Good morning. This is the conference operator. Welcome, and thank you for joining the Forvia 2026 third quarter sales conference call and webcast. As a reminder, all participants are in listen-only mode, and after the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Martin Fischer, CEO of Forvia. Please go ahead, sir.
Yeah, thank you very much. Good morning, ladies and gentlemen, and thank you for joining us today for our Q3 2026 sales call. As usual, I am presenting together with our CFO, Olivier Durand. For the agenda today, I will start by sharing our third quarter highlights. Olivier will walk you through the details of our Q3 sales. In the end, I will wrap up with our outlook for the full year 2026 before going into Q&A. Here we come with the three strategic priority. The third quarter demonstrated further progress on all of them when it comes to implementing the IGNITE roadmap. Despite a market environment that remained challenging, we continue to deliver. Therefore, first of all, best-in-class performance. In the third quarter, we returned to sales outperformance.
We delivered around 100 basis points of growth above the market. At the same time, we maintained disciplined execution and rigorous cost control in an inflationary environment. Second, our business transformation. With all regulatory approvals now being obtained, we are taking the final steps towards the closing of the Interiors transaction in the fourth quarter. We are also actively rolling out the Lighting Transformation Plan. Third, I would like to talk about culture. We continue to empower our teams, notably in China, so that decisions are taken close to the market, and we enhance our competitiveness over there. Globally speaking, we are embedding AI at the heart of our transformation, and we accelerate its responsible deployment across the organization. This commitment is reflected in the appointment of Raphaël Viard to the executive committee. Raphaël is reporting directly to me as Chief Digital and Artificial Intelligence Officer.
Having reached all those milestones in Q3, I am happy to confirm our full year 2026 guidance. Beyond the positive Q3 sales performance, the Forvia businesses continue to build momentum across the portfolio through innovation, new partnerships, diversification, and of course, commercial wins. When we start with our Growth cluster, which means Electronics and Seating, it is clear that Electronics secured significant awards with two international OEMs in Europe and North America for our integrated EnergyCore solutions. EnergyCore enables OEMs to simplify their electric vehicles and hybrid architecture by integrating battery management and power electronic functions into a single system. It reduces cost, weight, and complexity while improving safety and efficiency. We are also happy to report major series orders from two leading Chinese OEMs for our latest generation of 77 GHz radar. This very well highlights the competitiveness and quality of our technology in China.
In Seating, we made further progress on diversification. In India, we signed a joint venture with ANAND Group to accelerate our expansion. In commercial vehicles, our presence at the IAA Transportation in Hanover confirmed strong customer interest in our offering. When we look into our Value cluster, also there, we continue to strengthen our position. In Clean Mobility, we secured further growth in North America, where the market is supportive. We booked a new mid-three-digit million euro award for a new pickup truck from a major U.S. automaker. Lifecycle Solutions broadened its aftermarket offering, notably through the launch of brake pads for commercial vehicles. This expansion creates new growth avenues across trucks, buses, and trailers. Let me now focus on China, where the automotive market is undergoing a profound transformation.
Our first priority is to align our customer exposure with the evolving structure of the market. Chinese OEMs now account for around three-quarters of domestic production. While they represent approximately half of our sales in China today, they already account for close to 80% of awards won in the last 24 months. This order intake also reflects a much broader customer diversification than in the past, with our biggest customer representing less than 20% of the total. We have significant new wins with customers such as Chery, Leapmotor, Geely, and a new tech EV player. This demonstrates that we are moving rapidly in the right direction and progressively strengthen our position with the leading Chinese players. Just as importantly, we are adapting our organization to a market that is moving faster than ever. More than 1,000 models were launched in China in 2025 alone.
