Hello, and welcome to the Stellantis Q3 of 2021 revenues. My name is Jess, and I'll be your coordinator for today's event. For the duration of the call, your lines will be on listen only. However, there will be the opportunity to ask questions. This can be done by pressing star 1 on your telephone keypad to register your question at any time. If at any point you require assistance, please press star zero on your telephone keypad, and you will be connected to an operator. I'm now handing you over to your host, Mr. Andrea Bandinelli, Responsible for Investor Relations of Stellantis. Please, sir, go ahead. Thank you.
Thank you, Jess, and welcome to everyone joining us today as we review Stellantis' results for the Q3 of 2021. Earlier today, the presentation material used during this call, along with the related press release, was posted under the investors section of Stellantis group website. Today, our call is hosted by Richard Palmer, the group's CFO. After his presentation, Mr. Palmer will be available to answer questions from the analysts. Before we begin, I want to point out that any forward-looking statements we might make during today's call are subject to the risks and uncertainties mentioned in the safe harbor statement included on page 2 of today's presentation. As customary, the call will be governed by that language.
Now, I would like to hand the call over to Richard Palmer, CFO of Stellantis.
Thank you, Andrea. Good morning to everybody, or good afternoon, and welcome to the call. Moving on to page 3, I just want to quickly remind you of the basis of presentation of today's shipments and revenues performance. As you are, most of you are aware, we present shipments and revenues on Q1 and Q3 and full financial results at the half year and the full year. In terms of the history, obviously, Stellantis started its legal life from January 16, 2021 from the merger of PSA and FCA. For accounting purposes, there was an acquirer designated, which was PSA, and as a result, FCA's results are included in the results of Stellantis from the 1st day following the closure of the merger, which was the 17th of January, 2021.
Only the results of the continuing operations of PSA are included in the quarter to date and year to date 2020 accounting comparatives. However, to aid comparability for us to discuss performance of the business, we are presenting pro forma figures for Q3 of 2020, as well as for the year to date 2021, year to date 2020, in order to show more meaningful results for the year-over-year comparisons. The pro forma figures for both periods are presented as if the merger had occurred on January 1st, 2020. Therefore, the year to date 2021 pro forma figures include the results for FCA for the period January 1st to January 16th, 2021, thus representing a full 9 months of results for Stellantis.
The quarter to date and year to date 2020 pro forma figures include the results for both FCA and the continuing operations of PSA.
Most of my comments today for the period will be with respect to the pro forma results in the same way as we did for Q1 and H1 of this year. Moving to page 4, we see the highlights of Q3. Q3 net revenues reached EUR 32.6 billion, down 14% compared to Q3 of 2020, and consolidated shipments were down 27% to 1.1 million units. As you're all perfectly aware, the global semiconductor crisis continues to impact the global industry. During the quarter, our planned production was down around 600,000 units, equivalent to a reduction of around 30%.
The semiconductor losses were above what we had outlined at the time of our H1 results call on August the 3rd, where we indicated around 500,000 units, which at the time was based on our expectations of improvements in the situation in Southeast Asia in particular. Unfortunately, Southeast Asia continued to face constraints due to COVID-19 through the end of September, and the supply of components from a number of plants in that region impacted our supply chain and started to improve only towards the end of Q3. Our teams continue to manage the semiconductor situation on a daily basis to minimize the impact to our volumes and to our results.
Our planning visibility regarding semiconductors continues to be rather limited.
However, based on the stabilization we've seen through the end of Q3 and into October so far, we're seeing some progress with some key suppliers, and we do expect moderate improvements in supply in Q4 compared to Q3. Stellantis in the quarter, beyond the semiconductor impact, had very positive market share trends in some key markets, which is a very important indicator, clearly, of our competitiveness. In particular, in North America, Stellantis achieved encouraging commercial results with a 50 basis point sequential increase in U.S. retail share.
This was driven in part thanks to strong demand for the all-new Jeep Grand Cherokee L launched in June. In fact, Grand Cherokee was the top-selling full-size SUV in the U.S. market in the quarter with a 19% segment share.
In the EU30, we remained the market leader in the important commercial vehicles industry with a 32% share. Since the beginning of the year, our market share in large Europe for passenger cars and light commercial vehicles has increased by 30 basis points, which shows the success of our recently launched vehicles. Stellantis also continues to perform very well in South America, where it is market leader with Q3 share of 24.4%, up over 400 basis points year-over-year. In the 2 main markets, we grew share with Brazil at 35.6% share, up from 25%, and Argentina with 31% share, up over 500 basis points.
Maserati also improved sales and shipments in the quarter, thanks to the success of the recently refreshed lineup and the launch of the MC20, with shipments up 18% year-over-year and net revenues up 31%. We have a clear commitment to provide clean, safe, and affordable mobility going forward, and we are advancing on electrification strategy, which we outlined at our EV Day in July. In the last few months, we have announced several key strategic partnerships. Mercedes-Benz will join the ACC battery joint venture as an equal partner with Stellantis and TotalEnergies.
