of Human Rights, the core labor standards according to ILO. The UN guiding principles on business and human rights, the OECD guidelines for multinational enterprises as well as the OECD due diligence guidance for responsible supply chain and last not least, the principles of the UN Global Compact.

So we thought that's the best picture in order to summarize the challenge the colleagues in the supply chain management are faced with. You just see the tip of the iceberg with the 63,000 suppliers. And of course, there are multiple challenges. And most often, what we have to monitor very frequently, do our suppliers comply with our business partner code of conduct and how can we monitor insufficient adherence to the group responsible sourcing requirements.

On the other hand side, when we go down to the N tiers, in part, there is lack of transparency about the N tier, sometimes we don't get disclosure from the #9 in the tier because we recently have no direct contract with those suppliers, and they are part of the second tier or the third-tier supply chain. And when you think about that one single product chain can spend more than 8 tiers with several hundred suppliers are supplying to 1 module. I think you can gauge the complexity of the whole topic actually we are facing with. Again, it's not about complaint. Not complaining, but it's just giving you an impression actually of how big the exercise is.

So what you definitely need in order to be capable to manage such a supply chain is a supply chain system. And you can see here how our supply chain system works. First, we have the risk analysis and then obviously, the measures. The risk analysis looks first at the business model of the suppliers and then the individual supplier risk. And then we can apply our standard measures, first of all, the code of conduct for our business partners. The grievance mechanism. The media monitoring, which we frequently do in order to stay on top, if there is something brought up concerning one of our suppliers. The sustainability rating, which Dirk has mentioned, we're already 85% are certified. The S rating is, in particular, applied to those suppliers, which we see in the high category risk, this is mandatory. And then we have the dedicated supplier training, obviously, on those where we identify a higher risk.

The deep dive is then, in particular, when there is a human rights focus. And last not least, yes, we have the raw materials due diligence system, which is embedded in this responsible supply chain system and where we will now take a closer look. So here, you have the first, the risk analysis. Second, the mitigation measures you can apply here, definitely, there are 2 alternatives on how to mitigate the measures. The one is obviously the direct engagement with the supplier or the second solution could be that you have a cross industry engagement process where you can lobby for a certain solution. And last not least, then is the third step, evaluation and reporting.

So in line with the OECD and due diligence guidelines, we have established a working group and the senior level steering committee. So the working group actually feeds in ideas and process recommendations into the overall raw material due diligence cycle, while the senior level steering committee oversees the work of the cycle monitoring, and there is obviously a strong exchange between the 2. You will find this chart also in the raw materials report with a very detailed description how many members and how frequent they meet and how the index changes.

So if there is now the need for an audit. There are 3 different types of an audit we can perform. So first of all, it's a near supplier audit we could do on a regular basis where if we see the need actually for action, a corrective action plan is worked out together with the supplier and then run through. What we definitely prefer in order to be able to master also the workload is, obviously, if there is an external certificate available so that the supplier could basically apply for the external certificate, makes our life obviously much easier that can be compliant certificate with the with the RMAA, ASI or with AWG, which is, in particular, necessary when we think about leather usage in the vehicle.

So this would allow us to use databases in order not to do the work twice and is obviously the most efficient one. However, there are certain situations where you can't use an external certificate or whether supplier engagement, supplier audit fails, and this is then where we have the supplier engagement program, where we then make a site visit, we have a frequent dialogue with the supplier in order to make sure that we -- that the supplier is adhering to all of the procedures we have in the group.

When you look at the several audits, which are currently available, you'll find this overview here also in the raw materials report, there is an audit standard currently for tantalum, tungsten and gold as well as for battery raw materials, midstream and upstream. For leather, as I've mentioned, aluminum and then also for mica, mica which is largely used in coatings. You see the scope of the risk processed in the audit very detailed and which standard actually we are looking at. And then at which level it is done and take a comprehensive overview of how external audits can help us in order to run our supply chain risk cycle.

Where there is opportunity there is obviously also challenges and limits. I think we got a flavor actually from Andreas' presentation how complicated EU regulation, which is obviously necessary to drive things can make the situation for an OEM with more than 63,000 Tier 1 suppliers. So the legislation is obviously one thing. You have the European battery directive as well as the European Deforestation Act, which is obviously a lot of documentation, adding a lot of operational complexity. And we are faced with certain implementation challenges. So when we apply this to the whole of our organization.

And then the second one is resulting just simply from the supply chain complexity, where we have fragmented supply chains or where we have limited visibility in the upstream part of the supply chain because it sits so low in the tier that we are not in direct contact with the suppliers. And then obviously, data constraints wherever the supplier is not willing actually to exchange data, in particular, from sub-suppliers.

Other constraints to be very open, there is also that with applying all these standards to the European OEMs, we are not reaching a level playing field. When you export a vehicle, for instance, currently from outside Europe to one respective market, be it the U.K., be it Germany or whatsoever. You don't have to adhere to the Deforestation Act. And you obviously have also then certain savings, yes, by not doing all the documentation and having the operational complexity added and that gives you obviously also an advantage when selling new vehicles.

Role of governments, please don't forget about that. Of course, we would all act always in compliance, like to act in compliance. But in certain countries, when you think of the number 93 countries where we are operating in, it's just simply that the governments themselves do not fully reinforce that anti-bribery laws or that the respective bodies are always adhering to the rules in place. So much to that. As said, it's the sixth responsibility raw material report we have published. It's available since March. We have a dedicated -- done a dedicated review of 18 priority raw materials here. You find in-depth information about the scope in etimology -- and yes, you'll find at the very end of the presentation, also useful links where you get to all the respective regulation or to our own in-house policies where you can see actually how we try to deal with those topics.

And whenever you see that world map logo here on the very bottom of the slide, that's a hyperlink guiding you directly to this responsible raw materials report. Another area where we are very frequently asked, actually, how do you deal in particular with the raw materials for your batteries? And here also on behalf of our colleagues, we have gathered 3 slides, which are largely mirroring the approach actually you have seen in the raw materials report. But we wanted to make sure that you as investors get the comfort, everything, what we decide on the sourcing side for PowerCo is, of course, cleared by the Executive Board and Non-Executive Board level.

And as part of this Executive Board clearance, there is also a detailed ESG due diligence done in order to make sure that whenever we are sourcing something or saving direct supply from a mine that we are -- that we can make sure that our standards and rules are put into place. So what are we doing on PowerCo side? Yes, the idea is to vertically integrate parts of the supply chain. In particular, on the mining side, we definitely need resources on the conversion and refining side or also for cathode and anode materials. It's on one hand side to secure the volume, which we need in order to build our battery electric vehicles. On the other hand side, to reduce the price volatility, which is very inherent when you think, for instance, of lithium.

Lithium back in 2022 was as high as EUR 80,000 per tonne. Currently, we are more hovering around the EUR 20,000 per tonne. So it's quite a huge volatility we can safeguard in particular in the early years, also on the hedging side. But hedging is all but nothing if you don't have the volumes you need in your factories in order to build the vehicles, which you want to bring on the road.

So the focus today here is on the sustainable cell production. That's a process, which is pretty similar actually to what you have now learned in this raw material supply chain system, which I've presented to you. You start here, obviously, with a procurement strategy, vertical integration and then the levers to sustainable set production, and this is embedded in a sustainability strategy, sustainability business and also in the corporate decision making, a very comprehensive approach on the one or the other hand, bit more detailed than what you saw on the general procurement side, but by and large, mirroring the process, the very well-known process we have on the raw material side.

And you see also here if -- when identifying risks and we see that a supplier can not meet our strict ESG criteria then we will not consider such suppliers as being our partners in the battery raw material plays. That's easier said than done because we all know certain raw materials, in particular, in the battery electric vehicle area, they are largely sourced in countries where we know that we have particular problems in expecting that all standards we are known or used to here in Europe are 1% adhered to. But this is a clear commitment also from Volkswagen Group to be on the safe side with regard to raw material and battery sourcing.

You see also the foundation here, that's largely on international guidelines, the OECD and the UN Global Compact. Of course, the Supply Chain Due Diligence act as the RMAA standards, pretty similar to what you have seen in the raw material report, so nothing new. Coming to the last section, which is admittedly on Volkswagen side, always a topic where I know you want to see things moving quicker. On the other hand side, we think actually that, in particular, over the last 2, 3 years, we have already achieved a lot. And let's dive into details actually on where we think we have made progress. So since 2023, there are a lot of structural changes and all the processes very much driven by Oliver Blume. It's about group steering where the 2035 strategy has been implemented.

We strengthen more and more the independency of the regions. On the group level, the brand groups are strengthened. You have seen just recently that we cut almost half of the Executive Board mandates in Brand Group Core and take certain decisions actually to empower the regions, be it on the production level, albeit on the delivery level. We have newly defined a software governance, which within Volkswagen I think it's fair to claim that we are the only OEM currently being able to cater the Western Hemisphere with 1 solution and the Eastern Hemisphere with 1 solution. Eastern Hemisphere based on the Xiaopeng architecture, which is developed into the China electrical architecture.

And for the Western Hemisphere, it's our Rivian tech joint venture, where we start with the first vehicle in 2027 will be the ID.Everyone. And then from 2028 with the rollout of the SSP that will definitely gain speed and volume. Because on the SSP until 2035, I think it's about 30 million vehicles, which we are planning. Then lean corporation, reducing complexity and produced number of committees, number to impress you with Audi, I think Audi has reduced 80% of its committees over the last 18 months. Clearly, a huge step forward in order to make our decision-making faster.

So what have we achieved over the last 2 to 3 years? I think when most often we hear, our governance is slowing the organization down. We are not fast enough in our decision-making. And yes, to a certain extent, I mean, you always can get better. But when you think about the decisions which have -- we have taken now over the last several years, and I don't know for everyone who was able to visit us in China, just inhibited our latest CMD, has seen what is possible when the whole organization is moving in one direction. The In China, for China strategy implemented just within 3 years. after the strategy was initiated, we have been able to reduce raw material costs by more than 50%. We have been able to reduce our development times by 30%. And in April, we presented the first 3 new vehicles, which are coming now on road at very competitive pricing.

And more important, at very competitive tech features also for Chinese market, where you can really get a good feeling that if we can make it there and if we are successful in one of the most competitive markets, we can also make it in Europe and in other regions of that world. Battery ramp-up we've briefly talked about it. Salzgitter is now up and running. Plant with about 20 gigawatt hours, and we are progressing here according to plan. With the launch now of the urban electric car family, we will also start to enroll the urban electric car family with LFP batteries starting soon. ADAS Level 2+ and Level 2++ is already something which we offer in 2026 in China, and people move on to Level 3 readiness by 2027, developing our own in-house chip production.

When you think of December 2024, has not been seen that Volkswagen is taking out capacity over the last decades. We are reducing now capacity when we include our plant in Brussels by almost 1 million in Europe and the stringent cost execution can be witnessed on the quarterly basis when we report our results and where we highlight, in particular, this item in our EBIT bridge for automotive. But no time to stand still. Why not? Because since 2025, unfortunately, new challenges arose, that's on one hand side, the tariffs, which are costing us EUR 5 billion on an annual basis. And then in 2026, we have new conflicts, the Iran conflict. We have an unexpected weakness of the Chinese market I think the most pessimistic outlook foresaw. Maybe the Chinese market in 2026 could be stagnant or down by as much as 10%.

Now it's May, and the market is almost down by 20%. That increases now the export pressure from China to, in particular, the European market. And we see actually the success of the Chinese OEMs, in particular in the U.K., but also in other regions of Europe. And this is why we have to step up again our transformation efforts. Oliver Blume, our CEO, has highlighted it on the occasion of the Q1 results, you all know these 8 action fields, which -- where we are now working on and want to be ready by summer to decide together with the Supervisory Board which measures should be newly implemented.

The target is to make Volkswagen more robust and even resilient. We are banking our new 5 years plan on a no-growth scenario. And when we are frank and currently take the economic outlook, Europe, it's currently difficult to get excited about the economic activity in Europe and also over the foreseeable future. And we are already at a 25% market share. So it would be not recommended to think we can grow this market share in order to show growth in our overall numbers. Take the U.S., the tariffs have changed the situation for Volkswagen quite significantly. Even if we were to decide to localize additional capacity today, it would take a couple of years until this new capacity could come into play and help us to grow our business in the U.S.

In China, we just talked about it. We have an ambitious target to move our volumes beyond 3 million vehicles by 2030. But as you know, this is not in the consolidated revenues because most of the business we do in China is consolidated equity. So long and short, the target is not, not to grow, but to prepare for an environment where we likely will not see a lot of growth and adjust our cost base accordingly. And this is why we have to take these steps and have to move on in order also to stay successful in the future.

Last slide, coming to the changes in governance and what we have achieved so far. I think you all have seen that we have been able to dissolve the dual role of Oli in January. We won a new expert for our Supervisory Board, Susanne Wiegand, who is also running the Audit Committee, a truly independent person and female. So the board gender diversity increased now even to 45%, recently read a statistic that the average in the DACH is currently at around 40%. So here, I think Volkswagen is really in a very good position. New governance structure at Brand Group Core. I've mentioned it that we cut the number of Executive Board members almost in half in order to get faster, leaner and have faster decision-making.

And just in April where Oli announced that he bundles development, procurement, production, sales and quality on this level in order to move things forward in a faster way. So yes, we always can be better, fully agreed. And we are definitely looking forward for your feedback and your input in order to get new impulses and to move things forward. But I think we can also be proud on what we have achieved and what we have driven over the last couple of years.

And yes, with that, I come to an end, look forward very much to your questions. And because as I said, I'm not the super expert in each and every detail. I need some support. This is why I have asked Dirk again here on stage in order to take the upcoming questions.

So we have already the first one, which is coming from the Yassine Rahit. And I think it's a she. She asks, do you have appetite for green hybrid following the upcoming 2027 call date on one of your conventional hybrids. So hybrid bonds. Yes. It's the green financing. Well, Yassine, thank you very much for that question. I can only state we have our last bond -- green hybrid bond we did was in green format. So yes, we definitely plan to do further issuances, follow-on issuances in our hybrid bond portfolio in the green format. And yes, we'll look out for a spot and behave a bit opportunistic actually on timing as they are an integral part of our financing structure. But as you can imagine, we also want to manage our hiring portfolio very carefully. So thanks for that one.

Same question.

The next one, would you like to take it? .

I can take it. Cybersecurity and Yassine Rashid again. Cybersecurity had a material impact on some auto companies. I'm keen to know what Volkswagen is doing to safeguard its resilience against potential cyber case. I think last year, we had a similar question. The expert here talking about all the details we are setting up to really make sure that we are really safeguarding and ring-fencing our activities, be it our own plants, but also being in our cars as well. Referring to maybe to the old presentation, not going into too much of details, but I think there's an enormous amount of activity to make sure that we mitigate as best as we can, let's say, cyber I think you would never can avoid it but looking at the efforts we're doing, it's significant.

And Yassine, maybe as an -- obviously, on our website, when you look at the ESG conference, 2025, we had a dedicated topic on cybersecurity from one of our IT colleagues, a comprehensive presentation on that. And I would refer to this one. And if there are any open questions, then we are more than happy actually if you contact either Ares or Thomas in the Wolfsburg office and they will be happy to help you on the -- on any further follow-ups.

Next question here is coming from Justin. I note in 2025, factbook that reported that Volkswagen has about 21,000 suppliers completed in SAQ and Volkswagen carried out 180 on-site audits. This seems very low for such a large group by so many Tier 1 suppliers. How do you assess where the 180 audits and 21,000 SAQs is sufficient to ensure supplier compliance and for components.

That's a very good one. Because I pointed to the 63. Look, I think it's fair to say that the number of on-site audits we did, I told you that we also have the opportunity, obviously, for the certification. So if the supplier voluntarily applies for an external audit, and says then, look, I'm already certified by RMAA, by whatever standard you would like to have, which is valid actually for my industry. Then this -- it would be enough for us because certification is obviously done by externals and would then rely on the outcome of this certificate. And this might also explain why the number here, which looks here so low at first glance is maybe much better actually than you would guess. I hope. And if there is a follow-up, just then please contact us, and we will further elaborate on that.

Regarding the 8 action fields, would the group be ready to communicate on new cost measures at time of Q2 report, do you plan a specific event? That's a very good one, Bruno. We said we will be ready by summer. We didn't specify actually, if it's early summer, midsummer or late summer. So if it would be early summer, we could imagine that something could already be communicated on the occasion of the H1 results. But it's quite a complex and delicate topic, as you can guess, you might have read in the press. But it also was also positioned by Oli. We are talking about potential overcapacity of another 500,000 units in Europe, which might also affect additional employees. So therefore, the discussion is obviously not easy.

And to be fair, we shouldn't be a -- wouldn't be here to be fast but rather diligent and then precise not to irritate our people. You know that the 50,000, which are already agreed on, and they are all leaving Volkswagen in a socially responsible way. So we are -- we have no forced redundancies in our group. So I would say there is a certain chance that with the H1 results, we are able to disclose already first steps. But please do not be disappointed if the full release will then be done after the summer break. And yes, if so, we would definitely look then for a dedicated event. We're almost up on time, and I don't see any -- additional question here. So perfect on timing, I would say. And would leave me actually just to thank all the presenters we had, had today. I think we had a peak 120 participants in the Sustainability Conference, which is a new record and promise to interest.

It's not all internals. So it's really -- it just shows the rising interest, but also that we have something to tell, and something comprehensive to tell. Otherwise, I think you wouldn't take the time and dial in. So thank you for that huge interest. We would be super happy for all feedback actually which you have to us because we want to improve. We want to move on. We might not deem every proposal as sort of -- we look at all, but please do not be disappointed if we are not following each and every recommendation and request. And with that?

Thanks for a lot of good questions.

Thanks for the very good discussion here, in particular on the section around circular economy. And with that, thank you very much and see you next time. Speak soon. .

Good morning, and thank you for standing by. Welcome to the Volkswagen Group Q1 2026 Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I'd now like to hand the conference over to your speaker today, [indiscernible] Head of Corporate Communication.

Good morning, everyone, and warm welcome to to our first quarter 2026 results call of Volkswagen Group. Thanks for dialing in. This is, as usual, a joint call for both the media as well as investors and analysts, moderated by Rolf Woller our Head of Treasury and Investor Relations; and myself, [Pietro Soolino], Head of Corporate Communications. With us today are Oliver Blumer, our CEO of the Volkswagen Group; and Arno Antlitz, CFO and COO of Volkswagen Group. You should have received the press release, the interim finance report and all other related materials which are already this morning. If you do not have them, you can find all documents on our group website. In case of any issue, give us a call or drop us an e-mail. Now let me hand over to Rolf, who will give you a brief run-through of the next say on one and half hour.

Thank you, Pietro. Good morning to everyone from a very sunny day in [indiscernible] and thank you for joining us today. Let's have a look at our agenda. Oli will start with the financial highlights of the first quarter. and will then present our transformation plan towards the Volkswagen Group target picture 2030. Arno will go on with the key developments of the first quarter. And after that, we will take a closer look at the financial results and the full year outlook 2026.

Following the presentation, we will first host the Q&A session with Oli and Arno for the investor and analyst community, moderated by myself. And after this session, we will have a short break before we continue with the media Q&A, which will then be hosted by Pietro. Since today's call includes forward-looking statements, the safe have language and other cautionary statements on this slide will govern today's presentation. I encourage you to read the display carefully as all forward-looking statements are qualified by this language. In the interest of time, I will not read it to you. And with that, I hand it over to Oli. Oli, please go ahead. .

Thank you, Rolf. Thank you, Pietro. Good morning, ladies and gentlemen. Also a warm welcome -- let me start with the highlights year-to-date. Our model momentum in Europe continues. Importantly, the first 2 of a series of new vehicles of the electric urban car family have been launched to the market. The [indiscernible] and yesterday, the ID Polo and books are now open for customer orders. In China, we are switching to a delivery mode with our In China for China strategy, The Beijing Auto Show marked an implete start of our model offensive with locally developed NAVs geared to Chinese customers taste and highly competitive in terms of technologies and costs. .

In the U.S. [indiscernible] assembly plant will shift to higher volume models such as the second generation of the Atlas, which will be in the showrooms from fall. While the electrical IDP still is available in the U.S. We decided to end local production on the IDI from April 2026. The Rivian Pusan technology joint venture successfully completed winter testing of the first vehicles equipped with a newly developed software-defined vehicle architecture. Lastly, we continued the implementation of our active portfolio management. Traton reduced the holding in Sinotruck, recording a cash inflow of EUR 0.2 billion in the first quarter, a second step followed in April and the magnitude of EUR 400 million. In addition, Porter has closed an agreement to sell its stake in Bugati Remarts Group, closing of the transaction is contingent on regulatory approvals.

Looking at the financial highlights. Deliveries to customers were down 4% in quarter 1, mainly due to the declines in U.S. and China. Nevertheless, we kept our global market share stable. Our order book situation in Europe remains very encouraging. It shows that our new rebuilds are resonating well with customers. Revenues in the first quarter were down 2% in line with the unit sales decline, excluding China joint venture volumes. Automotive net cash flow was strong at around EUR 2 billion. This shows that the working capital measures implemented last year by Arno and the teams are delivering lasting results. Net liquidity was almost on par with year-end 2025 despite the redemption of EUR 1.75 billion hybrid bond in February.

Group operating profit stood at EUR 2.5 billion against the backdrop of increased geopolitical tension and declining [indiscernible] markets as well as, again, significant special effects the achieved return on sales of 3.3% is a solid result. But we must also be clear, our current business model and the changed environment is not generating sufficient returns. Even before special effects, our margin is at 4.3% only. U.S. tariffs are not included in the specialty effects. This is clearly too low to finance future investments, pay attractive dividends and strengthen our financial position at the same time. We must and will continue to reduce complexity, focus investments on what wins customers. and continued execution across the group while navigating industrial transformation, geopolitical uncertainty and stagnant revenue prospects in our industry, especially in Europe.

The lead for action was clearly recognized in 2023. A comprehensive realignment was therefore, kicked off and communicated in June of that year in a Capital Markets Day. Since then, a comprehensive action plan has been put into implementation across the key success factors: products, regions, software and cost programs. We have already made great progress. These achievements helped offset significant earnings headwinds and enabled us to regain the competitive flexibility and freedom to act that we need. At the same time. From 2025 onwards, headwinds intensified further, driven by geopolitics, tariffs and accelerated competition, particularly in China and Europe against a backdrop of generally high uncertainty. This environment makes it clear that we need to step up our transformation plan, the progress we have made in recent years gives us momentum and be confident to take the next steps now. This is why the Executive Board agreed on a substantial step-up and acceleration of our transformation plan. The result is the Volkswagen Group target picture 2030.

It focuses on distinct levels. The most relevant are laid out on the chart, reducing complexity in products, technology and value platforms while putting our customers at center stage, aligning our production footprint to market realities, exploiting growth priorities in the regions, streamlining the portfolio, and improving execution through operational excellence, leadership and lean government. First, product portfolio. We must reduce complexity and consequently drive synergies across the group. We will achieve this by significantly cutting the number of models from current about 150 and reducing the number of variance. We will focus on these projects that make it tangible different for our customers.

Second, technology road map. We will streamline our technological toolbox and implement a much more focused approach with a targeted number of modular platforms, electric electronic architectures, ADA stacks and infotainment systems. Our tech stacks, RVT and [indiscernible] for the Western and Eastern Hemisphere serve as a blueprint. Third, production network. We must adapt our production network to market realities. Based on a low or no growth environment, this requires realigning our global technical capacity to approximately 9 million units per year, consistently focused on customer demand in each region. This will lower our breakeven point to a level that gives us the necessary flexibility in such a dynamic environment.

Fourth, regional growth, we must faster regional growth opportunities. We steer centrally, but drive the business in the regions with more independence and decision-making power. North America and the Global South offer significant growth opportunities for Volkswagen Group. Fifth, operational excellence. We already bundled cross-functional responsibilities for development, procurement, production, sales and quality at CEO level. This will allow us to increase the speed in decision-making exploit synergies across the group, improve efficiency and quality, while keeping entrepreneurship and at brand level. Sixth, portfolio management. Our ambition must be to significantly streamline our portfolio, consistently aligned with the principles of the best owner approach.

Arno will provide an update of our progress year-to-date. Seventh, leadership and culture. We will foster an even stronger performance culture. The changes we have implemented since the Capital Markets Day in June 2023 demonstrate fewer hierarchy levels and effective lean management structures with clear responsibility and targeted integrated incentive system are 2 key drivers to change. We will build on this. Eighth, group governance, redecision making structures, streamlined processes and greater accountability at all levels will make our company more effective and help us remain competitive in the long term. Today marks the start of our journey to bring the Volkswagen Group target picture 2030 reality. The good news is, thanks to all efforts implemented already since 2023, we have a very solid basis to start from.

We have all the talent we need. We get strong support from our stakeholders. We have it in our own hands and the team has the skills will and will antipartoAXle. The strong progress achieved with our performance programs to date makes us confident that we can now take into the next level. We will drive this step in transformation decisively and will deliver on our margin and cash ambitions in 2030 by implementing our transformation plan. And as you have seen, it's from us since June 2023, we will take you on that journey through clear priorities, measurable milestones and regular updates on our progress. With that, I would like to hand over to Arno.

Yes. Thank you, Oliver, and welcome also from my side. In 2026, geopolitical tensions have risen and the competitive environment intensified even further. Again, the spectrum we made further progress. Order intake in Europe and the order book improved our cars are resonating well with our customers. Implementation of our China for China strategy continues with full speed. We reduced group overhead costs by almost EUR 1 billion in a quarter, and we achieved a net cash flow of EUR 2 billion, which is quite substantial for the first quarter, taking into account that we had to refill the product pipelines. Despite this progress, the operating margin, even before special effects standed 4.3% only reflecting the current changes of the industry and the weak spots of our current business model. Ladies and gentlemen, we bring attractive new vehicles to our customers making technological progress and consistently delivering on our cost programs. Nevertheless, our financial figures made clear that these efforts are not yet sufficient to generate an adequate return and ensure a robust path into the future. .

Since we launched Volkswagen SZukru program 1.5 years ago, the operating environment has deteriorated significantly. U.S. tariffs have been introduced and are weighing on our earnings by EUR 4 billion annually. Pricing and competitive pressure in China has intensified further, particularly for our premium brands, Audi and Porsche, and Chinese competitors are increasingly exporting this pressure to Europe. In addition, geopolitical tensions such as the conflict in the Middle East are worsening the global economic outlook. Against this backdrop, incremental cost measures will not be enough.We must fundamentally reshape our business model through structural and lasting improvements. This includes a step-up in cost competitiveness of our products, reduced overhead cost, improve efficiency in our plants and higher speed, both technologically wise and in terms of decision-making.

Achieving this is not possible within our current setup. To create the conditions for long-term success, we must drastically reduce complexity in terms of size, our product portfolio, a number of platforms and technology stacks we run in terms of the number of entities and layers and the way we steer the group. We need to put the customer at the center and structurally strengthen the core of our business. These are the priorities we will execute over the coming months. Let's now turn to the operational and financial developments of the quarter, starting with deliveries to customers. In the first 3 months of the year, deliveries to customers amounted to 2.05 million vehicles, some 4% below the prior year period. Deliveries differed by region, North America declined by 13%, mainly due to U.S. tariffs, which became effective in April 2025.

In China delivers to customers declined 15% slightly less than the overall weak market. Declines in both China and North America could be partially offset by increases in South America and Europe. North America recorded growth of 7% and in Europe, our strong momentum continued in the first quarter with deliveries up 5% year-on-year. The order situation in Europe continues to be strong, thanks to the enhanced model lineup and further product momentum. In the first 3 months of the year, order intake increased by 3% to 1.1 million vehicles driven by increases across all brands. And as a result, the total order book in Europe grew by 15% compared to year-end 2025 to about 1.1 million vehicles.

This corresponds to an order reach of more than 3 months. Global deliveries of battery electric vehicles were down 8% year-to-date to 200,000 units on lower demand in China and the U.S. Our BV shares stood at 10%, some 40 basis points below the prior year level. BV deliveries in Europe saw robust demand and increased by 12%, the corresponding BV share expanded year-on-year to 18.1%. [indiscernible] continues to ramp up extremely successfully with around 30,000 vehicles delivered in the first quarter underlining strong customer demand in the fast-growing compact better electric vehicle segment. With that let's move on to the financial and the operating performance of the Volkswagen Group in the first quarter.