This requires shorter development cycles and more standardized solutions. That is why we are empowering our local teams and increase the use of modular product platforms across multiple programs and customers. This allows us to move faster, remain competitive, and better serve our customers. In general, we continue to deepen our relationships with Chinese OEMs through partnerships, cooperation agreements, and joint ventures. Our expanded partnership with Great Wall Motor is a good example for that. It follows a similar agreement signed with Chery last year, and these partnerships create long-term growth opportunities for Forvia. Last but not least, we are supporting these Chinese customers as they expand internationally. We started to accompany BYD in Thailand already in 2024 and will start production in Hungary in the coming months. We have already secured new opportunities with Leapmotor and Chery in Spain, and we are also exploring further developments in Brazil.
Together, these three priorities allow us to capture the continued transformation of the Chinese market while leveraging China's speed, competitiveness, and innovation capabilities across the group. It is important to state that we continue to execute with discipline in an environment that is characterized by soft global volumes, regional volatility, and continued inflationary pressure. First, our self-help measures remain firmly on track. We continue to deliver EU-FORWARD, and the implementation of SIMPLIFY is progressing as planned. Second, recovering cost inflation is becoming increasingly important as inflationary pressure gains momentum. We are actively mitigating these headwinds through supply chain optimization, raw material pass-through mechanisms, and ongoing customer discussions. We are particularly focused on securing appropriate compensation for memory and PCB-related costs. Third point, we are maintaining a high degree of cost flexibility. In China, we continue to adapt rapidly to changes in customer demand.
In Europe, we are flexing production in response to customer shutdowns when needed. Finally, the Lighting Transformation Plan is actively being rolled out. We deploy actions to be more competitive in the volume segment through product optimization. We also launched key initiatives to improve R&D efficiency and industrial performance. In summary, I can say our teams are fully mobilized to deliver performance in the current market environment. Last but not least, I would like to talk about the upcoming closing of the Interiors divestiture. Strategically, it will sharpen our focus on higher growth technologies, and it will streamline our portfolio. This is fully in line with the IGNITE roadmap. Financially, it will strengthen our balance sheet and mark another important step in our deleveraging journey. Following the closing, net debt is expected to fall below EUR 4.5 billion compared with EUR 6 billion at the end of 2025.
Leverage is expected to move towards 1.5x. The transaction will also materially reduce our near-term refinancing requirements, with 2027 maturities largely addressed. Overall, the transaction will strengthen our financial structure and give us more flexibility to deliver our 2028 ambitions. It will also prepare us for our next strategic phase, which is Lead & Grow. I will now hand over to Olivier, who will take you through our third quarter sales performance in greater detail. Olivier.
Thank you, Martin, and good morning, everyone. Group sales reached EUR 5 billion and 79 million in the third quarter, representing a reported growth of 1%. On an organic basis, sales are broadly stable at minus 0.6%, despite a 1.6% decrease in global automotive production this quarter. This represents an outperformance of approximately 100 basis points. It marks a notable improvement in our sales momentum when we compare with the underperformance we faced in H1. Currency movements have turned positive, contributing 1.6% to reported growth, mainly reflecting the strengthening of the RMB against the euro. Currency effects are expected to remain a tailwind in the fourth quarter. After nine months, sales reached EUR 15.6 billion on a reported basis and EUR 15.8 billion at constant currencies.
If I turn now to the Growth cluster, sales amounted to EUR 2 billion 637 million, corresponding to an organic decline of 1% and a slight outperformance versus production volumes. Electronics continue to deliver strong growth with an organic evolution of 7%. This performance was driven by sustained demand for radar technologies and energy management solutions, particularly in Europe, where electrification is accelerating. Seating recorded an organic decline of 4.4%. The underlying trend improved comparatively to the first half, supported by solid growth in Europe and gradual progress in China. The overall picture for the cluster is therefore encouraging, Electronics being a strong growth driver for the group, while Seating is progressively moving towards a more favorable sales trajectory. If I move now to the Value cluster, sales reached EUR 2 billion 442 million and were broadly stable organically, outperforming the global automotive production.