This will accelerate ACC's industrial capacity to at least 120 gigawatt-hours of capacity in Europe by 2030.
Last week, we announced that we entered into 2 MOUs with LG Energy Solution and Samsung SDI to form 2 separate battery JVs in North America, which will provide at least 63 gigawatt-hours of total capacity with start of productions in 2024 and 2025 respectively. In addition, earlier in September, we announced a definitive agreement to acquire 1st Investors Financial Services Group in the U.S. This is a significant step forward to establishing a captive Finco in the U.S. as a strong lever to support our industrial operations and further extend our financial performance. We expect this transaction to close by the end of the year. Moving to page 5, we have an overview of key product launches in the full-size SUV and large SUV segments in North America.
These 2 segments are 2 of the most profitable U.S. markets, and to date, Stellantis was present with the 2-row Grand Cherokee and the Dodge Durango, producing around 350,000 units in 2019. The launch of the Grand Cherokee L in June this year extends the Grand Cherokee coverage into the full-size 3-row segment, which is larger than the 2-row one. Q3 shipments were around 50,000 units, and as mentioned, Grand Cherokee was the top nameplate in the segment in Q3 with 19% share. In September, we started the commercial launch of the Grand Wagoneer and Wagoneer, which take us into the large SUV segment, where prior we have not been present.
Late this year, we will start the commercial launch of the all new Grand Cherokee 2-row vehicle.
This vehicle will include a PHEV version launching in early 2022. The reception from the industry press and from consumers for these new vehicles has so far been extremely positive. Moving on to page 6, we show the shipment and revenue performance for the group. Our revenues in the quarter benefited from strong net pricing actions along with improved vehicle mix in particular driven by our recent new product launches, including the Jeep, as I mentioned earlier, which partially offset the loss of volumes due to unfilled semiconductor orders. This is a testament to the continued strong consumer brand demand throughout our diverse brand portfolio, demonstrating the attractiveness of our lineup in the different regions.
As mentioned, this meant we offset about half of the negative 27% impact in volumes caused by semiconductor shortages with a 14% reduction at revenue level.
These actions can be seen in the performance of nearly all the reported segments. By region, Europe, North America, and Middle East and Africa, shipments were down due to the semiconductor shortages. South America was up due to the fact that in Q3 of 2020, COVID was still impacting our plant activity, so the comparable was still low and offsets the semiconductor loss effect. Moving to page 6, we show the walk from the Q3 of 2020 to page seven, we show the walk from the Q3 of 2020 pro forma revenue of EUR 37.7 billion to the current Q3 number of EUR 32.6 billion, down 14%. Group volumes were down 27% to 1.1 million units. Most impacted region was extended Europe, down 36%.
North America was down 29%, and MEA was down 22%, while South America was up 10%, and China and Asia-Pacific and Maserati were positive. Vehicle net price and content was again very positive with North America due to the reduced price incentives and also improved MSRPs, option loads, and version mixes. South America was also very positive. Vehicle line mix was mainly due to positive performance in North America with the Grand Cherokee L, the Wrangler 4xe, and the discontinuation of the Grand Caravan and the Journey, as well as reduced volumes of lower ticket products such as the Cherokee, the Compass, and the Renegade. Extended Europe was also positive as well as all other regions.
Negative effects were driven by USD weakening versus euro. Overall, the company continues to act decisively to manage profitability levers as we manage the scarcity of semiconductors. On page 8, we look at revenue performance by region. North America industry volumes were down around 12% year-over-year, and our sales were down around 20% to 462,000 units, due mainly to reduced levels of dealer inventories and of fleet sales resulting from semiconductor shortages. Ram was down 20% and Jeep was down 11%, offsetting partly the negative impact due to the launch of the new Grand Cherokee L. As mentioned, shipments were down 29% to 394,000 units, with all brands down as we manage mix to optimize economics and market supply.
Pricing was positive across the lineup for around 7%, and positive mix was driven by the new Grand Cherokee L, increased Wrangler 4xe, and lower volumes of lower ticket nameplates. South America had a very strong quarter on a comparable basis, partly because COVID was still impacting Q3 of 2020, but mainly due to very strong commercial performance. The industry is +4%, while Stellantis was up 25% due to the significant share gains mentioned earlier. The market share in Brazil at 36% was more than double the second place OEM and 6 of the top selling nameplates in Brazil were Stellantis, led by the Fiat Strada at number 1. Revenues were up 43% with shipments +10% and very strong net price and product mix improvements offsetting raw material and negative FX impacts of the weaker real.