Vehicle sales came in at EUR 2 million, down 7% year-on-year or by 2%, excluding the China JV Group sales revenue declined by 2% to EUR 75.7 billion. The lower vehicle sales were partially compensated by strong growth in the financial services business. Operating result came in 14% lower year-on-year at EUR 2.5 billion, corresponding to a margin of 3.3%. Our continued product offensive across all brands as well as Singen costs will continue to pay off in our earnings. The results declined mainly due to special effects amounting to EUR 800 million or about 100 basis points margin, specifically at brand Volkswagen and at Traton.

EUR 0.5 billion has been booked related to the announced end of the production of the [indiscernible] Chazenuga, around EUR 0.3 billion incurred by restructuring measures at trade as well as to a smaller content for smaller extend brand group core in-addition-topairment related to the stop of an individual battery project. Excluding the effects, the Q1 operating margin would have amounted to 4.3%, corresponding to the lower half of our full year outlook range. Net cash flow in the Automotive division came in rather strong and totaled EUR 2 billion in Q1 2026 compared to minus EUR 800 million in the prior year quarter. Gross cash flow improved by EUR 2.2 billion year-on-year, mainly due to the operating performance before special items and about EUR 1.1 billion lower tax payments in the quarter.

Investments in CapEx and R&D were largely unchanged. And in the absence of further M&A, we recorded a cash inflow of EUR 0.2 billion related to the sale of a stake in Sinotruck by Trade. Working capital movements at minus EUR 0.9 billion were a slight headwind in the first quarter, but on a similar level as in Q1 last year. This development clearly confirms the sustainability of working capital measures implemented in particularly in the second half of last year. Automotive net liquidity came in at EUR 4.2 billion at the end of March, almost on par with the year-end 2025 number and on a state level. Net cash flow, EUR 2 billion, more than compensated for the net liquidity outflow from the redemption of a hybrid bond with a nominal value of EUR 1.75 billion.

Moving on to the performance of the division's passenger cars recorded an operating result of EUR 0.3 billion in the first 3 months of 2026, 43% above prior year period. The margin amounted to 4.1%, up by 1.3 percentage points. Commercial Vehicles saw a decline to EUR 40 million, corresponding to an operating margin of 0.4% to vast majority driven by special effects. The Financial Services division came in almost on par with last year's level with an operating result of EUR 1 billion. Coming to the EBIT bridge, volume price mix had a slightly negative impact of EUR 0.2 billion. Positive pricing partially compensated for negative mix effects. Same rate movement post a tailwind of $0.4 billion, popwer costs were largely flat year-on-year. And [indiscernible] lease fixed costs and others had a positive effect of EUR 0.8 billion with overhead cost reduction being the biggest contributor.

This is also visible when taking a more detailed look at the overhead cost development. In the first 3 months of the year, overhead costs in the Automotive division has been reduced by EUR 0.9 billion. Calling the lower cost ratio improved by 70 basis points, which is quite significant. This overhead cost reduction was largely driven by the consequent implementation of restructuring measures. In the first 3 months of 2026 Volkswagen AG reduced the number of active employees, both in the indirect and direct area at its German sites by another around 1,000 overall since the end of 2023 head count was reduced by approximately 15,000. In addition, our departing carriers are pushing ahead with their prospective programs. As a result, head count in Germany on group level have been reduced by a total of 3,000 in the first 3 months or 18,000 in a bit more than 2 years' time and group-wide restructuring resulted in a reduction of 29,000 head count since 2023.

Let's now turn to the development of the brand groups platforms and the financial services business. Within the passenger car segment, Brand Group Core recorded sales revenue almost on par with last year's Q1 operating result came in at EUR 0.5 billion, EUR 1.5 billion, 38% higher than in the prior year period despite the significant effect related to the end of the IDI production in U.S. of EUR 0.5 billion. The margin stands at 4.4%, and I will provide some more detail on Brand Group Core in a minute. Brand Group progressive saw sales declined by 6%, while sales revenue was flat. EBIT increased by 10% to EUR 0.6 billion compared to a prior year quarter that has been impacted by costs related to U.S. emission regulation and restructuring charges. Porsche Automotive business delivered an operating result of EUR 0.5 billion, corresponding to a margin of 7%. This was driven by a significant improvement in mix from higher volumes of 911 offsetting volume headwinds in China and the U.S.

As if I look at the brands of the Brand Group Core, the operating result was largely driven by SKODA and the component business. on passenger cars recorded a decline in profitability by 20 basis points to 0.4%, mainly due to the costs related to the ID production stop in the U.S. as well as significant headwinds from U.S. tariffs. SKODA continued their impressive earnings trajectory has improved operating margin by 80 basis points to remarkable value of 8.3%. Excluding the nonoperational effects, the financial performance of Volkswagen brand and Brand Group Core are decent -- before effect of EUR 0.5 billion from the IDFC reported margin of 3.3%. This is slightly below the margin target of 4% that the brand has set itself for the full year 2026.

And a reminder that we must continue to rigorously implement the measures agreed on Volkswagen Tuko agreement and intensified speed and magnitude of the restructuring programs. Backed by increasing volumes carried recorded sales revenue of EUR 0.4 billion, up 64% year-on-year Operating loss was reduced to minus EUR 0.4 billion, benefiting from the implementation of restructuring measures and higher volumes. Powercor at operating results at a stable level despite the ongoing ramp-up of cell production at the Sakia plant and intensionconstruction works at the Valencian St. Thomas plant. Trading recorded a slow start to the year, driven by lower unit sales, in particular in South America and North America sales in Europe were up and order trends in the region remain promising, mainly as a result of lower volume, sales revenue declined by 5% to EUR 9.8 billion.

Operating result came in at EUR 40 million, significantly below the prior year quarter. Low volumes U.S. tariff costs, foreign currency effects and special effects mainly related to the adjustments of the electric mobility projects the sale of string field site and the EU truck case negatively impacted results. Our Financial Services business delivered a solid performance in the period under review, supported by improved contract volume, specifically in Europe. The credit loss ratio continues to be on a solid level. Operating result at EUR 1 billion was almost on par with the prior year level.

Investment spend for CapEx and R&D in the Automotive division was slightly lower in the quarter by EUR 0.2 billion to EUR 7.5 billion in the first 3 months of the year. The invest ratio stood at 11.3%, largely unchanged year-over-year. We remain fully committed to sustainably reducing investment spend in the years to come. Moving on to the performance of our China joint ventures in an overall weak market and continued high competitive pressure, specifically in premium Unit sales were 9% lower year-on-year at 0.5 million vehicles. At the same time, Volkswagen Group China is launching its unprecedented model of handsets, which is burdening results now, and we expect contributions from Q3 onwards.

As a result and as expected, the proportionate operating result of our joint ventures in China came in at EUR 83 million in the first quarter of 2026. We confirm the bandwidth for proportionate or results for the full year and continue to expect an operational and financial turnaround in fiscal year 2027. This brings me to the full year outlook, which we confirm today. We continue to expect the operating return on sales in the bands between 4% and 5.5%. And Building on a strong start to the year. We continue to expect automotive net cash flow to the range between EUR 3 billion and EUR 6 billion.

Ladies and gentlemen, 6 strategic fields will determine the success of our strategy. The ramp-up of electric vehicles, software, China and North America, robust operating margins in a low growth environment, capital efficiency and cash conversion and the yield governance and reduce complexity. For most of these action experience, we have developed comprehensive plans that now must be implemented consistently and with discipline, at the same time, the economic environment has changed significantly. Since the launch of the Volkswagen Tuko program, which has -- this was designed to achieve a sustainable margin for Volkswagen brand, the world has changed dramatically. In this environment, it's not enough to just incrementally increase cost measures.

We need to fundamentally change our business model with a step out of structural and lasting improvements. In terms of cost competitiveness of our product, in terms of overhead cost reduction, and efficiency improvements in our plants and in terms of speed. To be able to teach this, we must significantly reduce complexity of our business model. These are the priorities we will address with determination over the coming months. Thank you very much. And with that, I hand back to Rolf.

Thank you, Oli. Thank you, Arno for the [indiscernible] presentation. Before we move to the Q&A, let me give you some instructions. [Operator Instructions] Let me briefly highlight the next events where you can follow us. We will continue on June 10 with our ESG conference. There will be the Annual Shareholders Meeting on June 18 and then the H1 call on July 24. And with that, I would like to move on to the Q&A session.

And see here the first question coming from Tim Pasafrom Deutsche Bank. Tim, please go ahead with your question.

Target program. Very interesting to see that much needed with the Chinese OEM coming to Europe tariff CPC and it's also good to learn about here for us about the media. Now Obviously, we want to know what all of this will cost you. We want to know what it brings you. And I suspect you're not yet ready to say that. So let me ask it a different way. Do you expect a material net EBITDA improvement from this program from the levels that you are right now is just really enough to counter the headwinds that we're seeing in the market.

And given that at again, a reduced the number of variants, and I've heard this many, many times over the 18 years I cover you guys now from VW. Can you give examples to how much you see on that side being possible? And on the capacity side, is it to see that also this comes out of Europe. And secondly, Arno, for you, just thinking about seasonality of cash and earnings here. Free cash flow is obviously quite strong. It's helped by taxes, but also the underlying comp is quite strong. So 2 questions. Should we expect normal seasonality to do from what you can tell right now, i.e., that it should be stronger underlying on earnings in terms of cash in Q1.

And since you didn't upgrade your free cash flow target now, is that just a sign of what's going on in the world with all the uncertainty? Or is there any cash out that you already foresee today that prevent you maybe possibly a higher than previously guided for figure?

Yes, Tim. And let me start with your -- with your first question in terms of improvement in terms of EBIT. As Arno mentioned, we keep our expectation year-to-year on a profit margin being 4% and 5.5%. And this, we expect a net EBIT improvement, and all this, despite of all the headwinds we have faced geopolitically, the regulations, the market and the expenditures and transformation. And this -- we are able -- because of all the work we have done during the last years. And so year-to-year, we expect a better EBIT. Then in terms of models, variants and then capacities. We the program. we have launched. We want to reduce our models and variance with a double-digit percentage and also the options where the idea is more to the bundle offers. And so making it easier at the end also for our customers and more and more transparent to order a car in terms of capacities. .

We come from an invested production footprint from over 12 million units. We already reduced EUR 1 million in China in several plants and also leading to component plans, then EUR 1 million in Europe. There, for example, we closed Brussels, Russia, rest now turning to a technology and innovation campus, then Osnabruck is underway. And in Volkswagen and Audi, we adapted technological capacity. So 1 plus 1 we are on EUR 10 million. And we think that 9 million will be reasonable percentage of the last 5 years has been on this level. So last week, we announced another 500,000 in China. And we are aiming now for reducing capacity in Germany, Europe with another 500,000 to come to EUR 9 million. And we will bring down our cost level to this EUR 9 million and aiming for more profitability. Yes .

Tim, thanks for the question. And I would like to add on what Oliver just said. All these measures you mentioned. Look, we -- Oliver laid out or we laid out our strategic margin target of 8% to 10% some months ago. And obviously, this transformation program, we just lay out is the way in steps to achieve this margin target at the end of this decade. And we now fill the gap from where we currently trade where our current margin target is what the headwinds are and still be able to come up to the 8% to 10%.

And in terms of cash flow, yes, we are quite pleased with the with strong cash flow in Q1, given the seasonality of our business, normally in Q1, when we filled up the order bank. But to be very transparent, it's about EUR 1 billion coming from from the operating business before special effects, EUR 1 billion, slightly less coming from tax versus -- tax payment versus last year. And last but at least, we were very disciplined on M&A, which is another EUR 1 billion. And so we have to take into account that there's a slight seasonality. As you know, we were successful in the winter test where we made good progress in our JV with Rivian. But as you also know, the successful winter test, we will invest in another EUR 1 billion in -- about EUR 1 billion, which will see an outflow in the second quarter.

All in all, we are really confident, and we said that last year on the conference call for last year that the working capital measures are really well in place. The whole company is focused on cash flow. You know we were like for years and years, we focused on EBIT. Now we really see a cultural change in the company. People are fighting for cash flow or net liquidity for better working capital -- so this is really now implemented in everybody's minds and gives us confidence that we will achieve the EUR 3 billion to EUR 6 billion this year.

Obviously, it's much too early to change the guidance. about the building [indiscernible] here. Since cost work, I would like to remember your overhead cost reduction of almost EUR 1 billion in 1 quarter, which is significant, much more disciplined M&A and disciplined R&D and CapEx combined should by far, compensate for potential headwinds we see from the market.

Thank you, Tim. And we will continue with Patrick Humel from UBS.

Thank you, Rolf. I would just like to follow up, Oli, please, regarding your comments about the cost and capacity alignment I think the point brought up was also about whether you can get ahead of the wave, so to say, or you remain reactive to safeguard margins rather than driving a margin recovery. So can I ask a bit more precisely what kind of time line we have to expect here for the exercise to cut the capacity by another EUR 1 million. I guess, the focus here is on that EUR 0.5 million that's yet to come in Europe. Are we talking about the next 1 to 2 years so that we will already see a significant positive bottom line impact in 2027, '28 or is it really back-end loaded towards the end of the decade.

And my second question, Arno, goes to you. I'd just like to get a quick update on the sensitivities to the Middle East situation. We're now 2 months into that crisis. And so far it seems the demand impact is very limited. Can you just remind us for the coming quarters, what your biggest potential pain points would be? Is it just softening of global SAAR? Is it maybe an acceleration of the commodity inflation in the second half as we've heard from some of your competitors just to get a better feel about the risks related to the Middle East situation.

Patrick. In terms of cost reduction, as you know, the implemented programs we are running are providing already results. For example, the overhead reduction Arno mentioned on the other side, what we will strengthen right now is, we call it, operational excellence, is even more cost work in terms of engineering, purchasing production, sales and then quality, for example. This is a program which has already started, will provide results already this year, and even more in the period up to 2030.

The other part, adapting capacities in China, the 1.5 billion are already done. In Germany, we announced the EUR 1 million, which is on a good way. We will complete up to 2028, for example, the adaption we have done already in Audi [indiscernible] and the adoption we are doing at Volkswagen. And a further 500,000 will be in the program by 2030. Now that depends a bit what we do have in the production lines right now, what opportunities we have to switch. But most importantly is the reduction of our plant costs. That's the main target. And last year, we were able to reduce our plant cost of over 20%. And that is ongoing and even more. And there's no argument not being able, working on the same cost level like competitors in Europe. And there, especially our plants in Eastern and Western Europe are helping.

Yes, Patrick, I would like to give you some flavor, perhaps a little bit more on the details on fuel and on other costs, we expect EUR 20 million to EUR 30 million a month for transportation. We have planned about 50,000 to 100,000 cars in the region, which is less than 1% of our volume, but which now try to find alternative ways to deliver the car to the customers, specifically for the premium brands, I think Porsche fund good rate there. On the raw material side, we are hedged most of it -- of course, you never hedge 100%, but we have some good hedgings, so -- and also on the order intake, I just said I just said that the order intake is also slightly increased.

So what we cannot rule out second round effects both in terms of global demand and on material costs. Of course, this is a risk, and we cannot allow that, but this is another motivation to increase our efforts on the cost side on the cash flow side to compensate for that. So this is where we stand currently.

And we will continue now with Mike Tyndall from HSBC. Mike, please go ahead.

You can hear me? Mike from HSBC. Just a couple of questions, if I can. I'm trying to get my head around the EUR 9 million of capacity, which is broadly where we are in current sales, but we've got growth in North America and the global South, and if I knock on growth in China. And is there an implication here that potentially Europe gets smaller from a volume perspective? Or am I just trying to particular numbers around too much. And then the other question is, your components business did a 9% margin in Q1.

I mean, compared to other suppliers, that's a very rich margin, and I know that 1 part feeds into the other, but where are you in terms of benchmarking what you're paying the components business versus third parties? Is there scope there to actually squeeze more cost out of that. Curious to know why that margin is so high when brand group core is potentially lower than it should really be .

Mike, let me start with your first question and then I hand over to Tan with a component question. to make it very clear. The EUR 9 million capacity is what we have seen in an average during the last 5 years. Our product planning is ambitious and also our sales planning is ambitious. But what we are doing here is, on the 1 hand side, to adapt our cost structure for 9 million cars in terms of a risk scenario. What could happen if. And on the other side, we are working on a more ambitious sales planning. And this leads us to bring down our breakeven situation and making our financial situation are more robust. So that's behind this is planning. And when at the end, all the new products and there we are very confident because of the feedback we are getting right now for all the new products coming to the market right now. We would be better there will be a positive effect in terms of our margin situation and EBIT at the end.

I can cover your second question. First and foremost, the components business, the majority of the component business is also part of the Volkswagen AG. Just to remind you, in the Volkswagen AG, we have the component business in customers, which is in gearboxes, Saskiaengine plant and branchlike steering and at components. And so all the cost efforts we see so far, for example, I said, since 2023, 15,000 reductions in Volkswagen AG is always also happening in the components business because they have 3 big plants there, also the improvement in overhead costs. And what you can see now here is we haven't basically changed the pricing logic between the brand group and the brands and the components business, and we kept basically the logic of the prices stable.

And what you see now is, basically, we measure the improvement of the Volkswagen turnaround of the Volkswagen project in that is working in the component. But nevertheless, we need more contributions also from our components business. The competition is coming to Europe and our component business, for example, is also producing electric engines, producing batteries for the material and we need also to to significantly step up the improvements there in order to be competitive for our cars versus competition.

Thank you, Mike. And we will continue with Tom Narayan from RBC.

Tom Narayan, RBC. First one, Arnaud, on the '26 guidance I noticed there wasn't any booking for the benefit on the EPA. The Supreme Court ruling in the U.S. The competitors have booked pretty large fits there in Q1. So I was just curious why you guys didn't book that. And then I know you a lot of hedging from the other OEMs are noticing pretty big H2 headwinds. Is it that you're not expecting those H2 headwinds? That's the first question on guidance. And then probably on the Chinese partnerships, is there any potential for the U.S.? I know it's a politically maybe sensitive topic, but what do you see out of -- as that as a possibility of Chinese relationships in the U.S.

Tom, I'll start with the second question in terms of -- I assume you're referring to the EBIT bridge, right? That is that is basically positive. Yes, it's a little bit conintuitive. It shows that we have some very good hedging there in place. But if you I would say -- and it's also versus last year, it was -- the EBIT register the effect versus last year. And last year, I think it was negative first quarter by minus 300 something also minus 400, so it's basically a reversal of some of the effects, but we don't expect that the positive effect throughout the year to stay here. I mean we have to face realities that major guaranties are weak. We have a lot of exports in other region and others. Since we are hedged, we don't expect a significant headwind in that topic in terms of EBIT bridge but for the operative business, it's obviously a headwind. And as you know, hedges don't last forever, and the next hedges will be more expensive.

So yes, it's a headwind. It's, I would say, a temporary effect positive, but it shouldn't turn significantly negative throughout the year. And in terms of APA nothing is booked in Q1 results. It's too early to say to what extent we will book a benefit in the remainder of the year. We will come back to all of you with that topic potentially in Q2.

Coming to your second question in terms of Chinese partnerships. First of all, Volkswagen Group is there in a very positive situation as a global automotive player, having a strong footprint in China, but also in the Western world, where we can benefit from innovation speed and then processes. We decided to go for 2 ecosystems. One is China, also with our partnerships there, [indiscernible] Verizon Robotics. We can see already the first results with our first [indiscernible] architecture. We presented at the end of last year and the first cars are entering into the market right now. And this is a blueprint in terms of architecture also for our Rivian joint venture.

In the Western world, we are -- have a distance of around 1 year to 1.5 years. comparing with our Chinese activities. And this brings us in the situation to have a clear comparison in terms of speed and content what we have achieved in China. But we are very happy about the progress I mentioned with our Rivian joint venture. Coming back to the 2 ecosystems. What we are doing in China right now will help us also for the Southern hemisphere, we can localize our local platforms from China. The China main platform, bringing this to a global main satcom, for example, for South America, and we have huge export opportunities now from China. -- being on the competitive technological level, but also a cost competitive with the Chinese competitors.

And this helps us to enter Southeast Asia, for example, Middle East, India, but at the end also Africa. And in the Western Hemisphere, this footprint from China helps us to speed up and build the right offer for the Western world, where we are restricted because of regulations to use Chinese software. And therefore, we have made a clear, but now we have the flexibility and having the right products for the right region to fulfill the customer expectations, but also the right cost structure.

And we move on to the next question, which comes from Jose Asumendi from JPMorgan.

A couple of questions. Oli, can you speak a bit about your tech stack that you have in China? Thank you very much for the Capital Markets Day recently paid. I'd like to understand a bit better which part of that take back and know how you're building in China, you can actually bring back to Europe or maybe which suppliers, you think you could collaborate closer in Europe to improve the cost competitiveness and bring that tech stack into European businesses.

Clearly, the closing in China are some of them clearly superior to what you're offering in Europe. Also interested, please in hearing if you will be open to open up your production sites, your capacity in Europe to your partners or SAC or [indiscernible] and second question, no, can you talk a bit about the margin progression on your progressive brand. Do you think there's a chance to see a sequential margin improvement in Q2 versus Q1 in light of the improved earnings in the first quarter?

Yes, Jose, on the one hand side, we can benefit from the innovation speed. And from China, which we can transfer also the process knowledge, but especially the cost work we have done, what we presented last week was a cost reduction of 40 to 50% depending on the platform. And all these measures, and that's a great opportunity. We can implement right now on our Western platform, which is already -- has already been kicked off. And on the other side, all activities we are doing there also with our component business. Arnold talked before, and suppliers in terms of hardware, we can benefit in terms of sourcing because knowing the right partners there and the best solutions that's an opportunity in software. We will be more restrictive because developing our own software for the Western world, but innovations and speed and processes helps a lot.

Overall. And having been in China last week, the media was great. We got the by far biggest media feedback and the reach of all companies, including the Chinese companies there in China, and that has shown the great response and how well our products are received in the market. In terms of capacities, we always look for intelligent solutions. As you have seen in terms of the risk or -- we are now in good negotiations for [indiscernible] for example, with defense companies. That's 1 approach. And the other approach, we also will check if there are opportunities for our Chinese cars in Europe or for opening this for partnering maybe this with our partners.

We do have them in China, and we haven't taken a decision, but the solution field is flexible. And this is always a clever solution to reduce capacities in terms of changing this to a different owner like defense company or sharing capacities with other business opportunities. And the second option at the end and that the worst and the most costly 1 is to close the plant, but we will go on this topic very, very openly.

Yes. In terms of margin, we expect and we need a step up in [indiscernible] Our guidance is 4% to 5.5%. We currently reported at 3.3%, and we want to achieve a reported margin within that guideline. And we have also some promising results. Look at brand [indiscernible]. Yes, they are more closer to [indiscernible] currently. But if you take into account the write-off for the IDI in U.S., they are 3.5% currently running. And we have a typical seasonality in our business at Q3 and sorry, Q2 and specifically Q4 are normally stronger than the first quarter. And it's also a good chance for Oli. Oli refreshed portfolio, they are currently trading at 4.2%. They expect 6 to 8 with a lot of product momentum coming, specifically S and RS models, which are really doing very well in order intake. And thus, but not least, we really drive forward the restructuring methods throughout the whole group.

You saw the fixed cost improvement, first quarter $1 billion. And obviously, we want to continue that. That should give also more tailwind. We have a little bit cautious. We will ramp up the BEVs in the second half of the year, which are margin dilutive. And yes, there might be some economic headwinds from the conflict in the Middle East. But all in all, taking this into account, we still are fully underway to achieve our guidance of 4% to 5.5% and confirm the guidance.

Thank you, Jose. And we will continue with Horst Schneider from Bank of America.

Yes. Thank you, and good morning, team. The first question that I have that relates to the impact on consumer demand coming from the higher oil price. Since you are the largest -- one of the largest car makers of the world, clearly, the market share [indiscernible] in Europe, I think you can maybe best answer this question. And it's not just about Q1 average, is more about the latest trends that you have seen since the oil price spike. So what shift do you see in terms of demerger from ICE to BAF down-trading assessments. Differences is premium versus mass and also between diesel and gasoline. So that's a question of number one. The number 2 is a little bit following up to that, what also Jose has asked on if you are prepared to share plans with Chinese OEMs. This seems to become kind of industry trends. So we heard that also Stellantis wants to do that. .

So it seems that several carmakers are thinking about that. And I just want to get then your view on the European outlook more in general, isn't that a bad sign for Europe because in the way the industry is opening up the market of the Chinese competition opening up to a world and cheap clothing potentially. So is the outlook from here that Europe can just get worse. The competition is feeding up and that the incumbents lose more market share.

I start with we had just like 2 days ago, the discussion what is your department called -- economic [indiscernible] they showed us all the risks, and there some really great scenarios on how long the conflict as -- what has been the full prices in different scenarios. And yes, there might be -- they have been coming up in terms of overall market demand -- but you ask -- and then put another they will include that in the total market guidance. But what we currently see with in us, we don't see these effects right now. We have strong order book. Yes, the March was a little bit weaker, but still strong. And what we specifically saw January, February, we saw a little bit more pressure on those civil values of the BBs and that turned in March, which is really positive. And in total, we see more, I would say, demand for BVs or interest in BVs, lets me put it that way, although [indiscernible] order intake both increased.

Yes, this is where we currently stand. Of course, we cannot rule out that they are headwinds. We prepare for them on the cost side. We are cautious on capacity, what Oliver said. We -- and we don't want to end up this being like on the inventory side, above ideal stock, we carefully monitor that. But we don't see a major effect so far in Europe .

And just a quick follow-up. When you talk about rising best demand, I wonder if that is in the end, then positive or negative for Volkswagen, you potentially save rebates that you don't have to provide any more, but you also lose profitable ICE car. So what's the net equation is that it or negative as best demand is increasing.

No, this is a great question. Currently, we are on the balance -- that means we have a margin dilution on the BV side, but we still expect full year to book EUR 400 million to EUR 500 million on burden because we don't achieve our CO2 targets. More demand means more margin dilution. On the other hand, less burden on the CO2 regulation. But net-net, if we were to significantly increase our bet share, that would be a margin dilution going forward, which is what we always said, structurally, we must decide -- we must distinguish between 3, I would say, technology platforms. one is MAB platform. For example, in our volume brand. We run currently ID3, ID4, and now with the arrival of the ID2 family comes in MAB plus, which which has an LFP battery seltopec, next generation for electric trains.

So there the margin dilution effect is still there, but it's smaller. The IDI [indiscernible] is much closer to the TROC. And -- so this is -- we have to take into account. But until we implement our next-generation SSP platform, the margin dilution effect will continue smaller than today, but it will continue.

Let me come to your second question, situation in Europe. We expect a tougher competition in the next years, especially from the Chinese current manufacturers. But we see ourselves very well prepared. First of all, we have a great product momentum. Order intake is increasing, both on ICE and BEV. We are, by far, a market leader for both. And the new products we kicked off 3 years ago are now entering into the market. The Polo and [indiscernible] about others also in the bet segments, and then Ana mentioned also the product momentum at Audi with SRS models. .

So first we are counting on our own strength, while keeping with our cost initiatives, at the end more profit visit our product. Second approaches, what we will check is once on China products could fit for the European markets, especially in segments where we are not present right now. But that depends at the end on tariffs, on logistic costs and so on. If we see opportunities there because we are now in a positive situation having owned Chinese products, which are very attractive to the customers. And third approaches at the end for capacities check if we could share capacities with Chinese partners. But a is very clear. First approach is what we are doing right now in our fabric is being in contact with the defense industry that it's also very intelligent to solve overcapacities with this manner.

On the other side, to protect or bringing more or equal competitiveness in Europe. We have a clear position in terms of make in Europe companies who made business here in Europe. Should have a European footprint. And therefore, we are in contact also with the European Commission, the made in Europe initiatives making progress. And so I think this will bring the market situation and the competition in Europe to a more fair trade situation. And that's also important because we are placed in other regions of the world. These restrictions and this is more a European interest policy. It's not protection. But I think we need it and to the companies who are investing in Europe can benefit.

Okay. Great. Also as the German citizen, I keep the finger crossed for you that you make all these challenges, all the best .

And we continue with Michael Punzet from DZ Bank.

Yes, I have 1 question regarding a report of [indiscernible] mentioning that you have to increase your liquidity. So far, you gave us a target of roughly 10% of revenue. Can you give us any indication for the new target? And maybe also the topics in which you need to increase net liquidity and if this has any impact on upcoming dividend payment yes .

Yes, Michael. Look, I'll give a little bit of color. Overall, we want to make sure that in the transformation, we have a really strong balance sheet. And the rating is really important for us. And so -- so this is not the only reason, but another reason why we are focused on improving our result on improving our net cash flow. So net liquidity, we said always at least 10% of revenue. But if you look into the industry, others have an even stronger balance sheet. And going forward, it is clear that we want to improve our operating result and the cash conversion rate with more discipline and being more disciplined and then on R&D, and that's driving also our cash conversion rate.