Clarion delivered another strong quarter with organic growth of 22%, supported by continued commercial success with Japanese OEMs. Lifecycle Solutions grew by 3.8%, benefiting from robust activity in the special original equipment business and continued growth in the aftermarket side. Clean Mobility declined by 3%. The strong growth in North America has partly offset the impact of rapid electrification in China, while the European business has proved resilient thanks to market share gains. Lighting declined by 7.8%, broadly in line with the expected trajectory towards stabilization in 2027. Overall, the value cluster demonstrated good resilience, with the strengths of Clarion and Lifecycle Solutions largely offsetting the decline in Lighting. Let me turn now to our regional sales performance. The picture is broadly positive, with strong market outperformance across most key regions. In Europe, organic sales grew by 4%, outperforming automotive production by 4 percentage points.
This performance was mainly supported by Electronics and Seating. In the Americas, we continue to outperform the market in both North and South America. The 5-point outperformance in North America was largely driven by Clean Mobility. In Asia, excluding China, which now represents 8% of our turnover, organic sales increased by 14%. It represents a 7 percentage points of outperformance, driven in particular by Clarion. In China, we saw a gradual improvement in Q3, supported by BYD recovery and our increasing customer diversification. Our underperformance, therefore, narrowed to 11 percentage points from 14 points that we faced in H1. Overall, the quarter showed better momentum with encouraging progress across several areas. Martin, I let you do the outlook.
Yeah. Thank you, Olivier. Let's look forward. The market environment is expected to remain challenging in the fourth quarter. We expect the global automotive production to decline by 4.2% year- on- year, with lower production in North America, Europe, and most significantly, China. Supply chains are also expected to remain under pressure, and persistent cost inflation and stoppages at some of our customers in Europe need to be expected. Against this backdrop, our priorities are clear and fully focused on execution. First, we will maintain disciplined cost and cash management. This includes strict control of fixed costs, continued cost flexibility, and the active recovery of inflation. Second, we are preparing to close the Interiors transaction in the fourth quarter, and this will be a decisive step in strengthening our balance sheet, reducing debt, and sharpening our strategic focus.
With that, we put Forvia in a stronger position for 2027. Third, we intend to sustain the improved sales momentum demonstrated in the third quarter. It will be supported by Electronics and the regions Europe and North America. While we remain vigilant given the market risks ahead, the actions required to deliver our objectives are clearly identified and executed with great discipline. We therefore confirm our full year 2026 guidance. We expect sales between EUR 20 billion and EUR 21 billion at constant exchange rate. Operating margin will be between 6% and 6.5%. We reach net cash flow of at least 3%, and the leverage ratio is expected at 1.5x. Thank you very much for having listened this morning, and now we are happy to take your questions.
Thank you. This is the conference operator. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone who has a question may press star and one at this time. First question is from Michael Foundoukidis, ODDO BHF.
Yes. Hi. Good morning. Thank you for taking my question. Michael Foundoukidis, ODDO BHF. Three questions on my side. First one maybe on inflation, and especially on memory and PCB inflation. How much of the additional cost you can recover from your customers, and is there any timing lag into 2027 on that topic? Second question on cash. Do you see the above 3% net cash flow target as a minimum, and are you still comfortable as you were in H1 being clearly above that level despite the H2 CapEx catch-up and the lower production environment? Maybe a third one on disposals. Once Interiors is closed and leverage reaches around 1.5x, should we expect further portfolio actions? We saw in the press some discussions on Clarion, or do you think that the focus shifts mainly to organic deleveraging? Thank you.
Yeah, good morning, Michael. Thanks for first three good questions. Let me talk a little bit about inflation. The effect that we have seen this year is progressive in nature. We saw first the implications in H1, and now the speed of price increases has evolved in H2, and you name it, right? It's PCBs, it's memories at the center of that. Our objective is to recover, to compensate, to mitigate these effects. We do that on both fronts, on the supplier front, where we have dual sourcings established, where we switch product as we see fit for that. On the other hand, the remaining effects we carry over into negotiations with our customers. These negotiations are, due to the progressive nature right now, in full spin, but our objective is to close those topics in time for 2026.