The extended Europe industry was down 22% and Stellantis was down 27%. Year to date market share is at 22%, slightly up from last year. Shipments in Q3 were heavily impacted by shortages and slowed down 36%, although pricing and mix improvements supported revenues down less than 21%. Thanks to the all new Opel Mokka, Citroën C4, and Fiat 500e, which reached over 10,000 shipments in the quarter. On page nine, we start with Middle East Africa, where the industry was up 11% overall with a disparate trend in different markets. For example, Turkey down 32% compared to the Gulf countries up 46%. Similar to the prior regions, our sales were negatively impacted by vehicle shortages and were down 27%.
Impact on revenues was limited to -10%, with prices increased around 9% and also a positive product mix impact due to increased volumes of Jeep vehicles, partly offsetting reductions in other brands. China and Asia Pacific consolidated shipments were up 23%, driven by improvements in Jeep Compass and Wrangler, as well as Peugeot 2008 and 3008. Maserati shipments improved 18% with Levante and Quattroporte up, as well as the first shipments of the MC20. Sales and shipments for the quarter were aligned at 5,800 units. Revenues were up 31% with improved pricing and MC20 mix supporting the volume. Page 10 shows our inventory of new vehicles.
Dealer inventory is reduced to 231,000 units compared to June 30th, with 60% of the reduction in extended Europe and 30% in North America. Dealer inventory covers about 40 days of supplies in U.S. retail, down from 50 at end June, but the market has also slowed due to product availability in the industry. We continue to improve dealer turn times, and with some improvement in semiconductor availability in October, do not expect U.S. dealer inventory to reduce further. Group inventory increased from 110 to 148,000 units at end September, which will support some dealer restocking for Q4. Lastly, we move to page 11 for our outlook.
We are confirming our AOI margin guidance at around 10% on the basis of the H1 11.4% and the continued realization in Q3 of strong positive net price and product mix to support revenues despite slightly worse than expected semiconductor shortages. As mentioned, we are seeing production moderately improving in October, and we expect the Q4 shortage rate to be below the Q3 level, with volumes also seasonally higher sequentially. In terms of the market outlooks, we reduced the full year outlooks for North America, South America, and extended Europe by around 5% each due to the slower Q3 markets that we saw.
Overall, a strong Q3 revenue performance given semiconductor shortages and sequential improvements in shortages in the last few months indicate Q4 volume improvements versus Q3. Thank you very much, and now we can move to Q&A.
If you would like to ask a question, please press star one on your telephone keypad and please ensure your line is unmuted locally as you will be advised when to ask your question. Once again, that's star one if you would like to ask a question. The 1st question comes from the line of George Galliers from Goldman Sachs. Please go ahead. Thank you for taking my question. Richard, just to start with a rather simplistic calculation, but when I look at the average revenue per shipment in Europe, it looks like it stepped up by more than 20% versus the H1 and also versus the H2 pro forma figures for last year. Is this purely a function of the battery electric vehicle and plug-in hybrid sales increasing or other factors? And how much of this should we expect to drop through to the EBIT line? Can it lead to actually you achieving a higher margin in Europe in the H2 than the H1 ? And the second question I had was just with respect to prior guidance you've given around the revenue.
I think previously you've said that you targeted something in the EUR 150 billion-EUR 160 billion range.
In light of what you are seeing today with respect to the semiconductors in your revised market outlook, do you think it's still conceivable to be at the bottom end of that range, or would you provide some kind of update? Thank you.
Thanks, George. So in terms of the unit revenues for Europe, yeah, one of the key items is the increase in penetration of low emission vehicles. You know, our target for Europe for this year is to be at about 14% penetration, and that's a big increase year-over-year, which is driving a positive impact on revenue per unit. Secondly, frankly, in Q3, you're seeing also you know, we were impacted more in Europe than elsewhere with the semiconductor shortages. And that you know, reduces the denominator on the calculation. The fact is that we have revenues that aren't strictly linked to new vehicles.
We have parts and service, used cars, and so those revenues don't actually variabilize with volume. There's some effect also of that in Q3. There's also clearly we're working on our price positions with some success also in Europe, not to the same extent as in North America and South America so far. In part also because we have, we still have a very healthy order book in Europe, and those are customer orders. It takes longer for actions on pricing to actually come through the P&L. I think, you know, positive revenue activity and I think we're quite happy is based on H1 with profitability we're seeing in Europe.
You know, it's early days post the transaction in January, but I think the trend is good. The fact is that, you know, Q3 was rather heavily impacted by semiconductor shortages. In terms of revenue guidance, you know, yeah, based on what we saw in Q3, I think the low end of that number is probably a good result. We could be a touch lower, frankly. I think we're seeing. We saw 30% down in terms of planned production, 27% down year-over-year in Q3 shipments. Last year, we shipped about just under 2 million vehicles in Q4 on a pro forma basis. You know, we'll see how much of an improvement we get compared to the 27% or the 30% type reference.