And so although it's too early to discuss it, but let's assume we achieve that, we are rather confident -- very confident that we achieve that. Then it's a question how can -- what are potential ways to use that cash flow. And one net cash flow is obviously that strengthen our net liquidity position and our balance sheet. Another possibility is or means is let our shareholders participate on a much stronger Volkswagen. And third, we have also hybrid bonds. We look into potentials there. And this is why we said 10% of revenue is the minimum we want to keep. And with a stronger Volkswagen going forward in an uncertain world, we potentially also want to increase that.

Okay. Maybe a short follow-up. You mentioned the sale of [indiscernible] will this have also no impact on you in as net cash and all the you have a different accounting compared with Porsche.

No, no, that will also strengthen our balance sheet because Porsche is fully consolidated in the group. .

No. I mean, yesterday portion said that we'll book in and also the cash inflow from the deal will not have any impact on the automotive division. Is it the same as a level.

This positive effect on net cash flow at Porsche will be since we are fully consolidated also positive in the cash flow and group level. .

And we continue with Christian Frenes, Goldman Sachs. Christian, please go ahead.

Goldman Sachs. Most of my questions have been answered. Just I have a question on pricing. Your pricing for passenger cars and light commercial vehicles was up in the quarter. Could we look into that a little bit more, specifically within EU pricing, given emerging Chinese OEMs localization efforts and you mentioned, I think, the minimum pricing discussions between the EU and China. How do we -- how do you expect pricing to evolve throughout the rest of the year -- in this year? And what impact do you think the minimum pricing discussions will have on that? And then secondly, just also sticking with pricing, looking at China, Thanks for your Capital Markets Day event, and we just had the Beijing Motor Show, where we sell a lot of the impressive products you have coming and also your strategy and targets. But could you comment a little bit about your expectations for China pricing again for the remainder of the year this year?

Thanks for the question. Obviously, good cannot make up public discussions on what prices we plan and what we expect. What we can say and what we're prepared for, the competition is clearly increasing. Chinese competitors are bringing their cars to Europe, and they're also basically exporting the competitive pressure to Europe, what we see in our EBIT bridge, we saw a very strong movement based on our really good product substance, and our portfolio, you saw pricing was even slightly positive in the first quarter with EUR 0.2 billion.

Of course, we have to take into account the negative mix, basically from the ramp-up of the BVs. In total, we expect more pressure, but this is also why we compensate on the cost side on in order to be prepared on the cost level. Now we have great products, we have good technology, and we have to have the competitive cost base. And this is what we work on. .

Yes. And maybe to China, we have seen during the last 2 years, an average decline of 15% of pricing. And we don't expect that the pricing level will come back where it has been years ago. So margin improvement will come only over tough cost work. And this process has already been kicked off. We have shown you a cost improvement of 40% to 50% sending our platforms in China, and we will continue to do so, yes. And the same what we are doing there is our task in Europe to being more competitive in terms of pricing while having the opportunity in improving margin. .

And then maybe as a quick follow-up, not much is being said about your supply chain or Middle East and that's in line with the rest of the industry, I would add. But if you -- when would you expect to have more clarity on 2027 regarding these issues?

Yes. Today, our supply chain is not affected. And also in terms of raw materials, for example, away we are hedging. What would it mean for '27 is too early to predict. It depends on the conflict. And we don't know what will happen. But for 2026, you can be for sure that we won't be affected in terms of cost. .

Brings us to the next question, which comes from Frank Biller from LBBW.

It's about possible divestments. Thinking about Evolent stake or a floating [indiscernible] Are you also thinking of a divesture of Duccati or Lamborgini IPO .

Now we were very transparent about our plans for [indiscernible], and we are pretty confident that this is a really very good process and progressing well. We always said we don't rule out the next step. We want to increase the free float. We made the first step also Traton made some steps for example, in terms of Sinotruk and -- but these are the topics we decided on so far. We look at various alternatives for Powerco. We opened our capital structure there. But Frank, please have understanding for that. We can only talk about topics like this once we have decided on.

But there's a clear intention that's part of our program for the next steps of transformation to reorden our investment portfolio, that's very clear to reduce complexity. And that, for example, why we kicked off last year, the Bugati deal at Porsche as 1 example. Many others, we are working currently, but we won't go into details speculations, some software [indiscernible]. But the activities are placed, and we have clear priorities what we'll tackle first and then step to step up step. But overall, reducing complexity is our goal.

It's a good point. We always talk about Ducati and Lamborghini, these brands. We have 1,500 entities that we have in our books, fully consolidated and not fully consolidated, and so we need to reduce that complexity. There are so many layers. We have a lot of entities and we need to reduce that complexity in order to achieve the cost savings that we need to achieve in order to be competitive. Thank you. .

Thank you, Frank. And we move on to Steven [indiscernible]

[indiscernible] handlebar interview last week, we also talk about reducing factor costs, which I think was well for [indiscernible] and you want to reduce that to EUR 3,000 in Europe. Could you comment on what the situation looks when you compare plants across Europe and how they also then compare to the situation in China and in other locations. Just give us some kind of [indiscernible] .

Yes. First of all, this hasn't been an interview in [indiscernible] but talking about the figures, that's the direction we want to go to. And we are very confident that we have turned to the right direction right now. Now the first results from having reduced our plant costs in Germany. -- over 20% last year. It is massive. We haven't achieved this over the last 10 or 20 years, and this in 1 year 20% and that's not the end. Today, we can say that our plants in Eastern and the Western Europe are competitive to all the others, reacting in Europe.

And therefore, we decided, for example, to bundle our Urban part family in Spain and the IDO1 to come in Portugal on a very competitive plant level. In Germany, we still have work ahead but also very clear measures to reduce, and so a plant cost level per car of around EUR 3,000 is a feasible level comparing to the competition. In China, the level of plant cost is even lower. That has clear because of labor costs and energy and everything around, but this you can't compare with Europe -- and for us, it's important to compare our situation in the different regions of the world. And there, we can confirm in Europe already Western and Eastern on competitive level in Germany still work to do. on China, completely on a competitive level and where we have also a strong footprint in South America, we are working on a competitive level. And that's what we have to do and which was written there. It's an average like a go to go to .

I just got a question, a follow-up question on my remark on the number of entities and layers. And I must confirm we are -- we are 100% convinced that we are the best owner of Lamborghini. Lamborghini is an integral part of Brand Group progressive. There's a lot of synergies between the 3 brands there. And so that's not -- hopefully, you didn't get it wrong. So we clearly stick to the current setup in the brand grow progressive, including Lamborghini right now. .

Thank you, Arno, for the clarification. There is we have handing [indiscernible] from Barclays actually has difficulties with asking the question. So he brought me an e-mail. And 2 questions. One is on, I think Oli can you update us on U.S. localization. Is there a chance that localization would take out into considerations -- and if we would localize would that be compensated within the EUR 160 billion investment budget for '26 to 2030, so in the current planning round. And the second Arno question is for Arnaud update on Evolent. There are obviously short listed PE names. If you would like to comment on that. and capital allocation from proceeds of the potential sale of Evolent if this is still true that this is in line with our current dividend policy and if the potential proceeds are included in the cash flow forecast.

Yes. Let me start with the first question in terms of U.S. localization. With the Scout plant, we have great opportunities, making good progress. We are in line with our milestones. -- and the capacity also provides opportunities for other brands of Volkswagen Group. And but we are not at the point today to communicate what are the concrete plans in terms of more capacities in the U.S. we are still in contact with the different states. But at the end, this depends in terms also support we are getting there, and the stick to my position.

We can't do both paying high tariffs on the 1 hand side and on the other side, heavily invest in new capacities. And so there are some states interested and in our investment. But at the end, the balance in between support and investment is important. And so we plan step by step. -- first now ramping up the Scout capacities, maybe using them for other brands of Volkswagen Group and then thinking due to the next step. But our goal is clear. to improve the local footprint in the U.S., have in the U.S. as an opportunity market for the future.

And regarding [indiscernible] Needless to say, this is a great company with a strong position in the market continuing strategy. And in consequence, the interest is very strong. I obviously cannot comment on specific steps of the process. What we said, we want to sell the majority, and the process is very well underway. The potential process are not included in the cash flow. This is what we always made very clear. And we also have understanding that we decide on the dividend towards the end of the year, taking all the factors into account and is decided on by the group Board and Management and Supervisory Board and it is too early to comment on now specificities on the dividend.

Thank you, Arnaud. And Henning, I hope this has answered all your questions. Coming to the last. Best for last, it would be Harald from Citi. Harald, please go ahead. Let me bring you up on stage.

Yes. So a slightly difficult question again, and I don't like the short-term ones. But [indiscernible] conversation in relation to [indiscernible] question earlier with regard to IAA, the market largely ignored that -- and by the way, I just wanted to congratulate you on the incredible work you're doing in what is I think the most challenging cycle that I have seen in this industry, as you know, are going to run probably as long as most of you. But with relation to policy and IA specifically. First question, how do you see the IAA impacting on the potential fleet sales for Chinese OEMs how restrictive do you think the IAA made in Europe policy might be? I suspect you'll focus that I'd love to understand that better because I think there is some potential there.

And then secondly, same question, but with relation to other policy, we're seeing some German government now looking to subsidize industrial electricity you've seen the EU protecting the steel industry much more carefully. To what degree should we hope -- I always want to hop and I'm always [indiscernible] But to what degree should we hope that the EU or the European governments will actually start to try to finally, finally start to help this industry. So you understand where my question is coming from.

Yes. And in terms of the Main Europe policy in -- from the European Commission, it hasn't been already fixed completely. But -- it is a European interest politic, which we support. And this starts with a European production footprint. But then also there different levels for components. And therefore, this has to be carefully balanced -- and I also agree that at the end, the different regions would be comparable. What we see in other regions which happened in Europe, and then you have a fair competition. And this has to be worked out, hardware components, focusing also on battery cells, battery systems. .

But at the end also in electric electronics, what could be included. And we feel ourselves prepared in Europe as a European player. And we expect there fair or better conditions in terms of trade comparing with the competition.

Energy is an important point in there, I think it should be important the focus also on the most important industries. For example, the battery industry right now in Germany, for example, is excluded from the energy regulations. And that's for me a wrong decision. They have to expand the energy regulations also for battery brands because the battery industry is a crucial 1 for Germany and Europe. And this has to be supported. It's battery manufacturing or production is high energy entities. And therefore, I think they have to adapt the regulations. That's only 1 example. And at the end, energy accounts also for the charging infrastructure. That's what we see in other regions of the world where the energy is on a very low level. So the customer is calculating and switching to battery electric vehicles. And there, we still have something to do, especially in Germany.

Thank you all actually for a very lively discussion, a lot to ask, a lot of debate. Clearly, you see that Volkswagen is moving ahead. This concludes the session for the investor and analyst call for today. If anything was left unanswered, yes, please contact the IR team here in Rosberg. They are really happy that we're keeping them employed. And after a short break of about 5 minutes, we will then continue with the media Q&A at about, I would say, 10:40, 10: 42, something like that.

Good morning, ladies and gentlemen, and welcome to the Full Year Results Investor and Analyst Call of Volkswagen AG. [Operator Instructions]

Let me now turn the floor over to Rolf Woller.

Thank you very much, and a very good morning to everyone, and a warm welcome to the Volkswagen Group Investor and Analyst Conference Call on the Full Year Results 2025. With me today are Oli Blume, our CEO; and Arno Antlitz, our CFO and COO.

Before we start, let me provide you with a few organizational remarks. The press release, the annual report and other related materials were all published early this morning. If you do not have them yet, you can find them on our IR website. As a reminder, and as always, the safe harbor language and other cautionary statements on Page 2 of our presentation will govern today's presentation. I would like to encourage you to read the disclaimer carefully since all forward-looking statements are qualified by this language. In order to maximize the time for the presentation and the Q&A, I will not read it loud to you.

Our presentation today is structured in 4 chapters. Oli will guide you through the financial and operational highlights in 2025, followed by our strategic priorities for the year 2026 and the updated financial ambition for 2030. Arno will close the presentation with the financial developments as well as the outlook for 2026. After the presentation, we will enter the Q&A session. [Operator Instructions]

Now and without any further ado, I hand it over to Oli. Oli, the floor is yours.

Good morning to all of you. Thanks for joining, and also a warm welcome to everyone on the call. Let me begin with 2025. It was a year of decisive action and delivery. We made significant progress in executing our strategy, brought compelling products with improved quality to our customers and translated technology into tangible customer benefits.

At the same time, we started streamlining our structures and reduced our fixed cost with first tangible results. We achieved all of this in a highly dynamic environment, marked by increasing geopolitical tensions, new trade barriers, intense competitive pressure and new competitors in key markets. Nevertheless, we continue to strengthen the Volkswagen Group's robustness and future readiness. We are actively shaping our transformation with a clear ambition to become the global automotive tech driver.

In 2025, we delivered nearly 9 million vehicles worldwide, broadly in line with the prior year. Driven by our strong BEV portfolio, BEV deliveries reached 983,000 units, up to 32% year-on-year, representing an 11% share of total deliveries. Group revenues amounted to EUR 322 billion. Operating profit came in at EUR 8.9 billion, primarily impacted by special items and costs related to increased U.S. tariffs. We partially offset these headwinds through sizable contributions from our performance programs over our brands.

Excluding special items, but including tariff effects, our operating margin stood at 4.6%. Excluding tariffs as well, the margin was 5.5% at the lower end of our original guidance range. Automotive net cash flow improved to EUR 6.4 billion, and we maintained net liquidity at a solid level. These results demonstrate how the Volkswagen Group held its own in a challenging global environment, even while undergoing first restructuring with significant associated costs.

We will propose a dividend of EUR 5.26 per preferred share for our fiscal year 2025, thereby confirming our dividend policy and our balanced approach to strengthen substance, investing in the future and maintaining an attractive proposition for investors. The fourth quarter showed a clear improvement across all financial KPIs with operating profit and net cash flow standing out in particular. This strong finish to the year underpins our confidence as we enter 2026. I would like to take this opportunity to thank all employees, who have contributed to this final push.

Our product portfolio remains one of the strongest levers for value creation. We delivered a comprehensive model offensive with enhanced design, improved quality and features clearly aligned with customer demand. We launched more than 60 new or refreshed models, strengthening our portfolio across all brands and segments. And it makes us proud to see that our brands are again winning awards.

We have even set historic records, most recently in the Golden Steering Wheel, Reader Polls, and the Best Car Award from Auto Motor und Sport. This comprehensive product renewal supports pricing discipline, improved mix and strengthen customer appeal across all regions. This is also a key differentiator versus both incumbent OEMs and new entrants, particularly in our home market, Europe. What was long seen as a weakness is now our clear strength, our flexibility across drive types.

In Europe, we are stronger than ever. With a 25% market share and a 4% increase in deliveries, we further expand our leading position. This performance was driven by a highly competitive product portfolio continued improvements in software integration and performance and strong market acceptance across our brands. The BEV momentum was particularly strong. Sales rose by 66% year-on-year with a 27% BEV market share. We are now exceeding our share in the ICE segment. Five of the 10 best-selling fully electric models in Europe come from the Volkswagen Group.

The positive momentum in Europe continues. By the end of January, order intake reached close to 328,000 vehicles, a 6.1% increase year-on-year with an order book of around 1 million vehicles on par with last year. Our performance programs are strengthening the group financial robustness through concrete measurable actions. A core focus is a structural improvement for our cost base, and we are progressing according to plan and budget.

In 2025, we made significant progress in the realignment of the workforce in Germany. At the same time, we have reduced factory costs at our German sites by more than 20% and will start to adjust capacities to market demand from next year. As planned, the wage agreement and workforce reduction delivered around EUR 1 billion in cost savings in 2025, keeping us firmly on track for more than EUR 6 billion in annual savings by 2030.

These are not short-term measures. They are essentially to restoring a competitive cost level, especially in Germany. In addition, Brand Group Core was first to initiate a significant overhaul on its steering, modeling and governance. As announced in January, a new cross-brand steering model is being introduced, bundling procurement, production and technical development at Brand Group level. These steps will simplify decision-making, reduce complexity and unlock cross-brand efficiencies and speed while simultaneously reducing Board seats by about 30%.

In China, we are demonstrating how quickly flexibly and consistently the Volkswagen Group can adapt to fundamentally changed market. With our In China-for-China strategy, we are now switching to delivery mode after less than 3 years of transformation. The all-new Audi E5 Sportback is in the market since late 2025, and we are preparing the launches of numerous NEVs that are highly competitive in terms of design, technology, features and of course, costs.

That includes newly new fully electric and range extender models created in close cooperation with our local technology partners. Now is the time to start winning market share in the expanding NEV segment in China. Our strong market position in combustion engines, which we were able to further expand in 2025, remains an important foundation of our transformation in the country.

Our localized R&D hub in Hefei , VCTC is now fully operational with more than 3,000 engineers on the ground, and it's central to our ambitious ambitions in the Chinese market. It delivers 30% faster development cycles. With our proprietary China electronic architecture, we have taken a state-of-the-art electric electronic architecture from concept to serious production in just 18 months, setting new standards in the new generation of intelligently connected vehicles. It will become the central software platform in China.

In addition, we are consistently driving the development of the China scalable platform, which will enable us to offer a wide range of NEV across market segments. At the same time, we made great progress in our Horizon joint venture in the development of highly automated driving. With our compact main platform for e-segment vehicles, we managed to reduce cost by more than 40%. This puts us on par with local BEV leaders.

2025 marked the successful first full year of our Volkswagen Rivian joint venture. Together, we are making great progress towards our joint ambition to create a state-of-the-art electronics architecture for the group in the Western Hemisphere. The joint venture is fully implemented and staffed, free mule vehicles have been built. The first test vehicles from Volkswagen, Audi and Scout brands are currently undergoing winter testing, 15 months after the joint venture was established. Our road map to series production in 2027 is on track with a full software-defined vehicle rollout from 2028. This partnership is a key accelerator of our software transformation. We were and are convinced the future of mobility is electric and the battery is the key to a competitive setup.

2025 marked a major milestone. Our Salzgitter gigafactory is live. With our subsidiary, PowerCo, we are the first European manufacturer to develop and produce battery cells at industrial scale. This gives us strategic control over a core building block of electromobility. With the Unified Cell, we have created a global cross-brand platform that significantly reduces complexity and unlocks scale effects across the group.

Let's look to 2026 and there our focus is on continuing our positive trajectory, accelerating execution, scaling key technologies and driving efficiencies across the brand, or in short, progressing ahead. Our top 10 programs for the group and our brands remain the key steering in cement for operational and strategic initiatives. They provide clear direction through ambitious targets, defined responsibilities, measurable milestones and a systematic roadmap.

In 2026, four strategic priorities will guide our execution. First, we are defining a clear target picture and roadmap for our North America business. Second, we are driving our model offensive in Europe and even more decisively in China. Third, we are simplifying our structures and reducing complexity to an enhanced group steering model. And fourth, we are accelerating our cost work and stepping up our performance programs to counter the additional headwinds in our environment. Winning North America has long been a strategic priority for Volkswagen. Our localized production model and focused portfolio delivered strong improvements in performance, but the environment has changed.

Trade barriers mean our model no longer works as intended, and a structural reset is required. This will take time. There are unfortunately no quick fixes. 2026 will therefore be the year in which we will develop a clear plan and strategic roadmap for medium-term success. We have already taken a first step by putting a new U.S. steering model in place. This strengthens regional responsibility and independence, speeds up decision-making, and brings us closer to the market. Building on this, our focus is on creating a product portfolio aligned with a segment where value is created, SUVs, pickups, and hybrids. A key differentiator will be our highly flexible range extender technology developed by Scout. Scout is fully on track, and we are preparing the next steps towards launching with strong momentum.

In parallel, we are evaluating additional localization options for imported vehicles across our brands in the North American market to further strengthen competitiveness and resilience. To make decisions that create long-term value, a stable framework is essential. One important factor will be the further evolution of USMCA. Taken together, this is about making Volkswagen North America faster, more focused, and structurally stronger. In Europe, in 2026, we are continuing our product offensive with undiminished momentum. We will bring more than 20 new models to market worldwide across all drivetrains. In Europe, a key strategic milestone in our BEST transformation is a market launch of the electric urban car family. Four models across three brands, Volkswagen, Skoda, and Cupra, are addressing a segment with an annual volume of around 2 million vehicles in Europe, a segment for affordable electromobility that has long been underserved.

Our vehicles are priced starting from about EUR 25,000. The urban car family will close this gap. Starting with the Cupra Raval in the second quarter, the ID Polo, ID Cross, and Skoda Epiq will follow in the second half of the year. All four models will be produced at our highly efficient plant in Martorell and Pamplona, leveraging scale, productivity, and cost competitiveness. These vehicles combine state-of-the-art technology, ranges up to 450 kilometers, and fast DC charging as standard. This positions us to win customers at scale. Over the medium term, our ambition is to achieve 20% market share in this segment in Europe and we will start delivering on that ambition already this year. In China, in particular, we are switching to delivery mode and are up to speed with the largest product offensive in the history of Volkswagen Group.

We are starting to launch the first models developed in China for China, highly competitive in terms of design, technology, and of course, cost. By the end of 2027, we will bring 30 new battery electric, plug-in hybrid, and range extender models to the market. 2026 also marks the start of the next phase of our cooperation with Horizon Robotics in our CARIZON joint venture. Together, we are delivering a high-performance, reliable, integrated, intelligent driving solution that will enter our vehicles this year. At the same time, we are developing the group's first safe-design system-on-chip for the next generation of smart connected vehicles in China.

The so-called SoC will power key functions for assisted and automated driving and gives us greater control over a critical core technology. Built on a 3-4 nanometer technology node with 500-700 TOPS of computing power, it significantly enhances real-time decision-making, safety, redundancy, and system stability, and positions Volkswagen strongly for the next stage of intelligent mobility in China.

Ladies and gentlemen, over the past 3 years, our performance programs have delivered tangible results. We have met our commitments and in several areas, achieved our targets even earlier than planned. Our progress has been driven by a clear focus on our top 10 programs. Building on this momentum, we are now entering the next phase of our transformation. We are working towards a clear target picture for Volkswagen Group in 2030.

This includes a more regionally tailored product portfolio aligned towards local profit pools, tailored technology and software offerings, and a continued strengthening of our financial resilience. To ensure success, we are now establishing a more efficient group structure and steering. The new cross-brand steering model and Brand Group Core was a first step. On group level, we are pushing ahead to further strengthen group steering and operational excellence. It will take over responsibility for cross-functional areas, development, procurement, production and sales. This will allow us to increase speed in decision-making, exploit synergies across the group, improve efficiency and quality while keeping entrepreneurship at brand level. This brings me to our long-term financial ambition, which is associated with a target picture on group level. Since our Capital Markets Day in June 2023, the industry environment has changed considerably.

Trade protectionism has been arising across all regions, adding complexity, costs and uncertainty to global flows of vehicles and components. Localization of business models is a consequence resulting in the partial loss of global scale advantages. In China, rising competition from Chinese EV brands is pushing into a declining premium and luxury market. Respective volume and margin protections have come under strong pressure. In addition, we lost about 220,000 units and respective margin contribution due to exiting from the Russian market in 2022.

Demand for passenger cars in Europe is sustainably lower at about 13.5 million vehicles per year. At the same time, we have faced increased competition also here. Regulatory requirements, especially those related to CO2 and emission compliance, have been evolving and overall granting some relief short-term.

Emission regulation in Europe has to become more flexible, but medium- and long-term targets remain ambitious. In particular, when taking into account a slower than expected adoption of BEV in the market, especially in Europe and North America, lower BEV volumes are delaying margin parity while higher investment are needed to preserve drivetrain flexibility. In addition, slower ramp-up results in increased supplier compensation for the lower than planned contract volumes.

Overall, global passenger cars are expected to display only low single-digit percentage compound annual growth until 2030. Our projections are based on the assumption that Volkswagen Group volumes will be developing in line with our markets. We are countering the additional uncertainty and headwinds with the implementation of substantial group-wide cost reduction programs, adapting both workforce and capacity to these market realities.

Despite these changed conditions, we are sticking to our target ambitions almost unchanged. We are driving our model offensive across all regions with full force while consistently improving mix and pricing discipline. Narrowing the margin gap between BEV and ICE remains a key profitability lever. In North America, we are actively exploiting market opportunities and positioning Scout for sustainable success. We will remain the largest international OEM in China. We have laid the foundation for this. We want to, and will, significantly increase profits there again. The year 2027 marks a turning point in this regard. Bringing our battery business sustainably towards breakeven is a critical enabler of our 2030 ambition. At the same time, we are accelerating our group-wide cost programs and further increasing their scale and impact.

Together, these levers form the foundation for delivering our updated financial ambition, an operating return on sales of 8% to 10% by 2030, and a cash conversion of more than 60% in the automotive division. This ambition represents a significantly higher quality level than our previous long-term targets, which were defined under more favorable framework conditions. The consistent implementation of our ambition gives us the flexibility we need to actively shape our future.

Our capital allocation strategy is reflecting this with a triad of strengthening the company's substance, necessary future investments, and creating attractive value proposition for our investors. This balanced approach allows us to navigate the transition at scale while safeguarding financial flexibility and providing attractive returns for shareholders and stay a strong investment grade-rated issuer for our bondholders. In the 2026 to 2030 planning period, around one-third of all available cash flow is expected to be used for strengthening the balance sheet and shareholder returns. We are committed to a strong investment-grade rating profile.

Let me close my presentation with a brief summary. In 2025, we acted and delivered. We achieved solid financial results in a highly dynamic environment and provided major proof points that our strategy is working across products, technology and costs. In 2026, we are progressing ahead. We are building on this momentum with a continued model offensive, strong advances in software and battery, accelerated cost work and more effective structures and steering across the group.

And looking toward 2030, we are working towards our ambition to deliver an operating margin of 8% to 10% for the Volkswagen Group and a cash conversion of more than 60% in the automotive division. This ambition is to be rated much higher than our previous target levels as the economic environment has changed considerably.

Ladies and gentlemen, with our extensive restructuring program and the realignment in the past 3 years, we have put the group on a robust basis. We have delivered on our promises and achieved some of our goals even ahead of schedule. At the same time, our world has changed dramatically over the past 3 years.

That is why we are working on a transformation plan for the next phase, our target picture 2030 for Volkswagen Group. We will focus on adjusting our business model under new conditions, on further developing our product portfolio, especially tailored to the regions of the world and the respective profit pools, on sharpening our road map for technology, battery and software, and on consequently improving our financials and on making the Volkswagen Group more efficient.

And with this, I would like to hand over to Arno. Arno, the floor is yours.

Thank you, Oliver, and good morning to everyone from my side as well.

Ladies and gentlemen, '25 was characterized by geopolitical tensions, tariffs, increased competition and ongoing transformation of the industry. Despite these challenges, Volkswagen continued its product offensive, made further advancements in restructuring the business, delivered solid cash flows, kept liquidity stable at a solid level of EUR 34 billion, thus strengthening the robustness of the group. I would like to thank all employees who have contributed to this success.

In '25, we improved some key performance indicators, but our operating profit fell substantially. And even adjusted for restructuring and special items, the group margin only reached 4.6%. This margin level shows that we must continue to consistently reduce costs, leverage group synergies, reduce complexity and thus increase our profitability to a higher level in a challenging environment.

With this short introduction, I would like to move on to the financial performance of 2025 and to our outlook. The market environment in '25 was truly challenging. Nevertheless, the Volkswagen Group delivered a robust performance and closed the year with 9 million deliveries to customers, almost on par with prior year. Lower deliveries in China and the U.S. were offset by double-digit growth in South America and strong growth in Europe, as our product renewal is increasingly paying off. Deliveries of battery electric vehicles increased by 32% to 980,000 units, and as a result, the BEV share increased to 11%, up from 8% on a year-over-year basis.

This was in particular driven by a strong performance in Europe, with 60% higher deliveries and BEV share of around 19% in the full year. While vehicle sales were stable in 2025, sales revenue was slightly down to EUR 322 billion. Operating profit fell by 53% to EUR 8.9 billion. The corresponding margin stands at 2.8%, in line with our updated guidance. Our result was impacted by significant special items from higher U.S. tariffs to restructuring costs and the Porsche product realignment and goodwill impairment. Adjusting for these effects provides a more nuanced picture of the true performance of the group.