Will there be small spillovers? Could happen. Overall, we expect major recovery, and that's also why we are in the position to confirm our guidance, because we don't see the effect out of it. Olivier, I will kick over to you for the cash question.
Yeah, so you are right. The cash guidance is to be at least at 3%. I can only confirm that 3% is a minimum, and this is including, in fact, investment necessary where it matters in terms of the development of the company. I confirm this minimum objective of 3%.
Good. Then, Michael, I take question number three concerning further portfolio actions. As we speak, the full attention goes to closing the Interiors transaction, and that we will do in Q4. How are we going to move from here? We guided a leverage ratio of 1.2x in 2028. When we are going to finish the year at 1.5x, and we have two years of time to the next guidance point, this allows us to reach that deleveraging through organic cash generation. When you watch the last couple of semesters, you have the rate, and we will keep generating the same good high-quality cash. We will reach 1.2x in 2028 without further disposals. That is how we approach it. We are always actively screening our portfolio and consider, obviously, choices, but nothing is under pressure, and right now, there is nothing to communicate on anything concrete.
Okay. Thank you, both of you.
Next question is from Stephen Benhamou, Bank of America.
Yes. Good morning. Thanks for taking my questions. I have two questions, please. The first one is on China. The underperformance in China narrowed this quarter. When do you expect China to go back to growth and to outperform? This is my first question. Second question is regarding the Interiors disposal. Now you have the main regulatory approvals for the Interiors sales. The closing is expected in Q4. Do you have a more precise figure to communicate regarding this above EUR 1 billion? What could still move it, such as the closing date or price adjustments? Thank you.
Okay. Morning, Steve. Good questions. In terms of China, let me start there. Yes, we have limited or we have further worked down our underperformance in Q3. When you look at the numbers again, in H1, we were about 14% behind the market. In Q3, it is now 11%. This was partially related to the BYD recovery. At the same time, we experienced a negative vehicle platform mix with BYD, so we are on some of the platforms that do not sell as well. Yes, we benefit from the BYD recovery, but not to the full extent right now. Also, the other factor in our performance in China is the international OEMs. As I mentioned, we still have about 50% share with those, and they shrink pretty fast in the market. We saw minus 14% IOEM shrinkage in H1, and we saw - 29%.
That is holding us back right now. At the same time, we are launching new programs, and we diversify our customer base. I think I referred to Chery, Geely, Leap, new tech player. We will, over time, set out for eliminating the underperformance and getting back first on track with the market, and then go back to outperformance. The exact timing and that kind of volatile Chinese market, I would refrain from giving that outlook, because just the consumer behaviors, the vehicle platform mixes are pretty volatile. At the same time, our structural measures, broader portfolio of customers, the acquisition of decent orders, that is going to help in the next semesters to get us back on track. As far as the Interiors are concerned, we fully confirm that EUR 1 million and-
EUR 1 billion.
1 billion. Did I say million? I meant Okay, so EUR 1 billion of net debt reduction and EUR 1.4 billion in gross debt. Now that we have proceeded quite well in the separation process, we don't see risks to these figures. Olivier, I don't know if you want to give any other insight.
No, we will give the final number at the closing. Let me remind you that this deal is firm. There is no clause of adjustment related to activity, inflation, or any other item. We will do the closing in Q4, and we will be able to communicate to you the actual number, as well as also what is the format of the new company post this transaction right after.
Thanks. Very clear.
Next question is from Thomas Besson, Kepler Cheuvreux.