You know, I think, you know, we're going to see a number around EUR 150 or even a little bit lower in terms of revenue. That's not going to impact significantly our ability to maintain margins because of the strong performance on mix and price. Also, frankly, the fact that we continue to work very hard on synergy realization. I'm not going to update you with a number because we're not giving you the financials today. We continue to see a positive trend in the realization of synergies. Part of that activity is also very much looking at continuing to improve our breakeven points across all regions.
You know, because the volatility we're seeing in supply related to semiconductors, you know, is not necessarily, you know, a short-term item. I think we still see this continuing for 12 months or so as hopefully things start to improve. But it's going to be sort of incremental. There's not going to be a big one-off improvement, I don't think. And then, you know, there's going to be some pressure on the markets because of, you know, macro, inflation, you know, uncertainty because of COVID. I think we need to continue to manage the business very aggressively to reduce breakeven points, which I think has been a clear focus of this management team in the past and will continue to be.
Thank you.
Thank you.
The next question comes from the line of Patrick Hummel from UBS. Please go ahead.
Thank you. Good afternoon, Richard. Patrick from UBS here. I would also have 2 questions. First one, looking at the revenue bridge, the price part was about 4% growth year-over-year. Which is a little bit less impressive compared to what we've seen elsewhere and also what you delivered in the H1 of the year. Could you just elaborate a little bit, what's going on with the price and net content part here? And how has it developed sequentially versus the H2 ? And my 2nd question is regarding the outlook for next year. I don't expect you to give a precise guidance at this point, but we heard some qualitative comments also from your competitors.
For example, Ford talked about 10% volume growth next year. I was just wondering if you can give us your current take on the supply situation. I guess demand is less of an issue. How confident do you feel that your growth next year is going to be clearly in the double-digit range?
Okay, Patrick. Thank you. On the first question, on the walk, I think it's about 5.5% to 6%, the overall improvement in pricing, the way I calculate it, which is the 1.6 over 37.7 minus the 8.7 of volume, because obviously we lost a significant amount of volume.
Yeah.
So-
Yeah.
I think, you know, quarter-over-quarter is a pretty good number. You know, we're seeing very positive pricing, particularly in the Americas, also Middle East, Africa, Asia, and sorry, India and Asia Pacific. You know, I think it continues to be very noteworthy, the ability of the business to price and hold the price. And it's a mix of, you know, MSRP improvements and reductions in incentives. I think, you know, some of those may be that's an important way also to look at it because we clearly need to look forward and see how much of this will sort of stick in terms of pricing as volumes improve.
While, you know, as I said earlier, I don't see a big, you know, cliff face type improvement coming up. I think it's going to be incremental, and we're going to see, you know, resource demand, resource supply stabilizing, sort of August, September, October. Hopefully we'll continue to see that through the rest of Q4 and then into the beginning of next year. You know, at some point as the industry restocks, there could be some, you know, reversion to a more competitive pricing environment. I think, you know, clearly between MSRPs and incentives, we need to try and make sure that we hold the pricing improvements that we've managed to put into the marketplace. I think that's really important going into 2022.
Also because of the inflation we're seeing, you know, of course more, of course, raw materials and energy and other elements of the cost equation. I think we'll give you a better idea as we get through the end of Q4 about our outlook for 2022. Given the volatility of supply, I don't think we're going to be planning 2022 based on a big increase in volume. I think our sort of mindset is continue to focus on price mix realization, continue to manage the break even points down, and be, you know, well positioned from a profitability point of view to then see the volume leverage on the business when it starts to improve.
The visibility for the moment is not great. You know, I don't really want to give you any guidance on volumes at this stage. I think it's important for us to get through Q4, and then we'll give you a better view as we close this year.
Understood. Thanks, Richard.
Thank you.
The next question comes from the line of Thomas Besson from Kepler Cheuvreux. Please go ahead.
Thank you very much. I'd like to ask a similar question to George on Latam, please, Richard. Your market share is now dominant, and your price realization have improved dramatically. Is it fair to believe that Stellantis could be back to the same level of profitability that FCA had in the past, or even higher? Or is it too early to think that it may happen already now?
Good question, Thomas. I think the leadership team in LATAM is clearly doing an outstanding job, frankly. You know, I think it would be limiting them to say that we don't think we can get up to double-digit margins in South America. I think, you know, the target for Stellantis is to be at those sorts of levels as a group, and we can't have one of the 3 or 4 big regions not making it. You know, I think we're looking at that as a target. I'm not going to give you any timescale on that. I think given the position we have, you know, the share is impressive.
Our position in Brazil and Argentina is very strong. We still need to improve our performance in the rest of South America, where we're not as present, frankly, from a commercial point of view. You know, historically the ex-FCA business was very Brazil focused. I think ex-PSA was actually better in Argentina. That sort of coming together has strengthened those 2 countries, but neither of us were particularly strong in the rest of Latin America for various reasons. I think that's a piece of the puzzle that the team is working on to improve. You know, the Jeep brand is in a really good place. It's positioned well.