The operating result includes special items in a magnitude of EUR 5.9 billion, mainly stemming from the Porsche goodwill impairment in the amount of EUR 2.7 billion and the Porsche realignment totaling EUR 2 billion on group level, both known already from Q3 results. Adjusting for these effects, the return on sales came in at 4.6%, which is also a good indication where we are standing right now in terms of margin in a difficult environment, including tariffs. U.S. tariffs added another EUR 2.9 billion burden since April 2025. Before special effects and tariffs, we achieved a margin of 5.5%, which is at the lower end of the guidance we gave at the beginning of the year and which we consider a decent performance in a challenging environment.

Don't get us wrong, tariffs in the automotive industry are here to stay, and a margin level of 4.6% is not sufficient to ensure a sufficient level of investments. This margin level clearly shows that we need to step up our efforts in 2026 and beyond to strengthen the resilience of the Volkswagen Group.

Profit after tax declined by 44% to EUR 6.9 billion, supported by an improved result from equity participations. The tax rate came in at 26%, largely unchanged, versus the prior year. Our dividend proposal reflects a well-balanced approach, on the one hand, providing an attractive value proposition for our investors. On the other hand, strengthening the company's financial base and ensuring a solid foundation for necessary future investments.

Against this backdrop, we propose a dividend of EUR 5.26 per preferred share and EUR 5.20 per ordinary share to the Annual General Meeting on June 18th. The proposal is based on our communicated and unchanged dividend policy of a payout ratio of at least 30%, while the calculation excluding the effect from the non-cash Porsche goodwill impairment, as communicated in autumn last year.

Reported net cash flow in the automotive division improved to EUR 6.4 billion. As a result, net liquidity remains stable year-over-year and rests on a robust level of EUR 34.5 billion. This is also above the level of 10% of group revenues. The improvement in cash flow is the result of targeted initiatives that have been implemented across the group since last summer. A net cash flow of EUR 6.4 billion was generated mainly in the second half of the year, particularly in the fourth quarter, which stood out thanks to improved inventory management and high level of investment discipline. We can be proud of the good work of our teams, whose dedication and commitment I would like to express my sincere thanks.

Ladies and gentlemen, given the public debate around how the net cash flow figure of 2025 was achieved, I want to create more transparency here. On the left-hand side of the chart, you see the key components of net cash flow in 2025, starting from gross cash flow of EUR 28.7 billion, changes in working capital of EUR 2.7 billion, and cash out for CapEx, capitalized R&D, and M&A. This leads to the reported net cash flow of EUR 6.4 billion.

However, the absolute values are of only limited explanatory power here. Therefore, the right-hand side graph compares this cash flow reconciliation with the prior year. The figures for 2024 are shown below the graph on the left-hand side of the chart. Driven by significantly weaker operating performance, gross cash flow declined by EUR 6.7 billion year-on-year. This deterioration, which is largely a consequence of the weaker operating business and tariffs, was anticipated and thus we guided for a net cash flow of around zero for the year in September.

Already during summer, we took decisive actions and set up a dedicated task force to identify and implement cost and cash measures to offset this anticipated development. And our teams delivered. By the end of the year, we achieved a positive contribution from working capital of EUR 2 billion compared to a cash outflow of minus EUR 1.1 billion last year. This adds up to a positive delta of EUR 3.8 billion. Most of the improvement stems from lower inventory level at the year-end 2025 versus 2024, and I come back to this later.

We spent EUR 1.9 billion less on CapEx versus the prior year. We reduced capitalized R&D by EUR 1.2 billion, and we stayed disciplined on M&A and spent EUR 1.1 billion less compared to last year. The foundation for these contributions was laid in summer, and some success was already evident at the end of the third quarter, but most of them only took full effect in the fourth quarter.

As said, most of the working capital improvements stem from an inventory reduction effect, which is typically in the fourth quarter. But in 2025, it was supported by lasting structural process improvements implemented in the second half over the year with a positive impact in Q4. Let me give you one concrete example. Post the corona pandemic, we significantly improved adherence to production deadlines in our vehicle plants. This enabled us to reduce throughput times across the whole value chain. And as a result, we were able to lower stocks of finished vehicles throughout the whole value chain without compromising availability of cars in front of the customers. Overall, inventory in the automotive business was reduced by EUR 4.8 billion versus Q3 and by EUR 2 billion compared to year-end 2024.

Next to working capital. Lower investments were the other key factor for the improved net cash flow. Investment spend for CapEx and R&D in the automotive division declined overall by EUR 3.5 billion to EUR 34.4 billion. Almost half of the improvement was achieved in the first quarter. The investment ratio declined to 11.8%, 20 basis points below our guided corridor, which demonstrates the increased progress in investment discipline. In 2026, we expect the level of investment in the automotive division in the range between 11% and 12%, and thus slightly lower year-on-year at the midpoint in absolute terms.

Going forward, we aim to continue this trajectory towards ambition of about 9% of the automotive revenue by 2030, as we are increasingly leveraging group synergies, reducing underlying investment spend, phase out investment in combustion engine vehicles and scale our software and battery business. With the initiatives I've just described, we were able to solidify the automotive net liquidity at a level of EUR 34.5 billion, despite the significant lower operating profit. This reflects a strong execution across all brands, particularly in inventory reduction, disciplined investment spending, which helped to offset the weaker operative result. Again, I would like to sincerely thank all employees who contributed to this achievement.

Moving on to the performance of the divisions. Passenger cars were affected by the Porsche alignment, increased U.S. tariffs and restructuring. As a result, the segment recorded an operating result of EUR 5 billion, 64% below the prior year. Commercial vehicles reflect the combined effect of lower volumes and respective, fixed cost burden. As a result, operating profit came in 43% lower at EUR 2.4 billion. Financial services, in contrast, achieved a significant improvement, boosting their operating result by 90% to EUR 3.7 billion.

Let's look at the drivers of the operating result in the passenger car segment. Volume had a significantly positive effect. Price mix cost us about 1 percentage point in margin. This was mainly the result of the dilutive effect from higher BEV share and exactly as expected at the beginning of the year. The increased tariffs and related loss of sales volume in the U.S. took another percentage point from our margin.

Product costs improved, contributed by EUR 1.5 billion. It's also important to note that the negative EUR 3.2 billion from fixed costs shown in the slide includes the impact from Porsche realignment and goodwill impairment of, in total, EUR 4.7 billion. Excluding both effects, fixed costs improved compared to the prior year, reflecting the progress in our performance programs, which are increasingly paying off.

Overhead costs in the Automotive division declined by EUR 1.5 billion in the full year, with significant contributions from the Volkswagen brand. A steady downward trend confirms that we are executing firmly on our performance roadmap. At the same time, the market environment and geopolitical development are posing additional headwinds and uncertainties, so we must, and we'll, step up both magnitude and implementation speed of the group-wide performance programs.

Major contributor to this development was the Zukunft Volkswagen agreement. Its implementation is in full swing. For the second consecutive year, we are seeing tangible decline in employee numbers. In 2025 alone, the active workforce of Volkswagen AG in Germany decreased by around 9,000 or 8%. Most employees left as part of an early retirement scheme, which is also highly attractive for the respective employee.

At the Volkswagen AG alone, we are spending more than EUR 400 million per year on this program. Overall, since end of 2023, headcount was reduced by approximately 14,000. In 2025, Audi, Porsche, and CARIAD have launched similar programs, and these programs will come in full force in the course of the year.

Let us move on to the development of the brand groups, the platforms, and the financial services business. Across our brand groups, operating performance reflects a combination of external effects, strong product momentum, operational discipline, and continued focus on margin quality. Brand Group Core recorded solid sales revenue. Operating result came in at EUR 6.8 billion as the brand group was able to largely compensate for the tariff burden. Margins stand at 4.7%, and we'll provide some more detail on Brand Group in a minute.

Brand Group Progressive already closed the year with a strong double-digit margin in the final quarter, not least thanks to the much-enriched product portfolio. Brand Group closed in a year with solid sales and revenue growth of 2%. A good top line did not filter through to the bottom line, however, due to the high US tariff cost and the significantly increased BEV share.

First benefits from the cost program initiated could only partially compensate for these effects. As a result, Brand Group Progressive posted an operating result of EUR 3.4 billion, 14% below prior year and corresponding to a margin of 5.1%. If we include tariffs or set aside the special items incurred in 2025, the margin would have come in at 6.3%. Operating result of Porsche Automotive business reflects lower volumes, particularly in China, and above all, significantly extraordinary costs incurred during financial year 2025.

Let's have a look at operating profit before the special effects of the Brand Group Core. Excluding the non-operational effects and tariffs, the operating margin at Brand Group Core was solid at 5.6%, and two factors stand out here. Skoda delivered another phenomenal year with operating return on sales of 8.3%, impressively demonstrating what can be achieved when a strong product substance on Volkswagen platforms is combined with a competitive cost structure.

Volkswagen brand concluded the year with a strong fourth quarter, excluding tariffs and restructuring effect. The brand's margin came in at 4.5%. This is a strong evidence that the implementation of our Volkswagen Group -- Zukunft Volkswagen agreement is being to deliver tangible results. However, it is reported profit that matters, not adjusted figures, and therefore we need to prepare for an environment where tariffs remain in place and high uncertainty persists. In our technology platforms, we made visible progress. However, results achieved here still significantly burden our results on group level.

CARIAD increased software license revenue and reduced operating losses by EUR 300 million to EUR 2.2 billion on the back of higher revenues and implementation of a restructuring program. PowerCo shows higher operating losses due to the ramp-up of battery production capacity, critical to enable our future BEV strategy.

Traton faced a tough year in dynamic global truck markets. Sales revenue declined to EUR 42.5 billion and operating profits fell to EUR 2.4 billion, mainly due to lower volumes in North America and Brazil, ForEx headwinds, and costs for the China production plant. Despite this recent order intake trend give us a good reason for confidence that 2026 should see some improvement.

Financial services delivered significantly improved performance, driven by strong business momentum in Europe and healthy portfolio margins. Remarketing results continue to contribute positively even as used car prices normalize. The operating result increased by 19% to EUR 3.7 billion, confirming the strength of this segment.

Moving on to the performance of our joint ventures in China, which delivered results at the upper end of the guided corridor. Competitive pressure remains high, specifically in the premium and luxury segment, whereas pricing and incentive level in the volume segment stabilized sequentially throughout 2025. Against that backdrop of the market dynamics and upcoming BEV launches, unit sales were 6% lower year-over-year, came in at 2.6 million vehicles.

Looking ahead, we expect the upcoming launches of highly competitive NEVs to at least partially compensate for the continued decline of ICE sales in the market. In total, we expect 2026 proportionate operating profit to be burdened by the ramp-up of a series of highly competitive NEVs and all JVs before we expect it to stabilize and turn around in 2027. Ralf Brandstatter and his team will provide an update on the progress made in implementing the China for China strategy on April 23rd in Beijing.

On top of operational improvements, we continue to review our portfolio participations and investments and take decisive steps to reduce complexity in our group. We already made progress with some smaller transactions, including, for example, the sale of Italdesign or the placement of trade and shares. We also initiated the process to sell a majority stake in Everllence. Project is progressing as planned with strong interest from prospective buyers.

Ladies and gentlemen, this brings me to the financial outlook for 2026, which reflects again a dynamic market environment and a business environment. Our outlook is based on the tariff situation. As per end of February, customer demand in the passenger car market is expected to be broadly stable globally. At the same time, competitive pressure will persist or can even rise. We will be enhancing our strong product portfolio in 2026 further, and we expect to see increasing benefits from the implementation of our group-wide cost programs. As a result, we expect the Volkswagen Group's sales revenue to range between 0% and 3%. The operating return on sales is expected in the range of 4% to 5.5%.

While we continue to invest in products and innovative technologies, we expect the level of investment in the automotive division in the range of 11% to 12%. Automotive net cash flow is expected in a bandwidth of EUR 3 billion to EUR 6 billion. We expect net liquidity to be in the range of EUR 32 billion to EUR 34 billion. Here, the positive net cash flow is expected to be offset in particular by the redemption of a hybrid bond, with a carrying amount of EUR 1.75 billion issued in 2014, as well as a dividend payment for full year 2025.

Ladies and gentlemen, we have excellent prerequisites to master the transformation of the industry. We are a group of strong brands, compelling products and global scale. These clear strengths are currently not fully reflected in our financial outlook for 2026. Our strengths are currently overshadowed by the challenges we face, a volatile global economy, high competitive pressure as well as high expenses for the transformation in our industry.

In this environment, we want and need to keep our combustion vehicles technology technologically competitive, continue to invest in expanding electric vehicles and in the latest software solutions for our customers, and we want to expand our regional presence, specifically in the U.S., and pursue our comeback plan in China. To achieve this, it is crucial to continue to reduce our costs, leverage group synergies, reduce complexity, and thus increase our profitability to a higher level. This is what we will focus on in the coming months.

Thank you very much.

Thank you, Arno. Thank you, Oli, for the explanations and the presentation given. We will now proceed to the live Q&A session. [Operator Instructions] And the first question comes from Tim Rokossa from Deutsche Bank.

Oli, I think the first question probably goes to you, how do you feel about your discussions with the EU and regulators in general? It feels like they have finally understood how important this industry is that they really should rather than fight it. But then again, everything we get from them seem still quite complete and perhaps less than we hoped for. Do you expect to get actually better more material support from the EU in the form of the credits for EUs for BEVs made in the EU that you speak about easing of restrictions and so on and so forth or should rather not bake in any support from that side?

And then secondly, free cash flow. Arno, I know that this is very much at your heart. It's good to see that you say working capital stays roughly where it is. Investments are expected to come down a lot. I mean, a 2 percentage point swing would be EUR 6 billion alone. So that would double last year's free cash flow generation roughly. Is that kind of the ambition we should think about that you are able to generate going forward once you have established all of the measures? And do you expect investors to continue to participate in this with a very nice dividend that you have just shown?

Tim, let me start with your first question. First of all, I'm personally in close touch with the German government, in person with Friedrich Merz and also with Brussels authorities and different prime ministers of European countries. I think there are different detailed discussions about 2023, and I think the regulation has to be easier, more transparent in terms of calculation and more pragmatic. The OEMs should be able to directly influence the levers. On the other side, I think it's also important to get more flexibility, to not have a look at 2035, and they are thinking also in averaging.

Even more important for me is the short-term perspective on 2030. We have to get there. Now if we won't find a pragmatic solution, it won't be possible to get to '35. Therefore, we are working for an averaging in between 2028 and 2032. This would be also a feasible averaging period for our planned Volkswagen BEV ramp up. There, I think, it's very helpful, what's already put into the proposal is to give super credits for smaller cars, EUR 1.3 billion in this proposal. The size is matching, for example, to our urban car family and later on, for the ID.1.

Also maybe it should be useful to have a made in Europe component for BEVs in terms of special credits. Besides at the end getting to this kind of more pragmatic approach, it's also important to improve the infrastructure. On the highways, we mentioned a much better situation right now, but we have to go through the cities and out of the cities with a better charging infrastructure and energy pricing play a role. This should come from the politics to support the BEV ramp up. In total, being more pragmatic, more clear, more transparent. We are fighting for this from our point and in our context.

Tim, thanks very much for your encouraging feedback. As you know, improving cash flow by a much better cash conversion rate is on our key focus. Yes, you're right, the components are inventory or working capital and then the most important aspect is CapEx. We did a significant step in 2025. In 2026, we guided for 11% to 12%. We started the year with the ambition of 12% to 13%, if I remember it right in 2025, and ended at 11.8%, so slightly better than the lower end of the guidance. We want to see another significant step in 2026.

The measures are clear. More investment discipline, more group synergies. The first effects on the software cooperation paying off, and also more disciplined on complexity or reducing complexity of our portfolio. These are the levers. We set a target of 10% for '27. This will be challenging, but this is where we hit. Even our long-term target is 9%. That is basically still the story we told in Hockenheim, that the major positive element of our investment story is in significant improvement of the cash conversion rate. Rest assured, we also work obviously on the profit side to achieve here also significant improvement since Oliver gave the long-term guidance on 2030 with 8% to 10%.

Coming to the question, what are we doing then with that better cash flow? Look, there are three elements. There's dividends, and we have a well-communicated dividend policy of more than 30%. We want to strengthen our net liquidity position and strengthen our rating. Last but not least, for the hybrid bonds, we want to in certain steps also reduce that hybrid bond, which works kind of like a share buyback, the small one, in the logic. Between these three elements, we are confident that we find a good compromise between dividends, let shareholders participate on the success of the group, strengthen the net liquidity and the financial base, and improve the interest situation.

The next one in line would be Patrick Hummel from UBS.

My first question goes to Oli. Looking at the Americas, and I don't want to sound overly harsh, but it looks very messy and very challenging right now for VW. For the LatAm region, one could wonder what growing Chinese presence does to your profitability? And for North America, we're still waiting for a clear plan for Audi and Porsche, which are the two most important cash cows for you in the region. At the same time, you're pricing ahead with Scout, which is, at least from a timing perspective, questionable in terms of being the right fit at the right time.

And you keep investing in a cell facility in Canada. Your Detroit competitors are either discontinuing their cell efforts. They're looking for different owners or they're repurposing the cell capacities for stationary storage. So doesn't the Americas region require a much more radical shift in the way you run the business there, the way you invest? For how long do we have to wait to hear on what's the plan specifically for Audi and Porsche?

And my second question goes to the 2026 guidance. Arno, you caveated it. And then obviously, the last few weeks have been very volatile with commodity pricing and everything. What I'd like to understand is what is really covered in that EBIT margin corridor of 4% to 5.5%? Can you talk a little bit about the headwinds you've baked in, in terms of commodity prices, memory chip prices? What about the price mix assumption that you're taking? What about the fixed cost of D&A, just to better understand where we are in this complex.

And if I may, just more precisely a follow-up, on the dividend. You mentioned Everllence is for sale. It can be expected that we'll see a significant book gain on that transaction, if you believe media reports. Can we apply the 30% minimum payout to the entire book gain of the Everllence transaction? Or will you say, "Hey, this is just a one-off, and we're going to deviate with a payout ratio for as far as the book gain on that transaction is concerned."

Patrick, let me start with your first question about Americas. The easier point there is Latin America, where you can see a strong growth of market share, about 12% last year and more to come. We restructured our whole product strategy there and having now products with the right cost positioning, pricing, but also very fitted to the South American market. More to come, especially in the pickup segments, smaller and mid pickups, having also the opportunity to export from Latin America.

There, I think, our strategy is working. More complex is the situation in the US about the tariffs, not only from Europe to the US, but especially from Mexico because we have a huge footprint in Mexico. With 27.5%, it's quite difficult to export cars from Mexico to the US. We are working on an overall American or U.S. strategy. We changed already our sourcing model in the U.S. But we need an approach especially for Audi and maybe Porsche.

Porsche is still very strong in the U.S. Last year was a record. We have seen record sales. But on the other side, having lost 15% in terms of tariffs. Our planning activities depend a lot. If we would find a solution to compensate the tariffs, we can't both to pay on the one hand side a high amount of tariffs and on the other side heavily invest. We are in close contact with the U.S. government, but also with the different states. Now, there's still an interest us to invest, but we need a solution. Until we haven't got a solution for full compensation, we won't do it.

For Audi, there is the intention to join the Scout plant. I think that's an easy approach with a bigger SUV. The activities for Scout are making good progress. We still think that's the right approach, coming with a range extender to the market. The order reservation is over 150,000 right now. We want to enter the market by the end of 2028. We are doing currently sensitivity analysis if the market is still there. But for this kind of product, Scout has a great design, technology better than the competition. The range extender technology, we still think that's a good approach. The profitability calculation also is positive. This is the first step to enter this important market of pickups and rugged SUVs.

In Canada, we have huge support from the Canadian government for our battery plant. In the mix calculation, this brings us on a very competitive level for all our battery cell activities between Germany, Spain and Canada. We reduced the overall capacity, but with this calculation and the two blocks we are investing in Canada, we have great opportunities also to export and making better our mix costs. The main action point in the U.S. is Audi, maybe added also with SUVs for Porsche, but we haven't got a decision.

At the end, I think their quality is first, and not speed. This plant would be in charge in 2030 or later. Therefore, we need a solid base to calculate the business case. At Volkswagen, we are entering now with this great products like the new Tiguan and expecting their market share growth. But you're completely right, that's one of our most complex questions we are working right now.

And Patrick, concerning basically EBIT bridge, what we factored in. Look, volume obviously it's more neutral, since markets are basically stable, and we don't expect significant market share gains or losses. Then pricing. Pricing is slightly positive, but if we take it together with price mix of the BEVs, then it's additional headwind since we are ramping up the BEVs specifically in Europe. ForEx is slightly negative, and we priced in the ForEx the raw material increase we saw basically in the last month. I come to the current situation in a minute.

Tariffs, more or less neutral. It's a very small headwind, but more or less neutral. We see an additional headwind in the first quarter, but on the other hand, we had a quarter last year with 25% or 27.5% from Europe, which is now down to 15%. Fixed costs and the stringent implementation of our efficiency programs clearly are positive. All in all, when we start at 4.6% before special items, and we guide basically in the midpoint for slightly higher than the 4.6%.

In terms of what we see in headwinds, when you look at our direct costs, we have rather long-term agreements. For example, we run our own power plants that we have long-term agreements for gas. We also have longer-term agreements for fuel. In the short term, we shouldn't be affected. Specifically on the fuel price for our trucks and for logistics, this protection doesn't run forever. There might be a headwind coming up in the second half of the year, but this is too early.

In terms of dividends, look, I don't want to disappoint you, but I want to be a little bit more generic. As I said, we have a triad between dividends, let our shareholders participate from our success, the strengthening the liquidity and the balance sheet and the redemption of hybrid bond. We make that decision at the end of 2026. But for the time being, we also, of course, say our dividend policy of more than 30% is unchanged.

Thank you, Patrick. And we move on to the next question, and it comes from Jose Asumendi from JPMorgan.

A few questions, please. Oli, just to address maybe product, please. Can you comment on the product launches of Audi in China and how is this allowing the brand to take market share in the region? And also, can you comment with regards to Europe with regards to the launch of the ID.1, ID.2. Is everything on track? These 2 vehicles are very important, obviously, to take market share in the compact electric vehicle segment.

Question two also for you, Oli, on humanoids. Definitely something that is evolving very quickly. Can you comment on any investments Volkswagen has with regards to humanoids and the deployment of humanoids across assembly lines. We have Renault obviously today doing a Capital Markets Day talking about hundreds of humanoids being deployed across the assembly line. We'd love to hear your thoughts there.

And then Arno, on financials, can you comment on Audi brand, the margin improvement you're expecting into 2026? I'm sure we will have a separate discussion on Audi, but if you could give us any hints with regards to the improvement in profitability for the Audi brand. Also interested in CapEx. Can CapEx be down on an absolute level in '26 versus 2025?

Jose, I would like to start with product launches of Audi, especially in China. We have seen also a very positive launch of the Audi E5, the lettering brand we implemented. The car got a award as a best car in China of 2025 from the most important journalists in the market, on the one hand side. On the other side, you know that the whole market is under pressure because of the high competition. Over 150 competitors there in the market. We are preparing now also our dealer network for all these launches.

The E5, I would say, has started regularly, not overwhelming. This instead of being best car in China, there you can read the competition. This car will be joined by an SUV with a higher market segment. I think we will need a bit more time to see if the car fits. We are winning all the tests against the competition. Very positive feedback from the customers. We are hitting the pricing point, but having so many competitors in the market, yes, it won't be run by itself. We have put a lot of work into.

With the product momentum we will bring now to the market with Volkswagen, I think we have all opportunities in our hands. But being faced with competition, that's very clear and being realistic. I think we have done what has been necessary to switch our complete strategy, and now being very quick in the market for around two years as well with new products.

And then looking toward Europe, we are on track with a new urban car family, with ID Polo, with the Cupra Raval being launched in April already and with a Skoda Epiq. And as I mentioned before, this will be an important segment to tackle by these very attractive products. Feedback is positive and also the drivability in our tests is very promising. Same like for ID.1, we are currently on the first winter testing with our new software architecture being built in our joint venture, Rivian Volkswagen Tech, so for both on track.

Talking about robots, we see more cooperations. We have some very promising ones in terms of partnerships. We don't think that we need to invest by ourselves. It's a rising market, and is an interesting market, also for our plant. We are already implementing test robots in different areas of our production lines. But this could be more for partnerships. We don't need to be the investor or the owner of these kind of robots. The market is moving so fast. Interesting, but on the other side, more on partnering.

José, some remarks on Audi. But as you said, they have their own conference call on March 17th. Audi is targeting for a margin improvement of 6% to 8% in 2026. Based on basically product momentum, they're coming with great new products to the market. They ramp up electrification, but also on the combustion engine side, Q7, Q8, and also some very attractive RS models. We talk a lot about electrification. But on the other hand, there are also markets where these models, they still play a very important role.

On the other hand, ramping up of electrification means also an additional headwind in terms of margin dilution. Audi, as you know, launched also a significant restructuring and efficiency program, which should provide some tailwind. These basically are the building blocks for Audi going forward. Really more to tell on their own conference call.

On CapEx, we expect like sales and sales revenue not significantly to grow. Since we want to improve our CapEx ratio by a lot of investment discipline, we expect CapEx in absolute terms also be below 2025.

We are moving on to Michael Punzet from DZ Bank.

Michael Punzet, I have 2 questions. First one is on your EBIT guidance. Are they included any kind of one-offs? And if so, what are the topics they are related to?

And the second one is with regard to your R&D expenses. Is it fair to assume that they will be stable or maybe even higher, taking into account the announced additional new models with ICE into your product portfolio?

Michael, thanks for the question. Very short in the EBIT guidance, there are no significant one-offs included from today where we stand. And in terms of R&D CapEx, we want to really compensate all of the upcoming investments. For example, I make one example. We will add hybrids to the Atlas and Tiguan in North America, but this is all compensated by our efficiency measures. As I said, we want to reduce R&D CapEx combined going into 2026 and beyond to 10% in 2027.

And we are moving on to Mike Tyndall from HSBC.

Just a couple for me. I wonder if you could talk a little bit about where are we in terms of the productivity gains? Oli, you mentioned that you've got a 20% improvement in 3 of our main German plants. And you also mentioned that you were ahead of where you expected to be. How much is left in terms of how much more can we expect from those programs for you to hit the targets?

And then within that, on the material cost side, where are we on that front? It doesn't feel like we've had certainly an acceleration in Q4. Is there more to come as the new product comes? I assume that's BEV related. But yes, if you could give us some sense of where we are in that continuum.

And then the second question is just around seasonality, specifically with regards to Audi, but also the VW brand, I mean, Q4 a blockbuster for Audi. Should we just expect that going forward? What's driving that huge seasonality in that business because it's started to become a pattern, which makes it quite hard to predict?

Mike, in terms of productivity, that's the first signal that we are moving to the right direction with the 3 big plants from Volkswagen in Germany alone. We achieved 20% cost reduction. That's more than we have ever achieved in 10 years. And that shows the efforts the teams are putting on this. And we are still not at the end. There is still room for improvement.

And so we are doing benchmarks with the competition in terms of plant costs. In Europe, there's a margin in between EUR 2,000 and EUR 2,500, we can see from the competition. And we are there on a level now a bit lower than EUR 4,000. And there, you can see there's still a lot of room of improvement. But there's more to come also with the staff reduction.

We have agreed with our future plans for Volkswagen, Audi, Porsche, for example. And talking overall, what improvement still has to be done? We are now tackling especially all the functional areas like engineering, purchasing, but also production and other areas in sales and then quality even more. And therefore, we implemented a new organization, all of them directly reporting to me as a CEO task.

And there, we see especially also short-term effects because the cake is big, what we can do there. And there, we have some areas where we see more than 20% reduction still and others lower. And where we will keep on working, especially on our general costs, we do have. And so I think a good orientation is around 20%. We have to improve in some areas more.

And in terms of seasonality for Audi and Volkswagen, we are calculating for this year around the same volume as we have achieved last year, in spite of all the challenges we do have in the market, around 9 million cars, and we will have, of course, seasonality, especially with the different product launches we do have. Expect, for example, with the Urban car family in the Brand Group Core. This will be a push in the market. But overall, you can expect around the same volume we achieved last year.

Yes, I want to kick one more specifically, which helps you potentially predict it. Look, Oliver well-described our programs, on the Volkswagen AG, we have the Zukunft Volkswagen, agreed to reduce head count by 35,000. And we achieved last year, 9,000 and before 5,000. So 14,000 of the 35,000 we achieved so far and the rest will be achieved until 2030. So that gives you an indication, but still out there.

And seasonality, Oliver mentioned already, basically, product momentum. But we must also say we guided for that as well. We guided for a double-digit margin for Audi because some of the effects, specifically in the model lineup availability that we saw them.