Thank you very much. Good morning. It's Thomas at Kepler Cheuvreux. I have three questions as well, please. First, can you talk about your trading activity so far in Q4 compared with the assumptions of S&P Global Mobility, and talk about eventually some of your customers that may have been volatile in their production patterns in October? To comment a bit about what you assume in Q4 in terms of your customer and regional mix. It's quite close to the previous question, but I think it's really an important question for your performance. Third, you're still comfortable with the 3%+ net cash flow, which is great news. Can you talk about CapEx and restructuring in Q4, and eventually say a few words about that in 2027? You move in Q3, which is great, back to organic growth.
Can you continue to crush your CapEx, and can you continue to live with sequentially lower restructuring? Or do you think that there will be an inflection, and at one point we'll see at least CapEx going up again? Or you found a new way of spending which is a lot more efficient? Thank you.
Yeah. Thank you, Thomas. Good morning. So for our Q4 assumptions, in general, we expect a similar trend as in Q3. We expect to outperform again in Europe, North America, and Asia without China. On Stephen's questions, I discussed already what we see in terms of catching up in China step by step, but certainly not to outperformance yet. In general, also what we see in the market is higher volatility, in particular in Europe, to an extent in North America, with some shorter-term plant shutdowns that you already saw announcements for. We watch that very carefully, and all attention goes to flexing our capacity accordingly when it happens. Overall, though, the fiscal year guidance remains intact, and again, I refer to a similar trend as in Q3.
When it comes to CapEx and restructuring and the cash flow goals in Q4 and beyond, also into the next year, before handing over to some details with Olivier, let me state that we guided CapEx and capitalized R&D well below 7%, and that is a rate we are going to maintain, also in the light of picking up order intake and sales growth. Olivier, you want to give it some more color probably.
You are asking a bit of perspective on 2027. What I can tell you is that the restructuring is expected to be a bit lower than this year from a cash perspective. Remember that the peak in P&L is passed on the back of the big restructuring that we have largely done in Europe. Regarding investments, we have this framework of investment, as mentioned by Martin Fischer, and this is on the back of working on the costing, on the standardization, but also working on the portfolio management. The fact that we have two clusters is in fact defining our investment policy, meaning that in fact we privilege investment for Electronics and Seating, and the businesses that are in the Value cluster are in a different frame of investment, which is allowing to be inside this framework while doing the investment for the growth that is coming.
Thank you both.
Next question is from José Asumendi, JP Morgan.
Good morning. Thank you. Just a couple of questions, please. Can you comment on, again, going back to the topic of outperformance to global production in the fourth quarter, the momentum there, and do you see that also setting a trend into 2027? Second, can you comment on the trends you are seeing across Seating in terms of growth, and provide a bit more details with regards to what you are seeing there year to date? Finally, in order to meet the lower end of the margin range guidance, Martin, do you think you need to set incremental measures on the pricing front, on the cost front, to hit that lower end of the margin range? Or are you comfortable with the actions you have set so far? Thank you.
Yeah. Morning, José. Thanks for three good questions once more. As far as the outperformance on the sales is confirmed, as I said, Q4 pretty much follows the Q3 trend. Also, when we look a little bit longer term with what we see right now in the marketplace, plus our order intake, we are very happy to confirm our guidance also for 2028. That's the longer-term outlook. Because the order intake as well, Electronics continues to push out the technology, as I referred to. Seating has been coming back very well. That's your second question as well. We see good bookings both for our metal parts and mechanisms, as well as full seat assembly. The Value cluster we refer to as well, Clean Mobility, works very well, particularly these days with all the new engines and platforms coming up in North America.
As every year, the 2027 more detailed guidance we will be providing through our February call. But so far, again, the momentum is there, both from our market mix and the order intake. In terms of measures for the guidance, how do we get through the rest of the year? Well, with utmost attention. We are in a good position that our general cost programs keep delivering. EU-FORWARD is progressing, as well as SIMPLIFY. For the rest, I mean, for my one and a half years plus now with the company, we have driven the business really strictly disciplined with always a good eye of only spending what's needed. Of course, that will continue also for the rest of the year. Given both the specific programs and the disciplined leadership approach we take, we are confident and confirming the guidance exactly for that reason.