It's obviously the freedom and the off-road capabilities work well in the countries in South America. We're seeing our pickup franchise doing really well with the 2 smaller pickups and also Ram now. You know, we have some good levers I think, and I think double digits that is the target for the group. I think it's a reasonable target for South America as well.
Thank you. I have a 2nd question on free cash flow, please. Clearly, your ability to produce has been capped substantially more than thought. It could continue in Q4. Could you confirm that you still aim at positive free cash flow despite this, let's say, hostile environment in terms of payables and what kind of negative impact should we anticipate from working capital?
It's clearly front of mind given the working capital impact that we get in the last 60 days of the year. You know, I think we're confirming that we expect to be cash flow positive. The visibility on semiconductors, as I said, is clearly not as good as we would like. The trend we've seen in August, September, October has shown, you know, incremental improvements in supply. You know, I think we are on a path to be at volume levels that will mean that, you know, working capital shouldn't be a reason for us not reaching the target.
You know, clearly the business is performing very well in terms of operating cash flow, excluding working capital, as we saw also in H1. I think in H1 we had between working capital and provisions, there was like EUR 5.5 billion, EUR 5.7 billion negative in H1 with EUR 1.2 billion negative in terms of free cash flow. You know, as we talked about at the time, that was EUR 4.5 billion positive excluding the impact of volume on the balance sheet. You know, the target has to be to manage the H2 , minimizing any working capital effects and then you know, using the operating cash flow ex that working capital to turn the sign to a positive in H2. I think H2 cash flow will be positive.
The working capital piece is still a little bit unclear, but I think we're on the right path to get there.
Thank you very much.
Thank you.
The next question comes from the line of Philippe Houchois from Jefferies. Please go ahead.
Well, thank you and good afternoon, Richard. Just had a question on order bank or distribution in the U.S. You know, yesterday Ford was talking about quite an increase in orders directly from end customers and growing share of their business. I think they mentioned as much as 30% for some of the products. I was just curious, as inventories remain tight, this is an opportunity maybe to change a little bit of the distribution business model. I'm just wondering if you can tell us on that front, if you're seeing a higher share of direct orders and that might ease your production a little bit.
The 2nd point was, as we talk about magnesium now almost as much as semiconductors, you, I believe you still own Teksid, very small part of the old FCA.
Is that helpful to have Teksid in your portfolio? I'm assuming you still have it, and if you can clarify that. Thank you.
Thank you, Philippe. Well, on the second question, with Teksid, in part of it, we're in the process of completing a sale.
Mm-hmm.
In mainly on the cast iron piece of the business, we do have a very small activity on magnesium. I don't think it's going to be helpful if there were to be a supply crisis, frankly. I think so far in magnesium, we haven't seen any significant impacts, and in the short term, I don't think we're expecting any. Clearly there could be impacts on price. We're seeing, obviously, we've been seeing impacts on price across raw materials now for quite a while, on aluminum. So far, no visibility of any issue in terms of supply. For North America or for U.S. distribution, I don't think. Well, let's say this.
We have a very significant book of orders from dealers trying to secure allocations because clearly, as you mentioned, dealer stock is at historical low levels. We have a lot of demand from the dealer body and also from fleet customers. I think what's very healthy is that we're turning vehicles very quickly. We are managing price mix, and that's being seen as you can look at the P&L or just at the revenue line here, you can see that impact. I don't think we've seen any significant change in the way the distribution is being managed other than it's just a lot more efficient at the moment.
Now, you know, going forward, whether we are starting to get more direct sales, I think we're getting a lot of inquiries from customers who are looking for supply. You know, clearly our first priority at the moment is our retail customers and our dealer body, because we don't want to lose customers because they're waiting for vehicles for far too long. I think, you know, some of that impact has been the reason why we saw, you know, Q3 market in the U.S. down year-over-year because there is a lack of supply into the retail channels. Nothing significant from what I'm aware of, Philippe, in terms of distribution change. Yeah.
All right. Thanks, Richard.
Thank you.
The next question comes from the line of Charles Coldicott from Redburn. Please go ahead.
Hi, guys. Thank you for taking my questions. I've got 2, please. The 1st on raw materials. You mentioned rising input costs. I think you previously said that you thought the headwind would be EUR 1.5 billion-EUR 2 billion this year. Does that still hold? And maybe would you have a comment on how we should think about 2022 for input costs? And then my 2nd question was going to be on Daimler joining ACC. I think they said that they'd invest about EUR 500 million next year and up to EUR 1 billion eventually. Can you just remind us how much Stellantis has already invested in ACC and what further investments you expect from here?