There is one last question, which reached us by e-mail from Horst Schneider from Bank of America. And he wants to know either Oli or Arno, the midterm guidance, the path to 8% to 10% in 2030. Is this more back-end loaded? And which role does the SSP play?

I think the question has already been partly answered by Oli in his presentation, but any last comments?

Of course, it's too early to give you an indication of the next year. But we can say there are some clear building blocks. We start from 4% to 5% and the way to 8% to 10%. We will continue to bring great products. Our business model continues to lever. And the margin dilution of the BEV is still there, but the effect should become closer and closer. As you know, ID.2 has also already an 80% margin of the respective combustion engines, and we consistently implement group-wide efficiency programs.

As Oliver and myself mentioned already, investment discipline helps. And last but not least, what we often forget, we ramp up significant new businesses like PowerCo on the battery, Scout, autonomous driving, and they will drive positive effects in the future, but they are burdening our business today. And in 2030, we expect all these entities to contribute not only strategically, but also financially. So by and large, there's not a significant, I would say, step up or step down in these effects. So it's more linear.

Thank you, Arno, and thank you all for the very good discussion and questions. We are now at the end of the investor and analyst call. If anything was left unanswered, yes, please contact the IR team in Wolfsburg. They are very happy that you keep them employed. Next chance to meet with us is virtual and physical roadshows that are conducted in Frankfurt, London and Paris in the coming weeks.

And before we look forward to the Auto China 2026 in Beijing, we will host an investor event -- where we will host an investor event on April 23, where we will provide you with an update on our progress along our strategic initiatives in China, and also showcase our latest NEV models. So very much looking forward to welcome you there. Q1 results will be released on April 30, 2026.

And with that said, thank you for your numerous participation. Thank you, Oli. Thank you, Arno, for all the explanations. Take care and all the best to speak soon.

Thanks to all of you.

Thanks very much.

Dear colleagues. Welcome to the Annual Media Conference of the Volkswagen Group here in Autostadt. I'm very pleased that all of you are here, either locally or live via livestream online. We also have our CEO, Oliver Blume here; our Group CFO, Arno Antlitz, who will tell us the details, and who will be available for answering questions because 2025 was a year full of events for the Volkswagen Group. We have the product drive that we moved forward vigorously. And at the same time, there are strong global headwinds for the entire automotive industry, and we have a film to show you about it.

[Presentation]

Good morning, everybody, and welcome to our Annual Media Conference of the Volkswagen Group at Wolfsburg, and it's great to have you here today. And for those of you who are joining us online, welcome to you as well.

Now we're here at Autostadt, which is a place that embodies like no other, what our company stands for, strong brands, iconic products and a clear vision for the mobility of tomorrow. For the Volkswagen Group, 2025 was a year of progress. We brought exciting products to the people. We translated technology into real customer benefits.

We streamlined our structures, reduced costs and further improved our governance. So the strong brands and strong products, we're not only convincing our customers, but also the experts in the sense that we are winning prestigious awards. We're setting historic records. Now recently, for instance, with the Golden Steering Wheel reader pole and the Best Car Pole by Automotor and Sport. And in 2025 also, we were named the world's most innovative Automotive Group.

So in short, the new strength of the Volkswagen Group was put on the road in an environment that is radically changing, which places unprecedented challenges to our entire industry with increasing geopolitical tensions and trade policy barriers and massive pricing pressure in key markets. We've worked flat out to make ourselves fit for the future to further strengthen our competitiveness with consistency, with discipline and pragmatism.

With around 9 million vehicles delivered in 2025, we're almost at the previous year's level and Europe remains our strong base here. In our home market, our position is now stronger than ever. And that happens at a time when we operate also in an extremely dynamic environment. We have posted a 4% increase in sales and market share of over 25%, and we've grown our leading position here with ICEs and electric vehicles.

Now what is particularly positive is that BEV sales in Europe rose by 66%. So with a share of 27%, we're the clear market leader here. 5 out of the 10 best-selling all-electric models here in Europe come from our group. Now in particularly challenging markets like North America, minus 10% and China minus 8%, the deliveries declined as expected.

Now very positive for us, on the other hand, was South America with an increase of 12%. And Asia, excluding China, came with an increase of 9% and the Middle East and Africa posted an increase of 10%. Our flexibility in terms of drive types is proving to be a global strength today. We have efficient internal combustion engines, advanced hybrids and sustainable all-electric vehicles.

The Volkswagen Group's revenue amounts to EUR 322 billion, almost reaching the previous year's level. Operating profit stands at EUR 8.9 billion, which is significantly less than in the previous year, but the decline is largely due to special effects and tariffs. And at the same time, we see that our comprehensive standardized performance programs are taking an effect for our brands, for our companies, for our regions, and this has also allowed us to significantly and sustainably strengthen the cost structure of our company.

And thanks to this major progress in cost reduction, where we're able to offset a significant part of the global headwinds. The direct and indirect effects of U.S. tariffs alone amounted to around EUR 5 billion. Additionally, there are significant one-off expenses for restructuring and special effects relating to our brands. And those were then recorded as one-off effects in 2025.

At 5.5%, our operating performance before special items and tariffs is at the lower end of our original forecast at the beginning of the year. This is also despite further unadjusted effects like changed market conditions in China, the drop of vehicle sales due to tariffs on Mexico produced cars and substantial expenses related to the technological transformation of our company. All of this underscores the effectiveness, but also the necessity of our programs.

Net cash flow in the Automotive Division reached EUR 6.4 billion. And thanks to the excellent work of our teams, this is up EUR 1.3 billion on the previous year. This has enabled us also to consolidate net liquidity at a very stable level of around EUR 34.5 billion. At the Annual General Meeting in June, the Board of Management and the Supervisory Board will propose a dividend of EUR 5.26 per preferred share for the 2025 financial year.

The fact that the capital market is gradually rewarding our approach is also reflected in the share price. Volkswagen preferred shares rose by around 16% in 2025. And during the same period, the STOXX Europe Automobile & Parts Automotive Industry Index declined by 4% in the capital market. Including our dividend for shareholders, this has meant an increase in value of 24% and that is a positive trend for the Volkswagen Group in an environment that was anything but easy for our industry. And all of this happens in the midst of a phase of profound restructuring, realignment and transformation.

Arno Antlitz will also explain the details of the financial figures to you in a moment. We achieved a great deal in 2025. with our clear strategy, consistent implementation and above all, a team that works on this every day with determination, with ambition and passion. But it's also clear that this was far from enough. We still have a lot of work ahead of us. The global conditions are undergoing a comprehensive fundamental realignment. Familiar certainties of the past are disappearing.

So our business model of the past also no longer works. So against this backdrop, it is crucial for our success to further expand our regional activities. At the same time, we will need to tap global synergies even more. And we've already begun to do this with our In China, for China strategy. We're growing our global footprint.

We are becoming more independent, and we're also taking advantage of local opportunities, and we're increasing our resilience. So ladies and gentlemen, you see that we're heading in the right direction. The strong fourth quarter has already shown a noticeable improvement in performance. We are now also seeing the first effects of the restructuring through our wage agreements and personnel measures alone, we have already achieved cost savings of around EUR 1 billion at Volkswagen, Audi, Porsche and CARIAD in 2025. We remain solidly focused on our goal.

By 2030, we plan to achieve annual cost savings of more than EUR 6 billion through the future packages alone. Our Volkswagen Brand has developed positively, and it is stabilizing the overall result. We have exciting products such as the new T-Roc, which has made an excellent start on the market. But we're also continuing now to pick up the pace, the electric urban car family is in the starting blocks as we speak that will expand our entire electric portfolio from the entry-level segment with the ID. Polo all the way to the ID.7.

Audi is reinforcing its claim to Vorsprung durch Technik with a complete realignment, which encompasses all areas of the company. It has iconic design, leading technologies, innovative manufacturing approaches. And this is how the concept C show car now points the way forward for the brand. And at the same time, also Audi is currently in the midst of the company's largest model push across all drivetrain types.

Porsche's sales volume in the largest single markets of China and the U.S.A. are exported exclusively from Europe. And therefore, Porsche finds itself in a particularly challenging situation with the massive changes in the market conditions. It's also why the company was realigned in 2025. And despite those new conditions, Porsche remains one of the strongest companies in the industry with the financial adjustments.

For the entire Volkswagen Group, we are working to achieve an operating return on sales of 8% to 10% by 2030, and this is an ambition that's higher than our target levels in the past. Why? Because the economic environment has changed dramatically. With our extensive restructuring program and the realignment of the last 3 years, we have put our group on a robust footing. And we have delivered in doing so. We have achieved some of our goals earlier than planned.

And everything really is geared towards our top 10 programs in the group and the brands, which apply to products, to technology, software, regions, mobility services, sustainability and, of course, financial performance. But at the same time, our world has changed dramatically over the last 3 years with market structures, trade policy barriers and extensive regulation in the world's regions and basically our own costs, which are still too high, especially in Europe. And that is why we are currently working on a transformation plan for the next phase of our company.

Now this we call the Volkswagen Group 2030 vision, focusing on revising our business model under the new conditions. We plan to further develop our product portfolio, which will be specifically tailored to the regions of the world and the respective profit pools we have in those markets. We are refocusing our technology, battery and software road map. And we also look to further improving our financial structure and generally making the Volkswagen Group more efficient.

And throughout the course of the year, we will provide information about our next steps. This year will be one where we will continue to bring our innovative strength to bear in our products and technologies with a model push of more than 20 new vehicles with a real highlight, the electric urban car family. It is more than just a model series. It is an expression of the Volkswagen Group's expertise and capabilities. We're talking here about 4 models, 3 brands, all sitting on 1 platform.

We first presented it as a complete family at the IAA Motor Show and now we're putting it on the road. Electric mobility at an entry-level price. It comes with top technologies from higher vehicle segments. Volkswagen, CUPRA and ŠKODA are thus tapping into a growth segment with great potential. In just a few weeks, the CUPRA Raval will celebrate its world premiere, and you can look forward to it, just like we do.

And there will be many other fully electric vehicles, such as the Audi E3 CUV or the Porsche Cayenne Electric. So a real BEV push across all the segments. And at the same time, we're also continuing to accelerate in China. After less than 3 years of transformation now, we are in full delivery mode.

By 2027, we will launch around 30 electrified models in the Chinese market together with our local partners. We've accelerated development times by up to 30%. And we have also reduced our material costs on the local CMP platform by more than 40%. So we will transfer this experience to other regions of the world.

In technology terms, we're already taking now the next decisive steps. In our joint venture between CARIAD and Horizon Robotics, which we call Horizon, we're developing our first group-owned AI chip for the next generation of intelligent connected vehicles and therefore a powerful, energy-efficient and AI-supported system of automated driving. Batteries remain the key technology for e-mobility, and we are increasingly taking this into our own hands. We launched our cell factory in Salzgitter in September, and that stands for technology know-how, industry expertise and control along the entire value chain.

With the introduction of LFP cell technologies, we're also expanding our technology spectrum and strengthen our competitiveness in the volume segment. And the same is true for software. We are making rapid progress. We launched the zonal China Electric Architecture. We brought it into series production in just 18 months.

At the same time, our joint venture with Rivian Volkswagen Touareg is off to a very good start. It's fully on schedule. And together, we are now developing the next STV architecture for the Western Hemisphere. It will then be used for the first time in the ID. EVERY1 from 2027. Our software subsidiary, CARIAD has been technically restructured. It's been reorganized, significantly streamlined now. It focuses on cross-functional tasks and is much more powerful.

Our standards remain high. We want to be the global automotive tech driver, and we're continuing on this path resolutely. We know where we want to go. We know what needs to be done, and we have the strength of a strong team behind us. colleagues around the world work to make progress possible day in, day out with great expertise, with a lot of passion and genuine team spirit.

Now I would like to thank our teams for what they have achieved over the past year, also on behalf of the entire Board of Management. Our focus now for 2026 is clear: strong products, compelling technologies, delighted customers and as in the past, strict cost discipline, not as an end in itself, but as a prerequisite for investment in the future for growth and a successful development of our company. We have made important progress. That is clear.

General conditions are once again more challenging, and we are continuing to adapt to them. We are acting with foresight. We remain focused, and we're seizing our opportunities, and there will be many more of these in 2026.

Thank you very much. Arno, the stage is yours.

Right. Ladies and gentlemen, 2025 was quite a challenging year. It was marked by geopolitical tensions, by tariffs and very intense competition. In this demanding environment, we have made major progress and continue to strengthen the substance of the Volkswagen Group.

For our customers, we have launched 30 attractive models to the market, and we have made visible progress with our restructuring plans, and we obtained a solid net cash flow. Thus, we kept net liquidity at a solid level. I would like to thank all of the employees for the success they have worked on.

Compared to the previous year, we have improved important key indicators. Our operating result, however, went down by about 50%. The current level of results at 4.6% adjusted by special effects is not enough in the long term to keep investing vigorously into the future. This shows that in this challenging environment, we have to continue to strictly reduce costs, open up group synergies and reduce complexity, thus bringing our profitability to a higher level and sustainably so.

After these preliminary remarks, please let me put the figures into context. We'll be starting by looking at our deliveries. Despite the multiple challenges, we delivered about 9 million vehicles worldwide to our customers in 2025. This is almost at previous year's level. Declines in deliveries in China and the United States were balanced by 2-digit growth rates in South America and by growth in Europe. The renewal of our product portfolio is, therefore, increasingly paying off.

The deliveries of battery electric vehicles grew by 32%. Thus, the share of battery electric cars has increased to 11% of global deliveries. Greatest came from Europe. The share of electric car deliveries in Europe stands at around 19%. Nowadays, every fourth electric vehicles sold in Europe comes from the Volkswagen Group. This shows quite impressively our electric strategy is working.

Group sales revenue went down slightly to around EUR 322 million, mainly due to currency effects. The operating result of EUR 8.9 billion was 53% below the previous year. This corresponds to a return of 2.8%. The result shows the intensive competition in our industry. However, 2025 also saw major special effects.

In total, there were special effects of about EUR 5.9 billion. The lion's share results from Porsche goodwill impairment to the tune of EUR 2.7 billion and from the adaptation of the Porsche product strategy coming in at around EUR 2 billion. Restructuring costs meant another EUR 1.3 billion. Adjusting the margin for these items results in a more precise picture of the operating performance of the Volkswagen Group in 2025.

Before these effects, the operating return on sales stands at 4.6%. This number is a good indicator for where we stand in the current environment. Deducting tariffs as well, which led to costs of EUR 2.9 billion in the last 9 months of 2025, we end up with a margin of 5.5%. Against the backdrop of the numerous challenges, this is quite an achievement. But of course, it is the result achieved, which counts in the end. Tariffs are here to stay and the margin of 4.6% is not enough for vigorous investment into the future.

In order to permanently strengthen Volkswagen's resilience in a difficult market situation, we have to implement the current improvement programs consistently, and we have to step up our efforts. Net cash flow in the group division Automotive grew to a total of EUR 6.4 billion. Cash flow improvement was the result of targeted initiatives that were implemented since last summer all over the group.

The net cash flow of EUR 6.4 billion mainly came from a strong second half of the year and in particular, from the fourth quarter, which was marked by an improved management of our inventories and a high level of CapEx discipline. We can quite rightly be proud of the good work of our teams in the brands and in the divisions. With their work, they have made a decisive contribution in order to strengthen the financial performance of our group.

Ladies and gentlemen, in order to create transparency and counter the unfounded speculation of recent weeks, I would like to take this opportunity to explain in a bit more detail how we achieved this net cash flow. The diagram shows you the individual components of the net cash flow in 2025 in a simplified fashion. Basis is gross cash flow, which in 2025 stood at EUR 28.7 billion. This gross cash flow results in the cash flow of ongoing operations plus changes in working capital, which are mainly changes in inventories and also receivables and liabilities.

When we build up inventories, this ties up money when we reduce stocks, additional money comes into the till. From the cash flow from ongoing operations, we have to pay for CapEx for capitalized R&D costs as well as for M&A activities such as Rivian, for example. Thus, we end up at the net cash flow figure. The absolute figures for 2025 are only of limited significance, which is why we have compared them with the figures we achieved in 2024, and you see them on the left below the pillars. These changes compared to previous year are shown on the right-hand side.

Due to weaker operating business, gross cash flow in 2025 was EUR 6.7 billion lower than that in 2024 against the backdrop of tariffs and considerable uncertainty, we reduced our forecast for net cash flow in September subsequently to 0. In order to decisively counteract this development, we have set up a group-wide task force with the aim to reduce expenditure and optimize inventories. And our teams have delivered.

In terms of working capital, a positive amount of EUR 2.7 billion was achieved for the full year of 2025. Previous year's figure was negative at minus EUR 1.1 billion. The majority of the improvement in working capital compared with previous year amounted to around EUR 2 billion. It came from lower inventories at the end of the year. I'm going to talk about that later on.

Thanks to strict expenditure discipline, capital expenditure on property, plant and equipment was also reduced by EUR 1.9 billion. Lower capitalized research and development expenditure contributed EUR 1.2 billion, and we spent EUR 1.1 billion less on M&A activities. Overall, measures such as inventory optimization, investment discipline, lower R&D expenditure and lower expenditure in M&A supported the net cash flow with EUR 6.2 billion and thus almost completely offset the lower cash inflow from weaker operating business. The majority of the improvement came in the fourth quarter.

So as already mentioned, main change in working capital came as mentioned, from the reduction of inventories. Now reduction in inventories in the fourth quarter is nothing unusual. In 2024, the seasonal effect was further supported by sustainable structural improvements between production, logistics and sales.

Let me give you an example. During the chip shortage, our plants found it difficult to meet exact delivery dates for customers. We simply did not know whether we had all the parts available. For this reason, the vehicles were built with a long lead time so that they would definitely be available to dealers on time when the customer's leasing contract expired and customers come back into the dealerships.

With improved adherence to delivery dates in our plants, we were able to shorten vehicle throughput times across the entire value chain to dealers in 2025, thereby reducing inventories without compromising vehicle availability for our customers. In total, we were able to reduce inventories in the fourth quarter of 2025 vis-a-vis third quarter by EUR 4.8 billion and by EUR 2 billion compared to the end of 2024. Supported by the positive development of net cash flow, we were able to maintain net liquidity at a solid level of EUR 34.5 billion.

Let's now come to the performance of the individual divisions. In the Automotive division, the realignment of Porsche, U.S. tariffs and restructuring had a particularly strong impact. As a result, the segment recorded an operating profit of only EUR 5 billion. This represents a decline of 64% compared with the previous year.

For heavy commercial vehicles, lower sales volumes, in particular, weighed on earnings. Operating profit fell by 43% to EUR 2.4 billion. Financial Services increased its operating profit by 19% to EUR 3.7 billion, driven primarily by a strong business in Europe.

Let's now take a look at the operating profit in the passenger cars and light commercial vehicles in the income statement reconciliation with the previous year effects become pretty clear then volume had a slightly positive effect. The successful ramp-up of electric vehicles, which currently still have lower margins in Europe came at a price. Negative price and mix effects had a negative impact of around EUR 3.2 billion or 1 percentage point on the margin. The burden of U.S. tariffs cost us around another percentage point of margin.

In terms of fixed cost, the burdens associated with the realignment of Porsche had a negative effect as described. By contrast, we were able to reduce operating fixed costs compared with 2024. Here, the consistent implementation of our performance programs is increasingly beginning to pay off.

As a result, overheads in the automotive division fell by EUR 1.5 billion. Volkswagen Brand, in particular, made an important contribution to this. So let's look at the development of the Brand Groups. Significant progress was made in the Brand Group Core. Sales volume and revenue increased in a difficult market environment, driven by the successful ramp-up of fully electric vehicles.

Despite the negative impact of tariffs and weaker margins of electric vehicles, operating performance remained stable. The result amounted to EUR 6.8 billion. The margin of 4.7% is roughly on par with the previous year. ŠKODA's outstanding performance has a positive impact here with a margin of 8.3%, the brand ŠKODA impressively demonstrates what can be achieved when a strong product substance based on the Volkswagen platform is combined with competitive cost structures.

Volkswagen Brand has also made substantial progress. This was particularly evident in the fourth quarter. Earnings remained stable for the year as a whole. This fully offset the Brand's tariff burdens of around EUR 900 million. These figures impressively demonstrate that with the implementation of our performance programs, we are not yet hitting our goal, but we are on the right track. The progressive -- with the Brand Group Progressive, Audi closed 2025 with a double-digit margin in the fourth quarter. With its fully electric models, Audi achieves a record number of deliveries.

Good sales figures did not translate into operating profit here either due to U.S. tariffs and the significant share of purely electric vehicles. Initial contributions from the performance program at Audi were able to offset these effects partially. As a result, the Brand Group Progressive achieves an operating profit of EUR 3.4 billion, 14% below previous year's figure. This leads to a margin of 5.1%.

The operating result of the Sport Luxury Brand Group reflects lower sales, particularly in the Chinese market and significant special items in 2025. Tariffs again had a negative impact here. Our technology platforms, CARIAD and PowerCo made visible progress in 2025, but still had a significant negative impact on the group's result. CARIAD significantly increased its license income and reduced its operating loss by EUR 0.3 billion to EUR 2.2 billion.

In the battery business, the operating loss increased as a result of the ramp-up of production capacity. PowerCo started cell production at the Salzgitter Gigafactory on schedule at the end of 2025. The first battery cells made in Europe are to be used in series production in our vehicles starting this year, an important milestone in our electric strategy.

TRATON was significantly affected by a difficult market environment in the truck segment. Revenue declined to EUR 42.5 billion, while operating profit fell to EUR 2.4 billion, mainly due to lower sales volumes in North America and Brazil, negative exchange rate effects and costs for the new plant in China. Nevertheless, the latest trend in order intake gives us reason to be confident that there should be some improvement in 2026. The proportionate operating profit of our joint venture activities in China amounted to EUR 958 million in 2025. Competitive pressure in China remains high, particularly in the premium and luxury segment. In the volume segment, prices have been stabilized in the course of 2025.

Looking ahead, new locally developed electric vehicles with competitive technologies and cost structures are now entering the market. While 2026 will still be financially impacted by these launches, rising financial contributions are expected again in 2027. Our Group Board member for China, Ralf Brandstatter, will explain the progress made by his team in detail at an investor and analyst event during the Beijing Auto Show in China in April.

Ladies and gentlemen, this brings me to the financial outlook for the 2026 financial year. We expect customer demand to remain largely stable all over the world. At the same time, we anticipate continued high competitive pressure. Against this backdrop, we expect the Volkswagen Group's revenue to grow by between 0% and 3% in 2026. The operating margin is expected to be in the range of between 4% and 5.5%. And we expect net cash flow to be in the range of EUR 3 billion to EUR 6 billion and net liquidity in the range of between EUR 32 billion and EUR 34 billion.

Ladies and gentlemen, the Volkswagen Group has everything it needs to successfully shape the transformation of the industry. We have strong brands, inspiring products and can rely on global economies of scale. These clear strengths are not currently fully reflected in our financial outlook. They are overshadowed by the current challenges, a volatile global economy and tariffs as well as increasing competition and high expenditure for transformation in the entire industry.

In this environment, we want and we need to keep our combustion engine vehicles technologically competitive, continue to invest in exciting electric vehicles and the latest software solutions for our customers and expand our regional presence, especially in the United States. We can only achieve this if we continue to consistently reduce our costs, leverage group synergies, reduce complexity and thus sustainably increase our profitability. This is what we will be focusing on in the coming months. Thank you very much.

Well, thank you very much, Arno Antlitz and Oliver Blume for your statements. And with that, we are going to take your questions.

[Operator Instructions] We start with Frank Johannsen, dpa; and then Christina Amann from Reuters.

Mr. Blume, you said earlier that you are working on the Vision 2030 target. It seems you need to bring cost down even further. And can you say specifically what that means? Do you still consider plant closures, staff reductions? I mean, is this something that you need to renegotiate with the trade unions with the IG Metall because you already agreed on a package -- on a reduction package and will more be added then?

Okay. Let me put that into context. In the past 3 years, and you're aware of this, we have fundamentally realigned the Volkswagen Group in the sense that we've achieved many of our objectives faster than we originally thought. 3 years ago, the situation was entirely different than it is today. We are facing trade policy barriers, completely changed in the markets, different regulatory systems that have become applicable.

And then we realized that the business model that has supported us for decades in the Volkswagen Group, and essentially, it's true for the entire German car industry for Germany as such, German industry as such, that this business model is not tenable anymore. And therefore, it's the prime obligation for all of us to grow, to develop our company. Now we call this a transformation plan.

And we are going to see how our business model for the future can be prepared for the needs that are out there to develop local products and structures like we've shown in China now. And at the same time, we need to make sure that all of our global synergies can still be tapped, can still be used, and they need to be grown. Our product portfolio will be adjusted. The profit pools must be spot on.

And then we will continue to focus on our core business, develop vehicles, sell vehicles. Financial service is important. Aftersales is important that we are going to focus on specific technologies and also deal with taking costs out because in the past 3 years, our performance programs have been very successful. And it's actually been thanks to those performance programs that we are still above the water line. You know what competitors are facing right now, and it's precisely that stable position of the Volkswagen Group is thanks to our intense work on reducing costs, which include also the future packages, staff cut packages that are part of the transformation program. So we will leave no stone unturned.

We look into development, production, procurement, quality and manufacturing, and we'll take a closer look at the factories, of course. But the positive signal for Volkswagen is that if we take the big 3 German plants in the past year, factory costs have been improved by 20%. So those of you who are in the know will realize what 20% of savings means. It's massive cost reduction work.

So the direction is the right one, but we will need to do more because our costs are still too high in Europe, and we have to pitch ourselves against our competitors who in Europe will include also Chinese OEMs because it's a big business potential here for the Chinese in Europe. So we have to fight back.

Christina Amann is next.

Just earlier, you mentioned the 3 large factories in which you have improved the cost situation. What about the other factories? And what about the complexity of your company? In 2024, your decision was taken to wind down production at Osnabrück and stop at 2027. But is there a way forward after this for Osnabrück and Zwickau for that matter? And what about mergers and acquisitions? There are also assets for divestment.

Now Mr. Antlitz, you want to increase the free float at TRATON, and in terms of Everllence, are you planning more? And finally, the U.S. business, what's the current state of play of Scout? When will the factory open? And what's your forecast there? And what about the Audi plant in the U.S.?

Okay. I'm going to take the first part here. And Arno, perhaps you go to our investment portfolio. Now we're making progress in all plants. I just picked an example here. And we have clear objectives. We are following and tracking the results. We set up tandems, working tandems between the plant manager and the Head of the Works Council. And that turns out to be a very positive working model. We work both ways as it were, and we're regularly tracking progress. Progress is very positive. I can say that.

When it comes to capacity adjustments, with Volkswagen, Audi, Porsche and CARIAD, we are planning to eliminate 50,000 jobs, which is part of the future package, including the 35,000 jobs that we've mentioned for Volkswagen. And that also means that capacities will have to be reduced, and we are doing this. Now for instance, in Volkswagen, we are talking about 700,000 units of reduction. Why?

Because this is what the markets currently demand. Now the European market compared to the pre-COVID times is down by 15%. So we have to make adjustments, of course, in terms of sales volumes. We closed the Brussels plant of Audi. For Dresden, for the Dresden plant, we have resumed responsibility to shift its focus to become a research location. In Osnabrück, we're still working on finding a solution. Currently, no solution has been taken yet. We're currently in talks with defense companies. Throughout the course of the year, we will make an announcement about the future.

When it comes to Scout, there has been earlier information that we're running out of control of our investment costs. No, that's not correct. What is correct is that we had higher costs related to higher plant and installation costs because demand in the U.S. currently is very high, thanks to the IRA legislation. And we have included more investments for that product portfolio like a range extender for vehicles. We included a suppliers park. So it's EUR 1.2 billion of extra cost, out of which EUR 900 million have already been compensated for. So we are anywhere between EUR 2.3 billion or EUR 2.6 billion and EUR 300 million of which is for the supplier park. Now we have done very good cost work and have compensated for the extra cost of the range extender.

The range extender now is a priority because the majority of preorders or reservations are for the range extender model. Currently, the scheduled date is 2028, and that's the time line that we're currently pursuing.

And Arno, would you say a word on our investment portfolio?

Yes. Now for that portfolio, we're always happy to get the financial contribution out of it. But the crux of the matter is that we want to focus on our core business. And you just gave some examples. So we have some examples. We sold Italdesign. There are some small elements here of SINOTRUK. We want to increase the free float of TRATON. TRATON so far has been listed only by 10% or 11% and higher free float will be better for the TRATON share, of course.

And not least of all, Everllence. Now we started activities there. They're in very good shape right now. And we want to sell the majority of Everllence to a financial strategic investor. We need to see, to discuss in order to team up with an investor to propel Everllence into the future because Everllence has a lot of earnings potential, needs a lot of investments as well. But I think it's a win-win situation, both for Everllence and for Volkswagen.