Thanks so much. Thank you.
Next question is from Christoph Laskawi, Deutsche Bank.
Good morning. Thank you for taking my questions. The first one is actually a follow-up towards José, just was asking. I think he was asking if you confirm the guidance on the low end, on the margin side at least. When we think about what Hella delivered on Friday, clearly, there will be an ambitious Q4 to get to their low end. You already printed 6% in H1. Could you potentially run us through what could actually lead to a better H2 than H1? Or indeed, we expect the margin to be basically flat, half over half? Sorry to come back to inflation, as you were saying, this is accelerating, at least for certain items.
At the same time, we're hearing from some of your peers that pass-throughs with OEMs get much more difficult, and more recently, OEMs also commented that compensation for cost or also for unexpected volume losses will no longer be done from the OEM side. The negotiations are probably way more difficult. Could you comment on that, how the negotiations are trending versus, say, a year ago? Lastly, just giving us a rough share of your bill of materials or your sourcing, how much of that is indexed? How much of that do you need to pass on through negotiations? Thank you.
Yeah. Christoph, good morning. Thank you for your questions. As far as the guidance for the second half and therefore the full year is concerned, I mean, we are expressing our confidence, right, through confirming our fiscal year guidance between 6% and 6.5%. You're right, we had 6% in H1, so it's easy math on what that means for H2. When you look at what's going on, it's a mixed bag between those headwinds that you rightfully express and our gains on the cost side, on the other hand, right? On the inflation side, we are certainly working every single case in a very serious manner with our customers. As I mentioned before, we have our programs going, EU-FORWARD and SIMPLIFY. The Q4 is expected to be better on the Lighting side. You heard that from Hella as well.
There were launch issues holding us back in Q3, but the Lighting Transformation Plan is going to yield into Q4. We do strong flexing wherever possible and keep discipline and frugality. So that's the mix of actions that, again, give us the confidence to confirm our guidance. As far as the inflation is concerned, and the discussions with both suppliers and customers, sure, it's always hard discussions. But as far as Forvia is concerned, I'm absolutely clear we cannot swallow that cost. We have seen both on the memory side and on PCBs significant price increases. With that being swallowed, it's just impossible to sustain the businesses. That's how we approach customers. We give the arguments, we give the details and the breakdowns, and as in all prior go-arounds of the last five, six years, we expect to find solutions.
Then you had a question for the bill of material. Olivier, maybe you want to give some numbers.
I think that what you are trying to capture is which part of the raw materials and the purchase is indexed or not. Clearly, the distinction is between the raw materials and the Electronics. Raw materials have indexation clause. They are covering most of it, not the totality, so you need to have negotiation to complement, but you have global index that are available and known by all actors. On semiconductors, this is not the case. That's why the negotiations are taking sometimes a bit longer time. But the objective and the logic is exactly the same. We are providing the transparency necessary to the carmaker, to our customers, so that they can see for themselves and they can even contact directly the suppliers if it can be of any help. So we provide the transparency so that the conversion and the recovery can be done with them.
Thank you. I was also looking for just the rough share in terms of value. The non-index portion of your total sourcing, is it fair to assume that that's like 20% or relatively small share compared to the overall, or would it need to be higher than that?
Memory PCBs, which are probably the ones, is a few hundred million. It's EUR 250 million-EUR 300 million at 2025 prices. Just to scale a little bit what is the topic less index than the usual raw material.
Understood. Thank you very much.
Next question is from Ross MacDonald, Citi.