Okay, Charles. The 1st question, I think we said that H1 was about EUR 750 million, and H2 was double that in terms of year-over-year impact of raw materials. I think we're sort of sticking to that number for the moment. For the full year is like EUR 2.25 billion of raw material inflation. For 2022, you know, again, you know, there's a lot going on in terms of looking at securing pricing for 2022. You know, some of our contracts on some areas of the raw material buy have long, you know, 12-month type contracts in place. We're in the process of having some discussions with suppliers.
You know, clearly, the level of price we're seeing today is significantly higher than 12 months ago when we negotiated this year's contracts more or less. You know, I think 2022 raw material inflation is going to be significant. That's one of the reasons why, you know, we continue to focus very hard on, you know, price, mix, and break-even points to manage our way through this inflationary environment. I think we'll continue to do that. You're seeing that today in the revenue line. We'll give you a better view on 2022 in January. I don't think the number's going to be lower, frankly, year over year. The other question.
Yeah, I don't have the number in my head as to how much we've invested so far into ACC. It's low hundreds of millions type number. We will be investing in high hundreds of millions through the period the same way as Daimler will be, given that we're one-third partners with them and with TotalEnergies. Those numbers are included in our forecast of around the 30 billion number we gave on the EV Day in terms of total investments. I think the important thing with that was it's a sort of validation of the ACC capabilities.
I think a very positive indication of collaboration between 2 large European-based OEMs to work on something you know this strategic. The relationship's very good. I think we all see benefits in working together on ACC. You know the investments really start now because we've been working on you know the R&D type investments, but now we start putting more investment into the 2 plants that have already been identified. Then we're looking at a 3rd one as well for the joint venture. You know in the next 3 or 4 years the sort of it's not EUR 1 billion, but it's not far off, will be invested in the equity of the JV.
Thanks.
Thank you.
The next question comes from the line of Harald Hendrikse from Morgan Stanley. Please go ahead.
Hi, Richard. 2 questions from me also, please. 1, just magnesium. Can you just make any comments at all? Are you worried about any other supply chain problems, you know, potentially from magnesium or anything else outside of semiconductors where, you know, hopefully things will improve? If you can make any comments there. And then secondly, Volkswagen this morning highlighted that they had produced a significant number of 99% completed cars waiting for chips and stuff. Can you talk about that in Stellantis for Q3 as well, please?
Yep, sure. Well, like I said before, magnesium in the short term, we're not seeing any issues. The sourcing of aluminum and is relatively localized in our major markets. Unfortunately, China's not a major market for us at this stage. If you know, if the issues there start to contagion other markets in the medium term, we'll see, but we're not seeing anything at the moment. In terms of incomplete vehicles, yeah, I don't think we've been doing anything significant. I haven't heard that comment from VW. You know, you saw on our inventory page here that our OEM inventory was up compared to June.
Those are vehicles that are ready for shipment or in transit to sales points.
They are not incomplete. We don't have any significant number at the moment. We have been doing some of that obviously to try and manage our way through, you know, the supply process and take some level of inventory on board as we try and prioritize production and be efficient about the management of plants. Because clearly plants are coming up, they're going down, and as we do that, we need to try and level out the supply chain process. Nothing that is noteworthy enough for us to talk to you guys about, I would say.
Okay. Thank you.
Thank you.
The next question comes from the line of Horst Schneider from Bank of America. Please go ahead.
Yeah, good afternoon. Thanks for taking my questions too. The 1st one relates again to a little bit to free cash flow and then also to the restocking that you mentioned. I just want to understand what if we could get any more precise guidance on restocking in Q4, and how should we think about your inventory management in the future? That means also for 2022 and thereafter, what is the normal inventory you would expect going forward? The 2nd question that I have relates more to the upcoming events that we have. Maybe you can give us an update, then we get this software day, 10-year strategy plan, when exactly you want to communicate that.
Going back to this merger stuff, I still have got in mind that you are planning for the Comau spin off. Any news on that as well? Thank you.
Yep. Thank you, Horst. I thought the restocking was really my comment was really more about the fact that we don't expect to continue to reduce dealer stock. You can see on page 10, we were down 230,000 units from June to September. We did have a slight increase in our own stock, which should help us to avoid a further decrease in Q4. It's a number of quarters sequentially that we've been reducing the stock levels. The target is to stabilize production and basically turn the corner. Whether it be Q4, Q1 or Q2, frankly, it's not that clear.
I think it's important that, you know, that we improve our levels of production. As I said earlier, the last 3 months, we've seen some level of improvement. We're sort of moderately optimistic that we'll start to see a further improvement in Q4 and then into the beginning of next year. It will still be at a lower level than we would normally expect, because the semiconductor issue clearly isn't going away in the short term. In terms of the events, you know, as we have said, we're going to definitely take you through a business plan the beginning of next year. We haven't announced a date yet, because we are working on that. We are pretty busy. I'm looking at Andrea and Valerie here.