Let's go to the other side. Start with Christian Müßgens, FAZ; and then Monica Raymunt, Bloomberg. Christian, over to you first.

Could you, Mr. Blume, tell us a bit about ŠKODA. ŠKODA, more than 8% return, while Porsche hasn't earned anything. I'm exaggerating a bit here. But ŠKODA apparently does a lot of things right. And can you tell us bit about regulation. There were some changes in -- when it comes to phasing out combustion engines. Are you happy politics-wise? What are your further demands?

Mr. Müßgens, ŠKODA, I can only praise them. They do an excellent job. We notice it when it comes to how our products are accepted in the market. Of course, when we cross compare it, ŠKODA and Volkswagen, ŠKODA has a different cost position in Eastern Europe. And if we compare it to other brands, we have to see that the focused business of ŠKODA is in Europe, whereas other brands are strongly impacted by how the market in China developed and also by the tariff situation in the U.S. Compared to Porsche, what happens is we have massive one-off effects and restructuring costs that came in last year.

If you deduct those, you see that Porsche still has a very strong return. So the substance of the company is there. We deemed it to be right to have everything settled in 1 year so that from this year onwards with Porsche, you will see an upward trend.

As regards CO2, well, that's one of the major issues that we are addressing with the authorities in Brussels at the moment. And of course, there are major discussions, various discussions for 2035. We think that it's important to simplify calculations so that at the end, it's not confusing to consumers. We are up and moving for electrification because we believe this is the superior drive for the future.

Still, we need more flexibility. I can imagine that we have a transitional period from 2035 onwards that maybe even starts a bit earlier in 2033 and then goes up to 2040 in order to give the automotive companies the opportunity to go the way of compensation depending on how the markets develop.

What is more decisive and I will not resist to underline it is regulation for 2030. If we can't come to terms with that, then by 2035, we won't be through with everything. That's why I clearly plead for a transitional period that is required '25 to -- for '25 to '27, we already have it, but that for 2028 to 2032, we go for another transitional period to have a longer balancing period without losing a single gram of CO2 and helpful are models where, for example, smaller cars in the electric arena are coming with special credits.

I can well imagine that cars that are made in Europe come with a certain localized content with the electric cars that they also get a positive credit. We have to come to such a solution, which is pragmatic for the industry that can be handled.

The industry shows with the example of Volkswagen here that we have excellent products coming to the market. The cost position will be better and better with our new urban car family or the ID.1 from 2027 onwards. And it also depends on the market condition. The infrastructure -- charging infrastructure plays a role. It's developed rather positively in many countries.

We have catching up to do in the cities, in regional areas. And energy prices play a role. We see it in China where you pay $0.02 to $0.03 per kilowatt hour. In many countries here, we're at a completely different level. And consumers, of course, calculate that. You have to come from both sides. You have to provide the conditions and be pragmatic at where moving. And my focus at the moment is at 2030, we have to solve this issue for the entire European automotive industry.

If you allow me, I would like to add one more thing. You have compared ŠKODA to Porsche -- with Porsche here. The ŠKODA example is rather encouraging for the Volkswagen brand as well because ŠKODA has excellent products, but on a Volkswagen platform, on a group platform and acts in a difficult environment, ramp up e-mobility and it shows what you can achieve with a good cost position. And Volkswagen has moved towards this. We have started a major program with Volkswagen.

Employees are reducing costs, stepping up productivity. And last year in Volkswagen AG, we have reduced staff by 9,000. Factory costs were reduced by 20%. And it's rather encouraging for Volkswagen as well that moves forward with major steps to reduce cost structures, and that's what the result shows this year.

Now Oliver Blume has talked about regulation in Europe. Christian's question was answered. So [indiscernible]; Andrea Malan, Automotive News Europe. I think your question should be covered. If not, please send me another question, but the questions were of a similar nature. We go to Monica Raymunt, Bloomberg.

Mr. Blume, in the media, there was an interview. There were various interviews with my colleagues. And in those, you announced that the goal of 10% market share in the U.S. is no longer realistic. And I wanted to ask a question specifically on that point. What is your vision for Volkswagen in the U.S.? What is your short-term goal? And what is your midterm goal? And how do you see the opportunities for Audi and Porsche to ramp up volumes again? And what kind of no longer realistic? And I wanted to ask a question specifically on that point.

What is your vision for Volkswagen in the U.S. What is your short-term goal? And what is your midterm goal? And how do you see the opportunities for Audi and Porsche to ramp up volumes again? And what kind of margin can you expect in the coming years in the U.S.?

Right, Ms. Raymunt. The United States continue to be significant market for us, and we do see growth in the outlook for the group. We have a relatively low market share in the United States at the moment. We have a bit over 4%. So yes, that can be expanded. At the moment, because of the trade political issues, we do see pressure. We have a strong localized footprint in Mexico with a current tariff trend of 27.5% with many cars, it's no longer worthwhile to export them from Mexico into the U.S. That's basically what the market decline or market share decline is about that we have shown here.

Be that as it may, we keep investing a lot in the U.S. with Scout. And for Audi, we also do see potential to move into new car segment. We have not declined Audi production there, but I have a very clear position. We have to find compensation mechanisms for tariffs. We can't pay high tariffs and then at the same time, invest into a factory. With the expansion of capacities, we are moving forward step by step there. For Porsche itself, in the future, we do see potential in the United States. Last year, despite tariffs was a record year for Porsche in the United States.

Last year, despite tariffs was a record year for Porsche in the United States. We have lots of Porsche aficionados in the U.S. There are excellent -- there is an excellent sales potential. But at the moment, we hardly earn any money there because Porsche is exporting 100% of its cars.

15% of tariffs come on top of the cars exported from Europe to the U.S. That's something which Porsche is suffering from. But all in all, United States is very interesting for us. The 10% that were mentioned historically in the Volkswagen Group are moved to the future because of the strong Mexico footprint.

Once there would be a regulation for that, that would be supporting. And we're now thinking about it step by step. Scout, for example, would bring us another percent of market share also with the other activities that we have with Volkswagen and Audi that will support us.

With the new Tiguan, we are in the United States, that will give us a further push. And we are looking at it on a project-by-project basis, and then we'll do the market share, but 10% is rather a long-term outlook at the moment.

[indiscernible] next, and Andreas Schweiger from the [ Brunswick. ]

A question about the VW plant in Salzgitter, you said first, batteries will be coming out of Salzgitter this year. Do you have a time line for that? And what's your summary of the first couple of months? How well has the SOP of the factory worked so far?

Well, we want to be the first European carmaker that makes sure to build and fully ramp up the battery factory. This is an extremely complex endeavor. I think we've prepared really well. We had a sample factory in China that already produced battery cells in series.

We trained our teams. The equipment installation has worked really well, and we've started on time last year with the first series produced battery cells. The challenging thing in the battery production is that the top-notch automation technology at work in the sense that battery cells are produced at an extremely high speed, high fast pace. So production equipment is lac together. So we're planning to fully ramp up the factory in the next couple of months. So it is our expectation that in the second half, the company or the factory will leave its full production line.

Now like in any battery cell production launch, this is a major endeavor. I've been to Salzgitter myself just recently, I have an excellent impression of technology and the team, but we need to solve problems there day in, day out. We do that. We resolve those, and we're confident that we make it happen.

And we believe that this know-how then can be transferred to Valencia and Canada in the way you saw in individual segments. And we believe that our own battery cell production, our battery cell know-how make us resilient and make us independent of Asian OEMs. So if you look at the mix of world regions and footprint where we are present, we will be more competitive both in technologies and cost potentials.

[ Andreas Schweiger ] is next, please.

Two questions, one for Mr. Blume and one for Mr. Antlitz. Mr. Blume, now so far, Chinese competition in Germany is rather moderate. It's visible, but still it's a niche player. When do you think they will be pervasive?

And Mr. Antlitz, there's a significant debt level in your -- on your balance sheet, more than EUR 400 billion. Was it EUR 440 billion of debt? Is that an order of magnitude that is customary for a group like yours? Or is that still a trouble spot? Because the total amount is actually impressive.

Well, maybe I'll take your question on China first. It's been abundantly clear now that the Chinese manufacturers have identified Europe as a market for their products. They're hardly making any money anymore in China because of the fierce competition there and the pricing pressure in China.

In Europe, they can make good money with their vehicles and the Chinese currently cannot export their products to the United States. So in that sense, yes, that's their main focus. And we do realize and see that Chinese OEMs are approaching Europe in concentric circles around Germany, especially in markets where there are few or very limited local production of vehicles and then changing over there to a Chinese brand is easier than like in Germany, right, where we have very strong homegrown brands. But we will have to assume that the Chinese vehicle brands also will be getting a foothold here in Germany.

Currently, we do not feel or do not see any noticeable effect, adverse effect on Volkswagen, the Volkswagen products. That's because of our solid product substance. European customers appreciate our brands, not only the brands, but the design, the quality, our service offerings that we are building here, have built for many years. But we have to be prepared for pricing pressure on us as well. So it's more than anything, an incentive for us to bring cost down even further.

So what we've started doing is exactly the right way forward. We will continue on that. because we will not be more resilient in terms of products in the future, but also the pricing positions. We will be competing with those Chinese OEMs on that basis.

I need to say a few words and put your answer in context first. And not only our business model, I'd like to talk about the entire car industry. There's an automotive division and the Financial Services division, which is a very common thing to happen in the sense that we're selling vehicles to dealerships to wholesale customers but half of vehicles are sold to financial services.

So they appear on the balance sheet of financial services and are then leased out to customers. So customers pay with their lease rates. And then in the second step, those are sold on at a later point. That's a typical element of our business model. So you have to distinguish between the Automotive division and the Financial Services division.

So in the Automotive division, we have a positive liquidity of more than EUR 34 billion. So it's a positive balance sheet, if you will, which is 10% of revenues, so which is solid, but we want to increase that level step by step in order to be even more resilient. So we need more financial contribution to make sure we keep that 10%. So EUR 330 billion of revenues. So EUR 33 billion, EUR 34 billion of net liquidity, which is 10% must be maintained.

And thanks to the positive cash flow in 2025, we managed to do that.

Now in a bank, which is a regulated institution, the situation is different. It depends on the equity ratio of a bank, and they are in good shape. The BaFin, the German regulator makes provisions on your equity levels that you need to maintain if you operate as a bank. Our equity level is actually above those statutory requirements.

So I should say on both sides, we're in good shape despite the high debt level. Debt is part of our business model. But what is important is to manage our risk properly. And we're positive. We have a good history of financial services to manage our residuals and residual risks. So with that in mind, yes, we're in a solid position, but we need to increase that solidity, the robustness because we are navigating difficult times.

Let's go back to the other side. Lazar Backovic from Handelsblatt; and then the colleague, [ Mr. Otto from Political. ]

I have 3 questions. I'd start with the geopolitical situation. You have already talked about major headwinds because of the situation in China, and there are tariffs in the U.S. Now the next crisis comes in the war in Iran and in the Gulf region. Can you give us some insight how that hits you, be it in logistics, questions of markets, thinking of Porsche and the luxury market that's very strong in the Gulf region. So that's the first question.

Second question on the group situation. That's to add to Frank Johannsen as to whether you can give us a time line as to when a second savings program would come out -- would be coming out.

And the third thing is about cash flow and the effects you have now through the cash flow components, bonus payments to Board of Management members. Can you imagine to waive the bonus payments or subsequent year, if the situation is tense for 2026 to waive this component? And how do you handle the situation that the employees demand to have a profit participation scheme? Can you tell us about this?

Mr. Backovic, I would like to start and like to ask Arno to add to me. So first on the geopolitical situation, we see just how volatile our world is. Every month, new topics seem to be cropping up. But that's our motivation to simply work and continue to work compared to the competition. Last year, we were able to compensate for many issues, which we no longer see among our competitors. But be that as it may, we will not get the world we desire to have. We have the real world, and we can't avert our eyes.

As regards to the Middle East, we don't see any interference when it comes to logistics or parts supply. What we do see very clear, but it's really early. What we will see is sales in Middle East, in particular, for our premium brands. Of course, that is a significant region. We've shown it before. Last year, we had a positive development in Africa and Middle East of 10%. And we have to wait and see what's coming now.

We have a very fine-tuned and transparent system of parts supply. We drill down rather deeply into the supply chains. We can react at short notice if we see something popping up. But currently, I can say we have everything under control. But of course, we will observe it diligently.

Now on the further transformation, I think the geopolitical situation is quite a good point to start from it. We are living in a world that has changed quickly in a short span of time. So our motivation is to move forward. We are quite self-assertive here because many things we were able to achieve in the last 3 years and only because we were able to do it, we are above the water.

But that's, of course, not a certainty that we'll have for the future as we see with the case of the Middle East just now. And the transformation plan mainly wants to change, to adapt our business model to the new conditions. We are working in far shorter cycles. In the past, strategies were set up for 10 years. You could see what would be coming in, in 5 years' time and in subsequent years.

Today, this is no longer the case. We have to have a year-on-year basis, and we want to work with a target picture for 2030, although we know 2030 is still 4 years in the future. We don't really know what's happening, but we have to adapt our structures when it comes to products, when it comes to technologies and also when it comes to the cost structure. And that is a continuous amount of work.

And on the one hand, we will provide stability to the company in the projects. It's important for the teams to focus on it. And regularly, we will always question the necessities. And we'll actually upturn each and every step. We need all the contributions will go through the entire process chain. And step by step, we will announce where we go in. But I can tell you what is encouraging for us right now is that everyone understood it in the company and everyone is working on it hands on to move forward the company.

Now on cash flow, I think Arno will add to this. We had demands out there to link it to a kind of recognition premium or bonus. Now with Volkswagen, we have to say it was a contribution by many brands and many regions. And in the past, we did not couple a kind of bonus to the cash flow with revenues and with expenditure. We had a different significance there. But on the company town hall meeting in Wolfsburg last week, we said that we are looking at such a participation bonus at a later point of time with the result not being clear yet. That's what we're usually doing.

We look at each and every brand, find out which brand contributed what and we'll then discuss it in the group Board of Management, and I'm quite explicit saying it here. We will not bring that in the context of the net cash flow. Net cash flow is a component that a couple of years ago, we used for group Board of Management members because it is an important key indicator, and it's important for the interest that we need to pay in the overall payment for Board members, it's [ 18 ] that is influenced by the net cash flow.

And with Board of Management remuneration of compensation, you see the focus of compensation is linked to bonus, about 80% with Group Board of Management members. And because of the results that we're having at the moment and the many parameters that we have, this bonus component alone went down significantly in a high 2-digit arena.

For all of the rest that is out there, the group Board of Management has decided to voluntarily waive 11% -- that's in the context of the reduction that we've done in collective bargaining, pay scales, but it's over proportional. And now you have to calculate it the overproportional reduction of 11% of what stays and the massive reduction of the bonus, which is part of Board compensation. I think those are the rules, and they are fair, and it is fair that the Board of Management carries and shoulders the biggest burden of the reduction.

Maybe Arno can talk on this.

So I would like to add to this because it's always the question, why did we focus so much on cash flow? Well, rightfully, [ Mr. Schweiger ] said before, we need solidity. That's our top goal. And one of the core indicators is net liquidity in automotive. That's a key indicator for how good and how solid a company is financed in a difficult environment. We want to keep it to 10%. And we're at EUR 34.5 billion, 10% is EUR 33 billion.

In summer, we were at 0. So you can calculate if 0 had come, what would have happened. We would have gone below the important key figure, which is why we had such a focus on it. The solidity, the financial solidity of Volkswagen is to be strengthened, which is why we set up a team in order to work on the content, reduce inventories, reduce CapEx, reduce development costs, and we spent less for M&A. That was the focus so that at the end, we have a balance sheet that is a solid one. That was the background for this task force.

We continue with [ Mr. Otto, ] please.

Mr. Blume, you talked about PowerCo based in Canada. Now you plan to continue your investments there. Now in that context, has the federal government, the German government asked you to invest more in Canada now because the Canada project in the car industry has also been a prerequisite for the submarine deal with ThyssenKrupp, and the Canadian government. And the second question refers to Brussels. Do you feel that there's enough support for regulation on the part of the German government? Are you talking to Brussels directly? Or you continue to use your channels with the government in Berlin?

First off, on PowerCo, we are in a trusted relationship with the Canadian government. I regularly continue this exchange with the Canadian government, and we're very happy with the progress of the battery cell project in Canada. And we currently also consider teaming up with commodity projects. Now we will see individually what makes sense for the Volkswagen Group to get involved in. There are, of course, different fields of cooperation, so Canada and Germany. Why?

Because we see that Canada is a very reliable partner for us, but we are not related or couple our activities to any other business deals. So what that means is we look at what makes sense for us for Volkswagen. When you talk about the raw materials, a commodity partnership with that country, well, possibly other European manufacturers could get involved in order to increase the relative volume.

And I think Canada has a lot to offer there. I can also always play back that ball. It is really good and constructive collaboration we have with Canada. Now as far as the Brussels regime and regulation is concerned, we also feel great support from the German government. I have traveled to China with the Federal Chancellor just recently. There's always a chance to talk and engage in that type of exchange.

And the Federal Chancellor is very much aware of the fact that we are a car-making country, and he realizes that we need pragmatic solutions for this car industry in order to safeguard its future. But at the same time, we are liaising with other countries, countries where we have a footprint and talk to politicians there in those countries. And whenever I have the opportunity to talk to them, I provide advice and consultancy and technical know-how. At the end of the day, it's the politicians who decide. And the same is true for our involvement in Brussels.

All I can say is reiterate and echo what's important to provide reliability and planning certainty for the car industry.

Now with that, there are also questions that have been answered already that you have asked about the Middle East and Brussels.

Now let's return to [ Alexander Dimmling ] and Thibaut Madelin from Les Echos. And we go from there, Alex.

A couple of questions on the Rivian joint venture for Mr. Antlitz, that we've seen here for the first time in the full year. What about the OpEx because these have been borne by Volkswagen as well. So what's the order of magnitude there? Can you say that? And can you explain how you internally spread the costs from the different brands because you're developing a joint software, but no vehicles are out there sold yet.

So how do you finance that? And with that collaboration, you have become a rather large shareholder of Rivian. Are you looking at a Board seat in the medium term, perhaps?

In Brand Group Core, there's a new governance model that you've now found where the brands don't have their own Board members on individual disciplines anymore or segments anymore. Is that something you're planning to do also with other brand groups perhaps going forward like for Progressive? Would that be possible with closer cooperation between Audi and Porsche? And if no, why not?

Okay. Let me take a shot first. You didn't talk about the general investment landscape, but about our operating business. Well, what we did is we set up a joint venture, and we included all software and coding activities, most of them from Rivian, some from Volkswagen as well and our financing injection of EUR 1 billion.

And that team now develops software, basic software that is used by both entities with some specific adjustments here and there. And then there's a system where we are much larger. In the first years, our contribution was higher, more than 50%, in other words, and Rivian has contributed less, which is a fair thing to do, given the size of the companies. Now our 50% share stays with Volkswagen.

And now you would use different mechanisms to apply those different costs or a portion of those costs to different brands in the sense that those who produce more cars have to pay a higher pro rata share depending on their volumes or planned volumes of vehicles, but there's also a per item or per unit license. So everyone who's contributing in other words, need to pay back.

Otherwise, Bentley would be paying nothing because they virtually have no volume or very little. volume. So we have an agreement with the tax authorities globally how to use that payments or contribution system within the brands or between the different brands depending on their sales volumes and how costs will be allocated accordingly.

And I have to follow up on that last question. We haven't communicated that yet. We are currently not seeking a board seat. Oliver?

Yes. We are focusing more on synergies that we want to tap together, pooling our procurement activities, develop or use modules together in similar vehicles, use the same software. If you take Scout and Rivian, for instance, these are the operational fields that we're currently engaged in. And I think we can make a contribution out of Volkswagen for Rivian.

Now Mr. Dimmling, can I continue with your second question, the brand group core. That was one of the initiatives that we've had in our plan to improve group governance, make group governance more efficient with Volkswagen and ŠKODA and CUPRA and Volkswagen Commercial Vehicles, we have identified many synergies, and they can be controlled or governed centrally.

And therefore, we streamlined that. For the Progressive brand group, synergies are not too great because we're talking about Bentley and Lamborghini, quite different business models there. Rather, we use the same platforms together. We use that Bentley uses predominantly the Porsche platforms. There's also cooperation fields between Audi and Porsche, where we share certain platform components, and this is what the synergies are focused on.

In general, group governance, we try to address group objectives together. On the 1st of April, we have the extended group management that is attached to my function because we want to show that sign of independence for the entire company to realize where the independence is. And at the same time, it supports functional programs along the transformation line, a solid consistent line as we also used in our performance-enhancing programs.

So R&D, group production, group procurement, group sales, beginning on the 1st of April will be centrally headed by myself. There's not going to be any staffing changes. So people who have been in the leadership roles will stay there, and we continue to use operational tasks.

Christian Vollmer, for instance, is in charge of VW Production; Marco Schubert in sales for Audi. And they, in addition, also perform group functions that come to my field of responsibility. All of that is used to streamline our group governance structures and more of those streamlining activities will be expected throughout the year.

So we go forward. Sebastien Ash, Financial Times is the second.

Yes, I have two questions. When you rework the transformation plan, can we understand that about the EUR 6 billion savings, you want to have more and you want to do more than the 50,000 posts that you want to reduce. And in the course of the year, you will give us more precise information. When will that be? And with a forecast, which oil price is your is the basis for your forecast?

I start with the first part, and you can maybe tell us something about the oil price. So in order to understand this transformation plan, let me tell you, it's for the entire company, for the business model of our company. And we are now in a situation, let me give you a picture where we actually have field the ground on our feet again after having come to times with lots of technical issues, and we can now do it ourselves. We are capable to act ourselves, and now we want to start the next phase.

Part of the transformation plan will, of course, be cost efficiency and improvement of cost structures. And within the cost structure, there is a smaller part what we did with the so-called future packs. They are also -- they're already part of the performance programs, but they're a fraction -- a rather small part of it because the big cost levers come from other areas, for example, from the areas that I just mentioned from the development process, from procurement, material costs play a major role and from sales, from production.

And we will now consistently stay on the path that we agreed upon in the Future Pact. And then, of course, we continue to check where do we need to go further steps, for example, with overheads.

I know Antlitz has shown the positive development that we had quite substantial improvement, and we continue working on it. But we're not hitting the target yet. And for all of the cost items, at the end, we need to do a benchmark exercise also outside of Germany, also with competitors. So that's the plan.

In the course of the year, we'll go through various packages step by step. It's various ones that we have there. And what we announced -- what I said before, whenever we have topics ready for communication, we will share it with you like we did it in the past. Maybe on the oil price, Yes, with the oil price, just roughly, it was at around $60. And we have very long-term contracts for oil and for gas. So on our procurement side for our power plants, we will not be hit immediately.

Of course, these contracts will be phased out and then subsequent contracts need to be negotiated. From today's point of view, we don't take it that this is going to be a long-term effect. And from today's point of view, we don't expect significant effects on the sales side at our customers will be coming in. But of course, we're observing the situation carefully. But cost-wise, the financial, I would say we're hedged.

Sebastien Ash, Financial Times.

I would like to come in talking about the same topic. How would a longer war conflict in the Middle East possibly influence sales numbers and the demand for cars worldwide?

And my second question, you said that Ralf Brandstatter will give some more insight into the business in China. But can you maybe indicate as to what you expect for this year? And will the new cars have an effect, the cars coming in with a new software or will things go on like last year with a lower operating result in the Chinese business?

Well, let me start with the second question. The first question is difficult. Maybe we can share it. Let me come to the second question. So this year, depending on how you calculate, we have 5 or with derivatives, 7 completely new models on the market. And in the second quarter, this will start and moves towards that and fourth quarter, electric cars, wonderful electric cars, range extenders together with SAIC.

And we expect that in the third and fourth quarter, they will lead to clearly better sales numbers in electric vehicles and will impact our market share Q3, Q4. We said -- we always said 3 or 4 years ago, 2026, fourth quarter, we should see the positive effects. Because of the launch situation or ramp-up situation, the pro rata operating result in China, we expect it to be a bit weaker than in 2025, but with a positive tendency.

And then in 2027, we will see a clearly positive leap. But we wanted to leave it up to Ralf Brandstatter to explain the details in the capital market communication. He has these wonderful cars around him. That's an overall package then.

Yes. And if I may, maybe also structurally to give you some insight into the Chinese market, the Volkswagen Group is by far the market leader with internal combustion engines with 22% market share. And we started the year with a rather strange funny situation.

The Volkswagen Group is the -- has started as the overall market leader. This has to do with the fact because the EV market in January declined. We won't be able to keep it up for the year, but this is just a little information. We are still strong there, and we'll go in this market strongly car-wise and technology-wise, we are convinced of these. We're testing them.

And 5 years ago, I would have told you it's a no-brainer and this will be moving forward in the Chinese market. We do have this massive competitive situation with more than 150 competitors. So it's no guarantee. We have come into a situation that we can be part of the game. We have wonderful products, but it's going to be quite some hard work over the next few years with the product drive that Arno Antlitz referred to.

You see it, for example, our new Audi that we have launched there was deemed -- was selected Car of the Year in China. This is the most prestigious award from the journalists. And still Audi has to be successful in competition. It's no guarantee compared to previous years where you only had 10 competitors in the market. That's the situation in China. We are confident.

But with these products, of course, you have to give them some time so that they come into the dealerships and the customers in this segment where we don't play a role are convinced of them.

Now on the Middle East itself, the market as such, when it comes to our EUR 9 million portfolio, it's not particularly big. It's a small 1-digit number. But still, it's strong in margins. And it's one further topic coming our way. And of course, it all adds up. There are issues that we thought we had dealt with like Russia, for example, where we lost more than 200,000 units. Ukraine, in particular, for the premium brands. That's a very important market, which simply is no longer there in this form. United States, then China.

Now the next thing comes in, Middle East. And customers in Middle East, of course, are rather insecure. They are uncertain. There will be a downturn. And at the end of the year, we will see what comes out. But of course, it will have an effect. But currently, it's this multitude of individual issues coming in.

And then together, they are a problem. All the more important that when it comes to the cost work, we are moving forward, influencing what we have in our hands. And we are compensating that with that. If you take the general substance of the Volkswagen Group, we have massively improved over recent years, but many things are lost because of the effects that we have on the outside.

I'm mindful of the clock, but I'll still take Stephen Wilmot from The Wall Street Journal; and the final one from [ Clare Richards ] of [indiscernible].

ust one question on autonomous driving. You were referring to the robotaxis based in Hamburg occasionally. Now my question would be, how do you see Level 2+ autonomous driving? So you seem to be lagging behind your competitors. So what's the outlook there for Audi and Porsche in terms of Level 2+?

Well, first off, robotaxis, we're quite confident. And we're making progress there. This year, we're going to grow our test operations. We'll be adding Oslo, Berlin as well, so driving in the inner cities. We have cities, actually dozens of cities who are asking us to do our test drives there to add to their existing public transport system. We're starting with Uber in Los Angeles this year.

So that would be a larger market for the 2030s, we believe. So it's a double-digit billions that is expected there, market research and consultants expect that, and that's where the market will be concentrated. We're the only European company offering that AD technology. So it is -- it bodes well for the future, I think. Generally speaking, you're right, when it comes to autonomous driving, we have been lagging behind, but we are closing that gap now with massive strides in China now with our Horizon Robotics cooperation, which is CARIAD and Horizon Robotics and the joint venture is called Horizon. We will be present in that market.

And with our European vehicles, we will be showing what can be done with Level 2++ driving in the United States by 2027. We work with Mobileye, for instance, and also Bosch to do just that. So currently, we are catching up massively so.

And we also see now the market is developing. Our tests that we're currently conducting are very promising with the products that we have out there. So all the automated assist functions and driving functions are clearly on par with the competitors, especially in the premium and luxury segment.

And the final question goes to [ Claudia Schultz. ]

There have been some negative developments in Porsche in the past year. Why did it end up with a 0 of a goodwill assessment of the brand name? And there was lower capitalization for R&D, products currently under development and more depreciation. Is your balance sheet policy more conservative? Why is the capitalization ratio so low? And finally, the other reserves have been dissolved now, EUR 5 billion, EUR 21.4 billion other reserves have been utilized and still EUR 27.6 billion were created. So EUR 6.2 billion more reserves created than the ones drawn on. Isn't that the compensation of the profit of the company?