You know, we've been working on, you know, the JVs we announced in the recent past of completing the merger process, the organization, getting some very key people into this new team, which I think has been really positive. There's absolute focus on updating you on, you know, the holistic plan for Stellantis, and we will do that beginning of next year. We'll definitely give you a date as we get through the end of 2021. In terms of and similar for the software day, frankly, we're obviously very focused on that to try and give a clear picture of how we're, you know, putting into place the organization and sourcing the organization and the priorities.
We'll get there, but we haven't yet given a date. On Comau, you know, Comau is an interesting business, but we don't want to rush into any type of transaction. You know, the team is preparing for a spin. You know, we're still focused on that, but we need to get through the end of this year, I think, and then we'll make some decisions also through the board about what's the best timing on Comau. You know, we're not walking away from any of these commitments, but you're going to have to have a little bit of patience with us as we get the sequence of everything into place.
All right.
Thanks for reminding me, Horst.
That's good. Thank you.
The next question comes from the line of Jose Asumendi from JP Morgan. Please go ahead.
Hi, Richard. It's Jose, JP Morgan. 3 quick ones, please. When I look at your some of your North American peers, they seem to be pretty advanced when it comes to ADAS applications, some of them even talking about taking the driver out of the equation. Can you just give us an update on where you stand in terms of your collaborations and the work that you're doing, and whether it's the same priority as you know, within the house as your 2 North American competitors out there?
2nd, I was just thinking in the light of the strong price mix we're seeing in North America. Whether it's reasonable to assume that your North American margins have been holding up more or less the same level as Q3 last year, or is there anything that we should have in mind when it comes to the momentum? 3, please, can you give us any details with regards to the industrial plan in Europe, and you know, how you are managing the production capacity? Are you done with taking down capacity at the Italian plants? Are you now in a situation where you're going to be ramping up capacity of the plants? Any details with regards to that momentum in European footprint? Thank you.
Thank you, José. ADAS is clearly a big focus for us. I think post-merger, we've been converging our activities between ex-PSA, ex-FCA, and focusing on what's the best way for the new company to approach up through level 3 and then beyond. I think when we get to the appropriate time, either software or the business plan, we will definitely get you into a bit more detail of where we are. It's definitely a priority. We do have a relationship with BMW, which is very important and very positive, frankly, in the way it's proceeding. We have other relationships with companies out there working on level 4.
You know, FCA had a long relationship with Waymo, and we continue to work with them. I think we'll give you a better view when the more competent people in the organization can explain to you where we are, frankly. On price mix and North America margins, I think the North America team is doing a very good job, commercially speaking, in North America. I think we saw our margins in H1, you know, at 16%, which was an outstanding number. I was looking at our peers and where they are, and we clearly are operating at a higher level. I think, you know, the team has continued to do a good job.
We'll clearly give you a better view in a few months' time as to how good that job is. You know, I don't see any significant deterioration in the performance of the business from a price or mix point of view. You know, we also have launched some important vehicles, as we mentioned earlier, yeah? The 3-row Grand Cherokee, the Grand Cherokee L, which you know goes into the segment of the full-size SUV, which we didn't really have a full entry into before, partly because we didn't have the capacity in JNAP to make enough cars between the Grand Cherokee 2-row and the Durango 3-row.
The Durango 3-row was always, sort of, you know, the victim of being constrained because the Grand Cherokee 2-row was so successful. Now with the new Detroit Assembly Complex that we put together for Grand Cherokee 2-row and 3-row, we have more capacity. We continue to make the Durango as well. I think, you know, that's going to be a positive for us in terms of profit contribution and mix in the back end of this year and going into 2022, as will the Wagoneer and the Grand Wagoneer, which, you know, is in one of the highest segments in terms of profitability in the U.S. market. We didn't have anything there before. I think the segment's about 500,000 vehicles.
You know, Jeep has to go in there and compete with the triplets from GM and the Lincoln Navigator, et cetera, which are great vehicles, but I think we have a great brand and a great couple of vehicles. That's also going to be accretive to our margins. I think North America, the business is in a good place, and price mix continues to be positive. On the European production, on the European footprint, I think we're doing a very good job of maximizing the efficiencies in the different plants.
There's clearly still a lot of work going on, as we work through our business planning exercise, to make sure we are as efficient as possible going forward, vis-à-vis the installations that we have. You know, I don't think there's anything that's behind schedule. You know, we'll give you a better view of how we think about volumes going forward and the focus of the different classes of plants and platforms when we get into the business planning discussion at the beginning of next year.
Excellent. Thank you. That's it.
Okay. Thank you.
The next question comes from the line of Stephen Reitman from Société Générale. Please go ahead.