I'm going to say a few words on Porsche, and then Arno will talk about the financial indicators that you've just quoted. And mind you, I'm not going to say too much about Porsche because they will have another annual press conference coming up, and there will be more figures presented there. And again, the general situation of Porsche is, and I mentioned it earlier, is that Porsche exports all its vehicles from China and the United States.

The Chinese luxury market has plummeted by 80% within a very short period despite the headwinds there and obviously, for a number of reasons. And that market will not swing back to normal again. Plus we have the tariff problem in the U.S. It has been a record year for Porsche on the one hand, but they lost out on the other hand because of the high tariffs. And secondly, Porsche also has a high portfolio or big portfolio of electric vehicles.

So it's one of the leading companies in the car industries with a level of electrification. But you know that margins in e-mobility is not that high. You could ask the question, why is Porsche building EVs anyway. Well, if they hadn't done it, the company would be punished harshly by the carbon emissions taxation. So that decision was right.

In other words, last year, we've taken decisions alongside the electrification strategy that will still be continued. The electric -- all-electric Cayenne will be launching soon. It's a fantastic vehicle. So we will invest also in ICE models going forward. And it's also true to say that Porsche has always used a flexible strategy. They want to have both ICEs and EVs in every segment, but not for every model.

Now the Macan is a model where our decision was taken to also produce it with an ICE and a hybrid drive. Now major restructuring is also underway because if you see if the Chinese market is shrinking, which accounts for 25% of the overall Porsche volume, just China alone. So the dealer network in China needs to be adjusted accordingly. You have to adjust your own organization. You need to bring capacities down if that happens.

So yes, a larger restructuring package is underway there. About 4,000 jobs have already been agreed to be reduced. So what that means is that additional strain plus the electrification strategy that requires us to make reserves at Porsche, also compensation payments for suppliers. All of that was accounted for within 1 year. So we want to do it within 1 full year.

And now in the new year, we want to grow again and develop Porsche forward. So if you deduct those one-off effects, Porsche continues to be one of the strongest financial player of the industry. The brand value of Porsche is very strong. So we assume that gradually Porsche will move up again. But again, with that massive headwind we are facing, it will never be in the area or the realms we've been before. And that's not only true for Porsche, but for the entire car industry. But Porsche has been particularly hit because of our high export ratio in these 2 regions. So this is why we feel it more than anything.

Okay. Well, really mindful of the clock and we're actually running out of time. But let me say that part of the special effects were related to the depreciation of Porsche goodwill that we had in our balance sheet, which was EUR 2.7 billion. So that was part of this onetime effect. It's the one that you just mentioned in your question. Yes, it was on our balance sheet, and it referred to our Porsche goodwill. Now when it comes to R&D spending and capitalization of R&D, well, that hat is related to the fact that how much in total you spend, but it's not for us to decide to choose how much we capitalize. Why? Because they are very strict rules. There is a product development process, PEP for short.

Every vehicle has to go through the product development process and beginning at one milestone with the level of product maturity, you capitalize the cost on your vehicle project, and it will show in the balance sheet. Before that, it goes to your profit and loss account. And that ends or this results in a capitalization ratio. It's not to do with the business policy.

Part of our new SSP platform that we're currently developing for our electric strategy also includes multiple activities, which happened before the milestone of the PEP that I just mentioned. So it's shown in the profit and loss account. Now as they move along in the maturity, they get capitalized and the auditors also review that they're very strictly defined processes that allow you to do that and to be on the safe side.

And when it comes to reserves, of course, there are so many things for which you create reserves, warranty costs, it's used up and then new reserves are created for restructuring, for job cuts, you created a reserve for the new alignment of your projects. And those reserves are also drawn on throughout the year. We created reserves for the factory closure of Brussels, and they are then eliminated over the years because the payments will have to be made.

Okay. With all that, thank you very much, Oliver Blume and Arno Antlitz, and thanks to all of you, dear colleagues for being here with us for asking these questions. It has been our pleasure to have you here at the Annual Media Conference of Volkswagen Group. Thank you very much. Have a great day, and see you soon. Thank you for coming.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

Ladies and gentlemen, welcome to the Volkswagen Group Investor Analyst and Media 9 Months 2025 Conference Call. I'm Vicky, Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions]

At this time, it's my pleasure to hand over to Pietro Zollino, Head of Corporate Communications. Please go ahead.

Yes. Good morning, everyone, and welcome to the Third Quarter 2025 Results Call of Volkswagen Group. This is, as usual, a call for both the media as well as investors and analysts, moderated by Rolf Woller, our Head of Treasury and Investor Relations; and myself, Pietro Zollino, Head of Corporate Communications. With us today is Arno Antlitz, CFO and COO of the Volkswagen Group. Good morning, Arno.

You should have received the press release, the interim financial report and all other related materials which were published this morning already. If you do not have them yet, you can find all documents on our Volkswagen Group website. In case of any issues, give us a call or drop us an e-mail.

Now let me hand over to my colleague, Rolf, who will give you a brief run-through of the next about 1.5 hours. Rolf, please?

Thank you, Peter, and good morning to everyone on the call. Thanks for joining us this morning. Let us have a look at our agenda. Arno Reiner will first present the key developments of the third quarter. And after that, we will take a closer look at the financial results and the full year outlook for 2025. Following the presentation, we will first host the Q&A session for the investor and the analyst community, moderated by myself. And after the session, we will have a short break before continuing with the media Q&A, which is then hosted by Pietro.

Since today's call includes forward-looking statements, the safe harbor language and other cautionary statements on this slide will govern today's presentation. I encourage you to read the disclaimer carefully as all forward-looking statements are qualified by this language and in the interest of time, as always, I will not read it out to you out.

And with that, I hand over to Arno. Arno, please go ahead.

Yes. Thank you, Rolf. Ladies and gentlemen, our 9-months results continue to tell a story with 2 sides. On the 1 hand, there's a huge success of our products, combustion engine and electric vehicles. The positive momentum in order intake in Western Europe persists and is reflecting the strong support from our customers. Our global BEV share increased to 11%. In Europe, every force electric vehicle is delivered from the Volkswagen Group. And we make further progress in implementing our strategy and in the restructuring of our business. However, operating results in Q3 was negative at minus EUR 1.3 billion. Two main reasons for that. First, the successful ramp-up of electric vehicle continues to dilute the operative margin. On top, results were significantly impacted by headwinds of EUR 5.3 billion in the third quarter, mainly by costs related to realignment of Porsche product strategy and the goodwill impairment of our stake in Porsche in the combined magnitude of EUR 4.7 billion and the increased U.S. tariffs of about EUR 800 million.

Excluding these effects, excluding this impact, we achieved a 5% margin in Q3, which we consider to be a decent performance in the current economic environment. And I really want to thank you -- say thank you to our teams worldwide for the efforts and the dedication and their commitment. However, we expect the tariffs to stay before special effects, but including tariffs, we stand at 4.5% margin after 9 months and a net cash flow of EUR 1.8 billion. These figures clearly show that we need to step up our efforts to reduce costs and increase productivity in all brands and units to strengthen the resilience of the Volkswagen Group.

With that, let us dive straight into the presentation with the key developments in the quarter before we continue with the financial results in more detail. As I said, we continue to see strong product momentum as highlighted at the IAA in Munich. The Brand Group Core presented the new Urban BB family complementing the BEV product lineup with very attractive entry-level offering from autumn 2026 onwards. Audi unveiled its concept C, which exemplifies the brand's new design philosophy and Spirit. The third quarter also saw the launches of 2 key models the all new TROC, 1 of Volkswagen Brand's bestsellers, hitting the markets with enhanced design and state-of-the-art technologies. And the new E5 Sport back from Audi's China exclusive 4-letter brand has just been launched. The Audi A5 Sportback has been well received by the market and first deliveries to customers have been made Back to the financial results and starting with volumes. Global deliveries to customers in the first 9 months increased to 6.6 million vehicles, 1% above the prior year period. Order intake in Western Europe continued its strong trajectory both on the combustion engine vehicle side and on the BEVs, reflecting the positive perception of our upgraded model portfolio by our customers. Order book in Western Europe stands at 885,000 vehicles at the end of September. This is about 4% above the level at the end of the year 2024. BEV order intake increased by 64%. We and electric vehicles account now for 25% of the total order book.

We recorded strong delivery growth of 9% in Europe in the third quarter thus accelerating the positive trends seen in the first half of the year. Year-to-date, we stand at plus 4%. South America achieved even double-digit growth in the quarter and year-to-date. In contrast, North America, recorded a decline of minus 10% in Q3. This is largely the result of trade uncertainties and the implementation of measures to mitigate effects from increased tariffs. Year-to-date, we stand at minus 8%. In China, we recorded a decline of 7% in the quarter and 4% year-to-date, in line with our planning. Despite lower BeV sales in China, global deliveries of battery electric vehicles improved by 42% year-to-date to 718,000 units. The share in group deliveries increased to 11% versus 8% 1 year ago. This was particular due to strong growth in Europe. Our BEV share in Western Europe almost doubled in the first 9 months to more than 20%.

With that, let's move on to the financial and operating performance of the Volkswagen Group in the first 9 months of 2025. On the back of rising vehicle sales, group sales revenue increased by 1% to EUR 239 million. The operating result came in at EUR 5.4 billion. This is or EUR 7.4 billion below the prior year. Accordingly, the operating return on sales stood at 2.3%. The result after 9 months include special effects in the magnitude of EUR 7.5 billion, mainly increased U.S. tariffs in the magnitude of EUR 2.1 billion, EUR 2.7 billion from goodwill impairment Porsche and EUR 2 billion related to the Porsche alignment as announced on the 19th of September.

Excluding these effects, the margin of the 9 months stands at 5.4%, which we consider a decent performance in the current environment. However, as said before, we expect the tariffs to stay, excluding the nonrecurring effects, but including costs related to the U.S. tariffs, the group operating margin would have amounted to 4.5%. And these figures clearly show that we need to intensify our cost reduction efforts must advance or pull forward part of the efficiency programs and find new ideas. Profit before tax largely followed the development of the operating results with higher income from participations and valuation effects outweighing a more negative interest result. Profit after tax declined by 61% to EUR 3.4 billion as a result of a higher tax rate, worth noting that the goodwill impairment is not tax deductible. Net cash flow in the Automotive Division totaled to EUR 1.8 billion in the first 9 months here, a significant improved cash flow from working capital management and lower investment spend more than compensated for the lower operating profit. Operating cash flow includes cash out of EUR 1.9 billion for U.S. tariffs and about EUR 1 billion related to restructuring measures. Not to forget about EUR 0.9 billion we had to spend in the second quarter for the acquisition of an additional shares in Rivian.

For the motive at liquidity in the first 9 months declined by EUR 3.4 billion compared to year-end 2024. Further to the operating cash flow, major factors for the development of the net liquidity year-to-date were dividends and interest payments to hybrid bond holders of a total EUR 4.4 billion and M&A expenditures of EUR 1.5 billion. This was partly compensated by operating cash flow. The other bucket includes negative EUR 1.2 billion effect from changes in lease liabilities.

Overall, at EUR 31 billion at the end of September, net liquidity is at a solid level.

Moving on to the performance of the divisions. Passenger cars recorded an operating result of EUR 2.2 billion in the first 9 months of 2025, 74% below prior year period. Commercial vehicles saw a decline of 46% and to EUR 1.7 billion, and this corresponds to an operative margin of 5.4%. Financial Services division strongly improved the operating result by 40% to EUR 3.1 billion. have a look on the drivers of the operating result in the passenger car segment. Volume had a positive impact of EUR 1.3 billion. Price mix was combined negative at EUR 3.0 billion. This was mainly the result of the dilutive effect from the higher BV share and unfavorable regional and brand mix effects. It's worth noting that volume price/mix in Q3 was almost a wash and in line what we guided for at the beginning of the year. Provisions related to European and U.S. emissions regulations had a negative net impact of EUR 0.4 billion after 9 months, exchange rate movements post the headwind mainly driven by negative valuation effects of balance sheet positions and foreign exchange rates. Product costs improved by EUR 1.3 billion.

Last but not least, fixed costs had a negative effect of EUR 2.5 billion. However, when excluding the impact from post alignment and the goodwill impairment of in total EUR 4.7 billion, fixed costs improved compared to the prior year period. This is also visible when taking a more detailed look at the overhead cost development.

In the first 9 months of the year, overhead costs in the Automotive division are reduced by EUR 1 billion. Accordingly, the OBD cost ratio improved by 60 basis points with positive momentum in the second and third quarter, in particular. Increases at trade and the ramp-up of new businesses like battery and Scout are more than compensated for by improvements, specifically brand group core and brand group sport luxury.

The good news to our teams worldwide is the efforts to reduce cost base and increase robustness are paying off. with more to come over the course of the following months and years. For Brand Volkswagen as well as the group in total, the stringent implementation of the performance program is key to achieve a sustainable reduction of overhead costs. As you can see on the left side of the chart program, TokonVolkswen is delivering tangible results. In the first 9 months of 2025, Volkswagen a reduced the number of active employees at its German sites by around 6,000 or 6%.

Overall, since the end of 2023, head count was reduced by approximately 11,000.

In addition, all portion carriers, in particular, pushing ahead with their respective programs. As a result, head count in Germany on group level has been reduced by a total of 7,000 in the first 9 months.

Let's now move on to the development of the brand groups, the platforms and the financial services business. Every business starts with the customer and the top line. Here, Brand Group core recorded solid levels revenue growth of 5%, respectively, year-on-year. The operating result amounted to EUR 4.7 billion. The margin stood at 4.4%, broadly in line with prior year figure despite tariffs and restructuring costs incurred totaling almost EUR 1 billion. Rate momentum at Audi is increasingly paying off. Brand Group progressive recorded sales revenue significantly above last year with a plus of 5% driven by growth in unit sales. Despite the strong top line operating result came in 26% lower year-on-year at EUR 1.6 billion, corresponding to a margin of 3.2%. Positive effects from volume growth were compensated for, in particular, by restructuring, increased U.S. tariffs and the strong increase in the B share. The underlying margin calculated based like we said before, Brand Group progressive stands at 5.7% after 9 months.

Operating results of Porsche Automotive business came in at minus EUR 0.2 billion. The loss is largely due to costs incurred related to a realignment of the product strategy totaling EUR 1.8 billion in the third quarter. In addition, headwinds resulted from a significantly lower sales volume, in particular, in China, U.S. tariffs as well as extraordinary charges recorded in the first half related to further strategic realignment measures and for battery-related activities.

Let's have a short look at the Brand Group core. Volkswagen Passenger Cars improved profitability by 30 basis points to 2.3%, and despite significant headwinds from U.S. tariffs. Skoda impressively continued their exceptional performance in a difficult market environment. First Class products on Volkswagen Group platforms combined with a competitive cost base. Whereas margin continued to stay strong at 8% at strongly improved unit sales and sales revenue, the slight decline in the margin of 30 basis points versus prior year period is a result of significantly higher BEV sales namely driven by the success of the rock.

Giving the nonoperational effects aside for a moment, the performance of the Brand Group Core and Volkswagen brand specifically was pretty solid. The increased U.S. tariffs and costs incurred for restructuring activities negatively impacted profitability. Excluding these effects, Volkswagen Passenger Cars recorded a margin of 4%, which is the target the brand has set itself in the beginning of the year.

One word of caution here again, restructuring expenses burdened the result now that help us to achieve a leaner cost structure in the future. However, we need to prepare for a scenario where tariffs are to stay as part of the operating business. And this clearly means the restructuring work must continue and we even need to speed up our measures. It continues to increase license revenue backed by increased sales volume on the 1.1% and the 1.2%. Sales revenue rose accordingly to around EUR 1 billion in the first 9 months, operating loss was reduced to EUR 1.5 billion, mainly as a result of the implementation of the nonrestructuring measures. Powerco, the ongoing ramp-up of the Saskita plant, intensifying construction works at the Valencia and the St. Thomas plant and the buildup of the organization are continuing. As a result, PowerCo recorded the significant expansion of the operating loss to EUR 1.1 billion year-to-date.

Redin recorded a decline of 9%, both in vehicle sales and sales revenue. Truck sales were weak, in particular, in Latin America and North America, sales revenue in Europe was stable. As a result of the lower sales volume increases in fixed cost and exchange rates, the operating profit declined by 46% to EUR 1.7 billion.

Our Financial Services business continued to perform well in the period under review, supported by improved contract volume, plus 5%, specifically in Europe and an expansion of the portfolio margin. In addition, the used car business benefited from still positive remarketing results while the normalization of used car prices continued in the quarter.

The credit loss ratio continues to be on a solid level. As a result, operating profit increased to a strong EUR 3.1 billion investment spend for CapEx and R&D in the Automotive division declined by EUR 2 billion to EUR 24.3 billion in the first 9 months of the year compared to the prior year period. We remain fully committed to sustainably reducing investment spend in the years to come despite significant investments required for the transformation of the portfolio and the development of new business. The initiatives to reduce complexity and actively manage our portfolio participations continue with full force as we speak.

Moving on to the performance of our joint ventures in China. The market environment remains highly competitive with pressure specifically in the premium segment. Pricing and incentive levels, however, seem to have stabilized sequentially but on a subcu 11. Unit sales were 1% lower year-on-year at 1.9 million vehicles, driven by declines in premium and BEVs. In contrast, ICE volumes held up very well. As a result, the proportionate operating result of our joint ventures in China came in at EUR 744 million in the first 3 quarters of 2025. This is about 1/3 below the prior year basis, but well in line with our target of up to EUR 1 billion for the full year.

This brings me to the full year outlook. Building on what we have achieved year-to-date, we factor in the following key assumptions for the final quarter. The current U.S. tariff situation is expected to post headwinds in terms of cost, cash out and volumes. Continued support from the model of transit, a further increase in the BV share with respective effect on price and mix, increasing contributions from the implementation of our performance programs sequentially improved financial performance of the premium brands. And at the same time, our forecast is based on the assumption that there will be no supply bottlenecks for semiconductors.

On that basis, we confirm the operating return on sales safely in the range of 2% to 3%. Given the financial performance year-to-date, there's even a chance to close the year in the upper half of the range. Investment ratio in Automotive division is expected to be in the range of 12% to 13%. We also confirm our expectations for the automotive net cash flow at around 0 with a good chance to end positive depending on the operating performance and working capital movements in the fourth quarter.

Ladies and gentlemen, we continue to make progress in the implementation of our strategy. Our product offensive is increasingly paying off as evidenced by the positive order intake and top line performance. We delivered a decent financial performance in the first 9 months before considerable headwinds from special effects. However, reported numbers matter and the operating margin stand at 2.3% after 9 months and even before nonrecurring effects, our margin amounted to only 4.5%. And this is not sustainable for our business model, in particular, in light of the ongoing volatile geopolitical situation and market environment. It and underlines that we must stay fully focused on driving our strategic initiatives, improving the cost base, the full force and continue our initiatives to reduce complexity and increase execution speed.

With that, I hand it back to Rolf.

Thank you, Arno, for that comprehensive overview of our 9-month results in the third quarter. And before we move on to the Q&A, let me provide you with the financial calendar 2026. The next group event will be the release of our full year results on March 10. I think this was for the sake of completeness because there's [indiscernible].

Let us now enter into our Q&A session, starting with our analysts and investors. [Operator Instructions] And yes, we give it a couple of seconds before we see the first question on the screen. And here we go. The first 1 is from Patrick Hummel from UBS.

Yes. I would like to ask first about the free cash flow. Obviously, Q3 was solid, working capital driven and you sound confident that it's going to be above 0 also for the full year. So I'm just wondering, looking a little bit further ahead, what's really the deal here with free cash flow. We've red stories in the media about a big gap in your cash flow planning for 2026. We talked about investments that might be required in response to the tariffs. So I know the planning round hasn't been finished, but can you just help us to get a clearer picture how we should think about the free cash generation of the business in 2026 and the investments? Are they going to be stable? Are they going to come down? Yes, any color you can give, highly appreciated.

And my second question relates to Brand Group Progressive or Audi specifically. Q3 run rate would not even closely get us to where the company wants to be on a full year basis. So either we're going to get an a very strong fourth quarter or Audi is not going to make the goals? What's your latest take here? Should we expect such a steep increase driven by the product cycle at Audi in the fourth quarter? And what happens if they don't deliver, does your group guidance already account for our delivering outside of their guidance corridor or at least at the very low end of it? And yes, how should we think about the trajectory in the coming couple of quarters at Audi?

Yes, Patrick, thanks very much for your questions. So I mean, for obvious reasons, I don't want to comment on the breast speculation for the planning round for next year. But let me put a little bit in perspective what happened. Look, when we talked about the current planning round, we saw the transformation in the industry supplier margins under pressure, competition in China and we countered that with a huge program for Volkswagen, Audi to [indiscernible], and that was basically part of the planning round last year. So -- and we decided on a viable planning round. And since then, 2 factors have changed. First, the implementation of tariffs, which is a burden of about EUR 5 billion on an annual basis. of direct tariffs to be paid, and we lost some volume due to realignment effect. And since then, the situation of in China, specifically in the premium brands has also changed, which is reflected in the new guidance of 4 months. They had like 15% to 70% guidance. Now they are 10 to 15, and so this -- we have to factor in into the new planning round, and this is where we stand. And this is what we work against and we work against countermeasures because we are fully committed to come up with a plan that makes the Volkswagen brand even robust. So this is where we stand. And in terms of free cash flow next year, obviously, it's too early to give you an indication. But we are committed to ramp down the investment. We have an investment spend of EUR 165 million, and that spend we always said it's front-loaded. So year-over-year, the investment goes now down in absolute terms, and this should increase the free cash flow and cash conversion rate. So this is still intact. And I also guided for that, the plan is EUR 165 million. And if we decided on a factory in U.S. for Audi, which we are actually looking for then we would compensate that within EUR 165 million. So this is even a chance. So that means like on an operative basis, we are further reducing R&D and CapEx and find more synergies in order to compensate for a potential factory in the U.S. So this is where we stand. And we have the consensus for next year in side, and we will give you an indication next year.

And Bank Group Progressive is -- yes, it is -- they need a strong fourth quarter. This is clear. Main factors should be product momentum. They have the full availability of the Q5, which was not the case. So far, they have a new Audi electric vehicles, [indiscernible]. And with these great cars, they should be able to meet their targets for the fourth quarter.

Thank you, Patrick, and we continue with Jose Asumendi from JP Moran.

Three questions, just very quick ones. On tariffs, can you speak about some of the mitigation measures you're taking to offset tariffs in the U.S. or any measures you've taken recently?

Second, there is strong free cash generation of Volkswagen, right, underlying, but there are exceptional one-offs. Are there any of these one-offs that we're seeing on Rivian shopping Scout? Do you see any of these one-off reversal next year when it comes to I hear you in your CapEx planning you have for '26 , but I think '25 CapEx has been hit and '24 by exceptional one-offs in terms of CapEx. Do you see some of these elements unwinding next year.

And then would love to hear about your market share in Europe where you're maintaining very strong market share despite, I think, stronger disruption from Chinese OEMs entering the European market. How do you think about your market share in the context of all the product launches you have?

Thanks for these questions. In terms of the tariffs, we -- I gave you a very broad figure up to EUR 5 billion on a full year basis. And this includes basically the direct payment we have to do. This includes some countermeasures in terms of pricing, but it also includes some measures where we lose margin. Why is that the case? Look in entry-level Chetan, entry level towers from Mexico shipped to the U.S. in the tariff regime of 27.5% is not feasible. So if you look at our sales in U.S. or North America in the first 9 months, we were originally planning to increase the sales. And now you see basically an 8% decrease. So we were like planning for increase. It's always difficult to say what are the reasons, but part of the tariff burden you also see in, let's call it, lost sales in Europe, in the U.S. And this adds up to the up to EUR 5 billion. And of course, we look into countermeasures, as I said before. The biggest countermeasure will be we have to compensate for that on the cost side. And we also said that we look at more localization, specifically on the Audi side in -- but this is too early to give you an indication.

In terms of CapEx, it's not really one-offs. It's more like a continuous ramp down to the targets we gave you in terms of R&D CapEx combined. We have the effect that we basically, in the year, now '24, '25, slightly '26. We have the double investment in terms of keeping our combustion engine cars competitive and a ramp-up of our BEVs and that effect will slightly go down. So we gave you a target of 10% for 2027, R&D CapEx combined, we're still in line with that target. And when you read in the press or when we communicate that we look into some measures to even improve the combustion engine side stronger with adding additional models, adding PV plug-in hybrids, adding a half, for example, for the U.S., we will compensate that on the ramp-up of electrification. To give you 1 example. We originally had a plan at the very beginning of our journey of EUR 15 billion CapEx for Power over 5 years. We reduced that to 12 and we introduced that to 10. And now we are significantly lower than 10 over the last 5 years because we just react in terms of adding capacity to the ramp-up of electrification in the market. So this is where we stand, and we absolutely commit the 10% target for 2027.

And in terms of market share, in Europe. We are very pleased with the current development that BEV share goes up and -- but the market share in ice holds very nicely. Now we see that, for example, in individual models. We are very pleased with the order intake of ID 7. And still, we are pleased with the performance of the Posard. And so this is where we stand. So this is a very good feedback for us and more great models to come. For example, the TRO, a very important model for brand Volkswagen and then a new small urban family. But going forward for our financial planning, we don't plan for an increase of market share. We increased we plan for a stable market in Europe on the current basis, and we plan for a stable market share, perhaps a small increase. And that, for me, gives given the current product substance more chance in the risk.

Thank you, Jose, and we continue the line with Horst Schneider from Bank of America.

I want to follow-up to Patrick's question. I know that you cannot give at this point the guidance for 2026. I think we all not expect that. But when I look also for your EBIT bridge Q3, 9 months, what we see is that the EVs continue to dilute the mix the EV sales increase, that's good. You hold up versus new market entrants, et cetera, that's great. But never say dilute the mix. For me, it's hard to imagine that this get any better because the number of back cells need to improve, of course. And then also pricing, it's constantly a little bit negative. So therefore, if I spin this sort further. It means that this burden will not go away. So in that context, can you remind us again of the cost savings that you expect for '26, '27, would be good to have this view on a net basis? Can they compensate basically these negative price mix effects, which should persist. So therefore, in a nutshell, the question is what I asked also at the IAA already is '26, maybe even '27, another year of transition? Or is the ambition clearly to increase the earnings already next year? That's number one.

The number 2 is on this Nexperia issue where you also probably do not have great visibility. And you say you are covered until next week. Next week is not a long time. So therefore, I just want to get a feeling if any production cut can be avoided or what needs to happen that the production cut can be avoided. I think it's just up to the politicians that they get this away. So what is happening in the background? Any color would be appreciated.

Yes, thanks very much for your question. As always, in the Q3 call, I start answering it with obviously, I can't give you full guidance for 2026, but I understand where you're coming from. Look, if you -- if I want to give a little bit color on the Exhibit 11, I deliberately decided to give you basically 3 margins. Now the 1 is reported margin, 2.3%. The 5.4% margin is like if you take out of the one-offs shows a little bit of our performance and shows also that although all these headwinds, we are still -- would have been still in the corridor that we gave you at the beginning of the year. And then we gave you a figure of 4.5%, which is kind of an underlying margin because it includes tariffs, but it excludes the one-offs. So -- and if I , I would say, look, this is roughly a normalized performance. It's a little bit improved because there's only 2 quarters of tariffs in, not 3, but let's assume this is basically the run rate of our current business, including tariffs. So -- and this is should be the base for like doing like then the math and the calculation for next year and from that 4.5%, I wouldn't expect too much from global markets. Europe flat U.S., perhaps a little bit under pressure. China, very small growth. I talked about the market share. So it's really on the cost and on the revenue side. And what are headwinds, yes, we ramp up further. So that will be an additional headwind. The headwind will be a little bit less proportionately because the ID 2 family, let's call it, I think we call it new urban -- new electric urban family, the margins are closer to the combustion engine margin. So they will have an LFP battery, they will be built in Spain. They will have a more integrated electrical engine. So the margin dilution effect continues, but for these cars, it's much lower because they have already 80% of the contribution margin of the combustion engine cars. But still margin dilutive I said it's a little bit then we add 1 quarter of tariffs, but let's not forget product momentum. Let's not forget the huge momentum we have on our cost programs. I think you we follow us for quite a while. And look, we were able to reduce overhead costs by EUR 1 billion despite inflation, and we are able to reduce the workforce by basically 11,000 over the last 1.5 years, and that continues. So if you -- and this is -- will continue next year. So margin losing effects performance programs and that some positive or negative smaller ones on the P&L.

Can you just tell us a number how much you want to cut the cost? I mean the -- that was announced already, but it's hard to keep the overview. Just repeat that maybe again what you expect in terms of cost savings for the next 2 years?

EUR 4 billion of the Volkswagen AG, which includes brand and component business. And if you add all the other programs, Audi to Porsche, it's a carrier is then up to EUR 6 billion until 2030.

2030. All right. And until '27, no number has been communicated, right?

No. But it's -- if you look at the major effect comes from the wage dampening the wage logic, that is EUR 1 billion this year and another EUR 500 million next year continuing. So then it's basically at the end of '26, we had EUR 1.5 billion, which should continue. And then the over -- the reduction of workforce, as you see, it's rather linear by 5,000, 2023, 5,000, 2024 -- sorry, 2024, '25 that should continue more or less linear. And the capacity reduction kicks in 2028. So this is more like a step down.

Okay. That's great. Just exterior would be great if you could answer that as well.

Look, perhaps it doesn't feel like if you read the breast, but I'm really proud of the team is working on. This team is dealed by, I don't know whether this is the right word in English. But I would say in German, this team is deal by the experience they made during the chip crisis. So we tremendous visibility between us and our suppliers. We know which semiconductors are going into which part and there's a great transparency. They also try to find additional sources, obviously. And what we can say, we are safe until end of next week. But I must also be very honest with you, we look at that topic week by week. We try to stabilized week by week. Now we are safe at the end of next week. And as we said before, the solution should be on the political side because it's not like a technical shortfall or a capacity shortfall is really induced by , obviously, political discussions. And this is where we hope that all the relevant parties sit together and find solutions.

This political discussion, it's at Europe or U.S., it has to be done by the U.S. or by Europe is your feeling?

I don't want to speculate. I'm not sure whether I have a -- what I can say is what we are doing and I would say the transparency, we have now per cap the piece is way better than we had when we started the chip crisis.

Thank you, Horst. And we move over to Tim from Deutsche Bank.

Arno, the fight for better free cash flow generation and conversion has kind of been 1 of your biggest professional CFO BW over the last few years. We know that VW only changes under tremendous pressure, usually really for the better. We've seen this multiple times with the restructuring, diesel scandal and so on forth. Do you feel like your colleague understand now a little bit better why you pick up that fight and why you want to drive free cash flow generation now that we see that cautious not generating as much anymore. And also problematic on all sorts of other items? Or do you still feel it's as difficult as it was? And I understand you don't want to give us a number, but if I give you a number and say, hey, let's say you generate a little bit of free cash flow this year actually because there's a lot of CapEx that you now have to spend in Q4 really and then you sell Evolent that would be counted as free cash flow as well, we suddenly talk about EUR 5 billion to EUR 7 billion positive next year and not the EUR 7 billion negative media speculation, right? So what would you say to that? And then secondly, when we think about restructuring and improvements of the business, we see the results already with VW brand and core group. Is this implied strong result of Audi in Q4, also partly a result of the ongoing restructuring efforts already or is that still to come next year as a support?

Yes, Tim, first and foremost, I think we had the opportunity to meet the -- not the whole board, but we had a presentation on the ER. And I think you realize that we really act as a team, and we find really good answers. I think everybody notes where we stand. And again, look, as I said before, the speculation in the press, you have to see where we stand. We had a planning round we agreed on a viable planning around. And now all of a sudden, there's an additional headwind of EUR 5 billion tariffs and additional headwind of China, and we are committed to compensate for that as well. And we look at measures. And I said it even in the interview this morning, there is -- we had program brand by brand. And these programs are really focusing not only on EBIT, but also on cash flow. The teams work much closer together in terms of production sales. If you look at our working capital of our inventory is much stronger than in the past in terms of percentage of sales, and -- but there's a second level, I would say. It's the field, we also talk long about its group synergies. And this is what I specifically highlighted. Now we have a real programs brand by brand at the next level where we could compensate and do even better and make more out of the current cash flow and R&D is even more group synergies, both in CapEx and R&D, on software on combining brands that production to brands, I make 1 example, the IDI family, all the cars from the same platform from different brands should be in future on 1 line or even or 1 factory. So this gives us the positive.

As I said before, Tim, it's really -- I cannot give you a free cash flow guidance today because we are not done so far, and that would be not professional. If I give you guidance, although we are not done. I said we have the consensus for next year in sight on cash flow. Perhaps we should leave it like this. And we know what we need to deliver as a group in order to be able to pay dividends and interest rate to shareholders. So this is where we stand. This is what we work on. And we are fully committed as a team.

And yes, hopefully, you are understanding that I cannot be more specific right now. And yes, and then Audi. Let's not forget, already restructured already. They closed down the process plant. They agreed on Auditor and they will reduce the head count by 7,000 New products are coming and the continuous effect on the closure of the Brussel plant also comes in, obviously, then in the fourth quarter and next year. Yes. So yes, part of the improved figures in Q4 and going on for next year or is also from the restructuring.

Arno, looking forward to the free cash flow guidance early next year.

Thank you, Tim. The next 1 in line would be Mike Tyndall from HSBC. Difficult to ask now an additional question on 2026 and the free cash flow. But Mike, please go ahead.

Just a couple for me. I guess, given we're talking about cash flow, I'm not going to ask about '26, but I wonder if you've got any thoughts around the dividend? We've seen a lot of one-offs this year. Some of them will be included. Some of them won't. Cash flow effectively on the guide is neutral. Any thoughts you could offer in terms of dividend would be super helpful.

And then the second one, on the tariff piece, it feels like we've seen movement in most regions with the exception of Mexico. And I just wonder if you can talk about what are you seeing and hearing on what might be happening on Mexico. And while I'm at it, there was some discussion about potentially getting credit for investment. You talked about potential Audi factory in the U.S. Is that conversation ongoing I just wonder if you could give us a bit more feel for it's EUR 5 billion, but is there a potential downside opportunity on that tariff number?

Yes, Mike, thanks for your questions. On the dividend, I think we -- I can give you 2 indications. First and foremost, I said we stick to the 30% payout ratio of at least 30% payout ratio. And what we also communicated that when we laid out the talk that we won't the noncash impairment charge of the Porsche goodwill in the magnitude of EUR 2.7 billion, we won't take as a basis when calculating the basis for the dividend for the 2025, which we propose. And this is what I can give you on the dividend, which would help you to determine where we could stand on that if you take early.

If I could -- can I just come back? Just 1 second on that, which is -- I just wonder with the planning round going on and the emphasis on generating free cash flow, how does that conflict potentially with paying money out?

I mean, look, what I said before, it's not conflicting it's actually the other way around. We have to come up with a planning around that is robust for the Volkswagen Group going forward. And robust means also being able to pay the dividends. We promised to the capital market to our shareholders. This is where it stands. So it's not conflicting. It's actually the other way around. This is part of the robustness. And we have a net liquidity of more than EUR 30 billion. We are committed on cash flow generation. The cash conversion rate should go up. So it's not conflicting. It's actually the other way around. It's part of the -- when I describe robustness. It's part of the ability to also let our shareholders participate of the success of the Volkswagen Group. And tariffs, yes, look, the EUR 5 billion, as said, up to EUR 5 billion. That's very roughly, but don't cite me, but very roughly, it's about billion, 4-point-something billion, we have to pay from the current basis on the regimes we see between 4 and 4.5 on payout. And the rest of the EUR 5 billion is basically I would say, lost margin due to some measures we took in order to mitigate the effect. So there are 2 levers to optimize the EUR 5 billion, first and foremost, additional measures like pricing and others, obviously. And on the other hand, there are some talks about look from Mexico to yes, you have 27.5%. So there are some ideas, I think to exclude some of the parts that go from Mexico to yes, which would obviously bring down the up to EUR 5 billion to a smaller number.

In terms of the factory, we don't have new information. We are still in discussions with the administration in the U.S. We still look into the topic we calculate, but I cannot share new information on the topic of a potential industrialization and localization, let's call it that way, of the Audi brand in the U.S. We don't have a new information, which I can share.

Thank you, Mike. And the next question comes from Sam Perry from Exxon.

There's a few media stories in the quarter around issues with the Rivian software rollout and carried sort of moving to be a coordinator of these technologies. Can you give any color on exactly what's going on here and whether or not that could result in any one-off charges going into next year?

And then with regards to Porsche's change in strategy back to ICE and given the shared platforms with Audi, the EUR 300 million impairment that Audi took, does that have any implications to Audi's future model rollout or investment requirements that you could share?

It was difficult to understand. I hear about the Rivian software. So what I can say, the Rivian software which we developed together in the JV for the electric vehicles is on plan. We look into the next milestone, which would be the winter test for the mall. And it's even the other way around, when you remember back then, we agreed on the software. We set up a certain model range of the first step of cars or the first tranche of cars that will get the software. For example, electric SUV for mode, for example, Scout and others, and we even included in the course of the joint venture, the IDN. So the ID 1 will be an additional model that will get the Rivian JV-based software in the MAB. So this doesn't feel like delayed. It's even like it's we increased basically the speed in terms of we added a different model, which is also a very good news for the ID 1 because it's a very capable and per car cost-effective software. This is where we stand at the Rivian.

I don't know if my second question was heard, but just on Porsche's changing strategy back to ICE, the implications for Audi?

Look, what I would propose, I think Audi has their call next week -- on next Monday. Yes, there are some implications, but minor ones in terms of financial impact, I think they had a burden of EUR 200 million. But I would really propose that next week's call is, I think, on Monday. And so here, you can discuss in detail the Audi products that achieve with [indiscernible]. Is that okay for you?

And the next question comes from Michael Punzet from DZ Bank.

Yes, Michael Punzet. I have 2 questions. First 1 is, can you explain a bit more detail what's happened with you on the financial result because we saw a huge swing year-over-year in Q3?

And second 1 is, can you give us any kind of guidance what we should expect on special items or restructuring charges and so on in Q4, please?

Yes, on the other financial results, there were some basically new valuations of, for example, convertibles, we have and, for example, yes, and other participations, which the positive. And for the fourth quarter, we don't expect major one-offs. The restructuring is going on. There's, I think, a double-digit million up to a small 3-digit million more restructuring to expect from Brand Group core, but not major ones. What I would like to remind you in terms of restructuring, just for the understanding the major effect of restructuring of our program at Volkswagen [indiscernible] is the so-called [indiscernible] retirement program. And this -- the accruals for that retirement program, we do contract by contract and person by person. So that flows in over the course of the year. And just to give you an understanding, it's a magnitude of EUR 400 million a year. This EUR 400 million is factored in our outlook and is factored in the bridge, but the true performance of our Volkswagen brand and Brand Group Core performance would even be better if you deduct that EUR 400 million per year as well, which we don't do.

Thank you, Michael. And we have the last question in today's session coming from Henning Cosman from Barclays.

Thank you for squeezing me in. I apologize in advance. I need to come back to this free cash flow thing for 2026, Arno. I just want to clarify because I think it's important appreciate the sort of color that you're striving for consensus. The clarification is just that's excluding any potential asset sales, right? Because that could, of course, be a big factor. So if you could just confirm that we're talking about underlying free cash flow from the operating business? And then the second question is, please, thanks for reminding us about the EUR 4 and EUR 6 million cost savings through to 2030. Could you just talk about whether that's growth or net of inflation that's happening in the meantime in terms of cost evolution. And also, if that's in any way double counting, for example, with the expected Audi earnings recovery, Porsche earnings recovery from a low base or is that really a number that we should basically stick on top of whatever the underlying result is currently without any netting offset?

Yes, Henning. No, the free cash flow bridge for 2026 is we talk about really operating free cash flow. Bear in mind, we have some also M&A activities planned for 2026 smaller ones. There might be some basically compensation for that smaller sales of participation. But in that free cash flow guidance we gave you the color, let's call it, color for 2026. And we said before that we look into options, strategic options for our Evolent participation, this Evolent participation if it works out, and we agree on certain options and execute on them is not included in the color I just gave you in that huge magnitude. But I don't rule out that smaller M&A activities in the plus and minus business is then included.

Perfect. That's very clear.

Yes. And the EUR 4 billion to EUR 6 billion net of inflation. Look, this is -- you can't put that on top because when brand recall said last year, we achieved -- try to achieve a target of 6.5% of aim for a target of 6.5%, 2029. Of course, the EUR 4 billion are included in that figure. And also the EUR 2 billion for the rest of the group are included in the EBIT guidance. So you can't put that on top to the guidance. So it's basically -- this is the effect of the programs I just mentioned, for example, the EUR 4 billion. net reduction is basically EUR 1.5 billion of dampening of wage increase and the rest comes from productivity and ramp down of the workforce. So this is basically included in the guidance of the brand.

Very good. That was the last 1 actually in our Q&A round. Thanks very much for all the very good discussion, and we are now continuing with a small break before we continue then with the Q&A of the media colleagues. Thank you very much and talk soon.

[Break]

Ladies and gentlemen, we will now begin the question-and-answer session for media. [Operator Instructions].

Yes. Hello, everyone. So let's give off the Q&A. We have a couple of colleagues already lined up. As I can see in the list, Sebastian [indiscernible], the first one.

Yes. Arno, I was wondering if you could just run us through those tariff numbers 1 more time. So it's EUR 2.1 billion impact in terms of the tariffs paid year-to-date, what would be -- what would that be over the full year in 2025? And if I understand, you see that rising to EUR 4 billion next year? How does that fit in within the EUR 5 billion figure? Perhaps you can bring a little clarity there for me?

And then my second sort of addition there would be that with other major OEMs, especially those with a bigger manufacturing presence in the United States, then we've seen that the recent adjustments have led to fairly significant reduction in the anticipated tariff burden. How do you evaluate that disparity between Volkswagen and those other OEMs? And how do you think it affects your competitive position in North America?

Yes, Sebastian. Thanks for that question. Look, yes, as you said, EUR 2.1 billion for 2 quarters. So very roughly, if you double that, you are roughly at 4%, perhaps slightly less. This is what the tariff we pay. And why did I say up to EUR 5 billion? Look, the EUR 5 billion we calculated at the beginning of that tariff journey. And back then, we were planning for, let's say, 10% more sales in the U.S., and now we are faced with in North America, now we are sales this 8% less. So obviously, there is a swing in our sales, partly and mostly due to tariffs and that swing is due to all the measures we talk specifically from Mexico for Mexico to yes, for cars is 27.5%. And based on that, tariff situation, some cars are just not profitable. Of course, we have our customers inside. Of course, we look on the dealers and their business. But on that basis, it's just like we took some measures also on the cars we delivered. And that leads then what I said up to EUR 5 billion and that obviously can be optimized, but this is where we stand today..

And just the full year 2025, would that be about the EUR 2.8 billion on the current run rate? What would that be?

This is a good estimate up to 3 on tariff paid.

Yes, I understand. .

Okay. As I can see, next line is Rachel Moor from Reuters. Rachel, can you hear us?

Yes, can you hear me?

Very good. Loud and clear.

I wanted to ask about the Porsche cost because we see that they were a bit less than I did last month at EUR 4.7 billion. Can you say why that was? What helped here? And I also have a question on the recent agreement between the U.S. and China on trade. Do you expect that to fix the where Earth's problem in terms of possible supply problems there?

Can you repeat the first question, please?

Yes. The first question, sorry, was on Porsche costs. They were lower than guided. What helped there? I think we had EUR 5.1 billion last month and turned out to do there was a EUR 4.7 billion hit from the strategy change.

Yes, when we communicated the talk to the capital market, we had a rough estimation of EUR 3 billion write-down in the goodwill of our Porsche participation. But obviously, we have not so much time to an in-depth discussion and calculation. And in the course of the detailed calculation, we came up with some different assumptions, specifically on the interest rate and then the precise number was then EUR 2.7 billion, but that didn't really change materially. It's just like they were like assumptions in the calculations, which we had over the course of time to make more precise. This was the difference between the EUR 2.7 billion and the EUR 3 billion. And between U.S. trade and China, obviously, a lot of current threat restrictions are based on the relation between U.S. and China, and obviously, it's very important for us that some of the topics they are solved, specifically on the Nexperia, we discussed that before. This is not physical supply shortage. It's a supply short that's based on political decisions and other decisions. And so this is also the way that topic can be solved, and we will look forward to these trade talks. But I don't have more information than you have on specific systems.

On rare air, you can't speak to that, any easing in the problems there?

It's really hard to understand your question.

Apologies. The question on rare air supply, whether the U.S. and China agreement helps in that regard.

I think it's the same topic, really. We just know what you know out of the new. So I think it's -- as Arno mentioned, it's quite too early to give any estimations, assumptions to what's the outcome of it.

So next on the list, Monica Raymunt from Blue. Monica, are you on the line?

I am indeed. Can you hear me all right?

Excellent. Go ahead.

Wonderful. I just -- I had 2 questions. One centering not necessarily only on Nexperia but also on Powerco. I'm wondering Athletes how your view of PowerCo has changed in light of what's happened with Nexperia and all of the geopolitical tussling surrounding rare earth and Chinese supply of Chinese controlled supply chains in general. Does this put additional pressure on PowerCo to ramp up production in [indiscernible] in order to maintain or to have a more secure supply of batteries. With China flexing its towers on rare earths and chips. Basically, I'm wondering how does Volkswagen feel about the security of its supply of batteries.

And then my second question would be on the dividend. You said that Volkswagen is going to stick to the minimum 30% payout ratio. I was just wondering, do you see that as sort of being the bottom of the barrel in terms of how low dividends could go? Or do you see that as being 1 of the levers that would need to be changed to keep folks signs operations sort of in the black or keep Volkswagen's operations looking all right for investors.

Yes, Monica, thank you for your 2 questions. First and foremost, the basic view on PowerCore has not changed because there were always several reasons why we embarked on that strategy to invest in our own battery capacity. First and foremost, obviously, that we have it in our own hands, we have the technology on our own hands. Then we can -- we introduced the Unified cell, which is a huge advantage in the competition. Just to remember that within 1 cell, we can offer LFP and NMC chemistry, so huge flexibility.

And the last part not least, we always said that we invested in PowerCo also to be kind of independent on the political situations, and this is why we are not only investing in the capacity, but also in upstream and downstream, specifically in upstream initiatives like securing raw materials, lithium and cobalt and other materials. So this was always a part of the strategy since it becomes even more relevant going forward. On the other hand, what we do, and I was very transparent on that, we adapt the ramp-up of PowerCo to the needs we have -- we see in the global market and also with us. So this is -- why is it before? In the light of the new expectations about the ramp-up of battery, we basically adjust the ramp-up of the PowerCo. We fully stick to the 3 sites. We have in Sakia, in Spain and in Ontario Canada. But of course, we have to adapt to market realities. And if the ramp-up of electrification, specifically now in U.S., it's not as fast as expected, we will react with postponing some of the blocks in the sites, but that has nothing to do with less commitment to the PowerCo but rather with adapting to market realities. And the dividend that -- as said, our dividend policy is a payout ratio of at least 30%. And that's obviously depending on the earnings per share we achieved and -- but the 30% as a relative measure, we have as a policy since years and we haven't changed that.

Okay. Now we're moving to our home region here in Lower Saxony. It's DPA, Frank Johannsen. Frank, can you hear us?

Yes. Yes, I can hear you. Just a short question semiconductor problems and crises. So could you give me -- give us just a short brief summary house the situation? And how to solve the problem because while I think that's quite a huge problem if you say your outlook is suppose that there will be no shortage that's quite not simply not realistic, I think. So how is the situation and how to solve the problem.

First and foremost, I must reiterate that I'm really proud of the team, how dedicated their work, the transparency. We have really much more transparency than we had back in the semiconductor crisis. We also know these are not like very complicated semiconductors. It's more like than semiconductors. And the shortage was not caused by earthquake or something like happen just like pit obviously a political discussion, and this is how it needs also to be solved. I'm really look forward to that. The parties sit together and find solutions for the German and European and basically the worldwide by the industry. Yes, it can be solved as said before, first and foremost, politically, but we cannot stand still. We have a responsibility. So we try to find alternative sources, get it from alternative sources. We achieved that so far, and we look on the issue day by day and week by week and what we can say until the end of next week, we have enough supply. And we continue to try to find alternative sources. And so the truth is week by week, we work forward. But the good news is, so far, until end of next week, we can say that we don't lose any cars on that topic.

Okay. I think this is as much as we can say honestly at the moment. Next on the list would be Christina Amann. Christina, are you on the line?

I hope you can hear me.

Excellent.

Fantastic. I have 1 question on the Audi plant. Are you still optimistic to take a position this year or do you think this will drag into next year?

Second question on the overall investment. You said that in the current planning round, it's EUR 165 billion, that's going to go down. Do you have any target you can give for the next planning round what's your goal? Where do you expect investments to go?

And the third question would be on divestments. There's the Traton stake where you've said in the past that you want to reduce the has been the sale, but is there more to come? Second question on Everland, which is going on sale. There's been reports lately. Do you have any time frame or any details on that? And the third would be Power Co, which was going to be investment ready this year. Do you have any information on where is that going? Is there any investment of any outside investor to come? Or will that be something for even later?

Yes. On the investment side, I said we have the now for the next 5 years inside. And we didn't prepare for less because I said if we decided on a potential plant for all the then we will compensate that in EUR 165 million. And so that shows we will work down the EUR 165 million over time because if we decided on the Audi plant, then that means that we will compensate that. So we prepared already for a lower figure. And we also gave a guidance of 10% R&D CapEx combined for 2027, which is also significantly lower than today, where we stand at 12% to 13% in terms of sales. Divestments we were transparent about that. There are some chances. We look at PowerCo. And we look into potential options for Evolent. But it's too early to give you a specific more information. We don't have more information on that. As soon as we make progress or decided on specific steps, we will inform you. But it's -- hopefully, you understand that it's too early to give you specifics. What I can reiterate it. We are committed on that path. We started that pass back in [indiscernible] our communication and we make progress on that, and you show. The progress is also shown by a first small step on trade, which we achieved at the beginning of the year.

Okay. So active portfolio.

And the last 1 was the Audi plant, do you still expect a decision this year?

Yes. We -- Oliver was very transparent on that. We said we have to decide on the Audi plant this year, and this is still what we are looking for.

Good. So on the list, I can see the next 1 in line would be Lazar Backovic from Handelsblatt. Lazar can you hear us?

Yes.

Very good.

Okay. So 2 topics, but for questions with that. So 2 questions. Each, first, you had to write off billions because of your adjustments at Posh regarding electric your vehicle plans. Can you, in any way, rule out that this will be repeated within the next months within other brands and that we will continue to see one-offs. That will be the first question.

Second question in this context, you are feeling strong pressure. And against this backdrop, are there any considerations to postpone your future platform, SSP, once again in order to stretch any investments? And then regarding Nexperia and chips, maybe you can put a bit color on to what exactly is missing and how long the stocks will last? Because, yes, I think there is sometimes a mixture, sometimes they say semiconductors, then or something else that will be interesting what exactly is missing?

And the last question would be, did I get that right that you do not have any assessment on the deal made between she and Trump regarding rare earths -- yes, any comment on this would help.

Yes. A lot of questions. Thank for them. What I said in the call earlier, there might be smaller one-offs here and there, but we don't expect, from today's perspective, significant one-offs going forward in the magnitude what we just communicated. And then in terms of a on investments on our future platforms. We are committed to ramp up the so-called SSP. What I said before, we look into potentially even more synergies in the group and that more synergies might mean that we combine even more cars from different brands on certain platforms in the course of the SSP and optimize that. This is specifically what we look at, both in terms of software and in terms of hardware, but this is currently what we look at, but it's more like an optimization of using the funds we have in the group and using the huge scale and the potential we have in the groups more sense. Let's not forget, we basically invented the platform strategy. And that platform sale was very successfully implemented over years in terms of R&D and now the next phase would be that we combine the cars from the same platform, even more singed also for production. When you look today, Golf is on the same platform like an Audi and other cars, like Leon and Octavia, but every brand today produces the golf by themselves, for example, uses golf or the produces DAF, Scodari. And the next I would say, wafer platform sales is producing them on the same line in the same factors, which will benefit us and has no impact in terms of the customer value is even higher in terms of differentiation in front of the customers, but we save synergies in combining these cars. Another example is -- for example, the ID family, it's combined in Spain, although there are 3 brands involved. So these are the things we look at.

In terms of chips, it's -- I think it's more than 200 small different chips, let's call them chips. So I cannot really go through them by piece. It's really very small, very, really cheap semis, not the difficult ones, and so it makes it also difficult to find alternative solutions because we are not talking about 3 or 5 or 7 different units, more like thousands. And again, the assessment of the talks between Mr. Trump and Mr. Ji, I don't have any additional information that on top of what you potentially have. So kind of comment on what we can expect there.

So at least from the outlet, we move away from Germany to the New York Times. Melissa are you on the call?

Yes, I'm here. Can you hear me?

Yes, excellent. Very good Great.

And my first question would be during the IAA, Ali Bloomer spoke very clearly about cutting a deal with the Trump administration, it or not avoiding tariffs, but given VW's big investment in the state, that there would be some way to carve something out. He said that was expected in the coming weeks. I'm just looking for some guidance on where that is at and what kind of time line you're looking at. And coming back to Nexperia, what would be the result if you do not find supplies say, for a week. What goes down first? Or where would you have to halt production?

I think I'll start with the second question first because I really -- let's not speculate. What I can say, we secured the production day by day and week by week, we are now safe until end of next week and the teams continue to work. And I don't want to really speculate where and when. For the time being, it's good news that we are safe for another week and this is how we work through that topic, find alternative solutions and final turn suppliers of semis together with our first suppliers. And I'm very pleased with the performance of the teams and the processes and the cooperation we see on the whole -- in the whole value chain.

Yes, in terms of U.S. deal, I think we have no new information on that topic. We are absolutely committed to the gas. It's 1 of the biggest and most profitable market and more localization would be 1 measure to increase our footprint there. But I kindly ask for you understand that I cannot share more detail today.

Okay. So at least outlet-wise if there was Germany stay in the U.S., even if you are not based there. Go ahead, please.

Can you hear me?

Yes. Very good. Loud and clear.

Great. Okay. Well, you've covered a lot of the points here, and I know you can't say any more on the potential Audi factory, but can you talk to me about the other options you have for reducing this EUR 5 billion tariff bill. And where are you at with price increases, for example? And what about making more parts that you use in Mexico, USMCA compliant. Just if you could talk to me about the other levers you might be able to pull in order to reduce that tariff bill. That would be great.

And just second question. On China, it sounds like most people seem to be of the view that things aren't -- the price competition isn't getting any easier there. Are you still optimistic that you can turn the business around in the way that you've laid out in your previous guidance?

Yes, in terms of measures, you already -- I think you mentioned the most important ones first and foremost, is more localization, bigger footprint in the U.S. We operate a factory there. Let's not forget that we work on the ramp-up of Scout, which is a very promising project. It's a project that's localized in South Carolina. It's in the middle of the most important American segment, the pickup Rocket SUVs. So we invest in the Scout. You talked about pricing. You talked about increasing the localization of parts in the U.S., this is exactly what we look at and what we work on to optimize the situation. And second, they are China. It's a very challenging pricing environment, although we see some, I would say, stabilization of the situation, but it's still -- it's still very challenging in terms of pricing. What makes us confident in our strategy is that we bring a lot of great new cars now on new platforms. Based on the new China main platform, we both significantly reduced the cost base, first and foremost; and second, the product substance increases, new software features, we bring LFP batteries. We bring in-containment state-of-the-art, and we are convinced that even in the current challenging pricing environment, we are much better off in terms of competitiveness with the new cars we bring in both our joint ventures and Sand also at Anand the case presented in Shanghai, also Audi. And I would say the best news in that challenging pricing 1 is that we bring very attractive and cars on a very good cost base to compete.

I'm sorry. Can I just say on price increases, I appreciate you're working on that, but -- so Porsche's made clear that it's increasing prices. What about the other brands, is it -- do you see potential to increase prices to cover the tariff costs? Or are you more cautious on the other brands? What's the overall picture?

Yes. But look, for certain less I cannot talk publicly about planned price increase. very clear. What I can say, it's a principal major level, and we look into that. This is what I can say.

Yes. So Arno talked a lot about products that I think [indiscernible] car magazine fits perfectly in here, I can see Autocar, Will, are you on the line? I think he's -- he can't hear us.

Can you hear me?

No, I can hear you. Yes. Go ahead.

I wonder if you're able to shed any light for me on the talks between Porsche and [indiscernible] about selling Porsche stake in Bugatti Rimac and what it could mean for the wider Volkswagen group?

Unfortunately, I don't want to disappoint you, but unfortunately, I must say I cannot comment on speculation. So sorry for that.

I expected the answer, that's absolutely fine.

Okay. I think that brings us to the end of this Q&A. Thank you for participating. Thank you for your excellent questions. Yes, I can only wish you have a great day and stay safe and talk to you soon. Bye.

Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.