Yes. Good afternoon, Richard. Thank you. I mean, you partially answered my question with your discussions about the Grand Wagoneer and the Grand Cherokee. I mean, basically the margin you saw in the H1 , the 16.1% North America really was not affected by these models, which as you said, have commercialized more in the H2 and obviously.
Being held up a little bit by some of the issues. Could you talk about the order intake on these vehicles? In particular, when you look at the Grand Wagoneer, how much are we looking at the really high-end versions on that vehicle? Thank you.
Thank you, Stephen. Well, I mean, we're very focused on the Grand Wagoneer at the moment, which is the higher end version of the 2. Clearly, as is often the case with a newly launched vehicle, the mix is very positive at the beginning. You know, we've only just started the commercial launch, so it's a little bit early to give you numbers on order intake. Safe to say that, you know, I think the write-ups I've seen regarding the overall content and presentation of the vehicle, both external, internal, and the contenting have been extremely positive.
I think, you know, the cars are striking and, you know, the Jeep brand really absolutely needed to have an entry in that segment, given, you know, how successful it is in the full-size segment with the Grand Cherokee. I'm sorry, but I'm not going to give you numbers on order intake because I think it's early days. We're definitely gonna be sold out given that, you know, the demand is very high and the vehicle reception has been extremely positive. The mix will be very positive going into Q4 as we start shipping vehicles.
Thank you. On turning to Europe, can we confirm also that in 2022 we're going to see the 1st ex-FCA brands being produced on ex-PSA platforms already? I think it's not in Tychy.
Yeah, I think towards the end of 2022, beginning of 2023. Yeah. That's right.
Thank you very much.
Yeah. The B segment. Thank you, Stephen.
The next question comes from the line of Martino De Ambroggi from Equita. Please go ahead.
Thank you. Good morning. Good afternoon, everybody. The 1st is just a couple of quick follow-ups. The first is on the positive free cash flow for the full year. Are you moving the CapEx assumption or is always the same? The second on the last question concerning the order intake. You mentioned during the initial remarks that the order backlog is strong. I clearly understand you do not provide orders for the new models. Could you provide any figure on the overall backlog or trend, as you prefer? Hello?
Sorry, I was talking to myself on mute. The CapEx numbers are the guidance we gave still stands, so nothing new there. In terms of your second question, I don't really want to give numbers on order backlog. I think it's safe to say that we have significant order backlog on the dealer side in North America and on the retail customer side in Europe. There's definitely not a problem of demand. The problem for us clearly is to meet demand and continue to incrementally improve our production levels as I've talked about a few times on this call. I won't repeat myself again, but I think that's clearly the focus.
The demand function for our vehicles in all of the regions really is very good. You know, Middle East, Africa, India, Asia Pacific and China are also getting hurt because we just don't have enough vehicles to get into to satisfy demand in all of those regions. Really the focus is to from the industrial machine, and obviously it's a big focus for the whole organization, is to continue to improve our production levels. I think, you know, we've talked about that already.
Yeah, very clear. On the
Okay.
On the Finco, could you share with us what is your strategy following the recent acquisition?
Well, I mean, I was looking at GM and Ford's numbers for the quarter. My strategy is to look like them in terms of the amount of money they make, in terms of contribution to their overall profitability from their FinCOs and cash. You know, I just think we've had a very strong commercial business in the U.S. that from an industrial point of view is making very good margins and has a great position. But we've been creating a very profitable annuity for our finance providers so far.
We haven't really participated in any way in the revenue share or the profitability of that activity because, you know, we've had partners and they've been very collaborative and work very well with us, but there's not been a significant share in the economics for us for various reasons. You know, I think it's really important for the business to have a finco. It's clearly a big source of profitability in the medium term. It's gonna take us a few years to get the activity up to speed and the portfolio to grow. You know, a good reference, I think there is what GM did from 2010 onwards when they purchased AmeriCredit, I think, at the time, and built their finco.
You know, 5 or 6 years, they had a very strong portfolio with a very profitable business, and we need to do the same and faster if possible. I think, you know, it's a big strategic lever also for customer loyalty and, you know, communication with customers and also as you go through into maybe a more of a mobility provision and service provision business model compared to, you know, the more classic purchasing of the asset, then there's also an argument for that being an important part of the services that the car companies provide. I think it's strategically a very good fit.
I think the type of company we bought is perfect because we didn't have to pay a huge premium for a book of business that wasn't necessarily relevant to what a captive Finco looks like for a car company and maybe would have been more focused on subprime and higher HY type paper, which is clearly a great business model for a finance company. We're interested in providing financing across the whole range of customers, including prime and lease and everything else. That's what we'll do with the company we bought, which has a good set of systems, a good management team, and gives us a good foundation to build the business. Okay. Thank you.
That is all the time we have for questions today. I will now hand the call back to your host for some closing remarks.
Okay. Thank you, everybody, for joining the call today and, for the interesting questions, and have a great day. Take care.
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