Yes. Hi there. Hopefully you can hear me. Three questions from me. The first one on Interiors. Can you maybe, Olivier, remind us, the free cash flow generation within Interiors in 2026 obviously still belongs to Forvia. I think in the past you had commented on that averaging about EUR 150 million in 2024 and 2025. Could you, A, confirm that, and B, comment around how that free cash flow development looks for 2026? Because I understand that is not in the EUR 1 billion net cash in deal ticket. Second question just on BYD and the China exposure. More into 2027, we have seen the EU looking to introduce caps around plug-in hybrid imports. Can you maybe talk around Forvia's exposure to those new rules? Obviously, you are ramping in Hungary with BYD. I would be interested if you see the businesses hedged to any downside on China exports into Europe.
Then the final question just on Clean Mobility. Not a business we discuss very often, but it is your highest margin business and obviously declining in the quarter at the top line level. But you do call out Clean Mobility as a regional driver of strength in North America. Can you maybe comment on the regional margin profiles for Clean Mobility and comment around whether that business can still grow EBIT in the second half versus 2025? Thank you.
Ross, good morning. Thank you. I would kick the free cash flow generation of Interiors to you, Olivier, first.
Yes. You are absolutely right. Interiors is with us until the closing, and there is a cash flow contribution of Interiors. The last two years indeed was EUR 150 million. We should be between EUR 100 million and EUR 150 million for this year before the closing. Yes, it is not inside the net debt reduction that we are quoting of the transaction itself.
Good. Thank you. Then I take over with the BYD question and potential import limitations to Europe on the plug-in hybrid side. I mean, we are a supplier to BYD both, right, for their local Chinese platforms as well as the exports. Ross, you said we are also supporting them when they are local. I would think that BYD is building sufficient capacity in Hungary, which is ramping up completely now, to offset some of potential limitations in terms of import. The question is how this is all going to be administered. Traveling in China two, three weeks ago, the OEMs were discussing who is going to get what share if Europe imposes a limitation. How are BYD, Chery, the others going to split their allowable importation? That is still up in the a ir.
I think it is a little early to speculate on what it is going to mean specifically to us. Again, it is important that we are with our Chinese customers on their home turf and when they go global. When it comes to Clean Mobility and volume decline in that third quarter, we are on a very good and stable trajectory. That decline in Q3 was majorly caused by a faster conversion to new energy vehicles and BEVs in China. That caused that reduction. At the same time, looking forward and seeing also the order intake that we have globally, we confirm that we are remaining very strong in that market. We gain businesses, we conquer businesses also from competitors, and overall, over the next couple of years, we see rather stability can be accomplished for our Clean Mobility business.
And maybe to complement some in terms of regional color, North America will be this year the biggest region for Clean Mobility. You can expect that to continue. It will be something like 2.5x what we do in China. In fact, the shift from east to west, in this case, of the Clean Mobility activity is really happening. We have strong position in Europe that we maintain, and we are growing in North America, where we are registering, as Martin mentioned, a sizable order. It's actually not only because of electrification, but also because of specificities of this market, in which people are expecting the bigger systems and the biggest renewals of system.
It's a market that will continue to develop, on which we expect to continue to increase our presence, which is explaining potential in terms of revenues, but potential in margin of Clean Mobility as a whole.
Thank you.
Next question is from Vanessa Jeffriess from Jefferies.
Hi, thanks for taking my questions. First on Seating, it does not sound like you expect a return to growth in the fourth quarter, but given the start of BYD in Hungary and other things you spoke about, when should we expect a return to growth there? Secondly, just on potential divestments and the topic of Clarion. I mean, obviously it is in the Value cluster, not Growth, but it has been growing very nicely this year. I am wondering if this is in line with what you expected when you set the strategy earlier this year, or if Clarion is outperforming your expectations at all. Thirdly, do not want to labor the point on the guidance, but just to confirm, at your last update, you said you expect sales in the upper half, and it seems like from what you are saying, that is still true.
But just given you have not explicitly said it, just guidance, despite implications for margin. Thank you.
Morning, Vanessa. Good hearing from you. Return to growth, was that a global question or was it for China again or Chinese customers?
Sorry, Seating globally.
Seating, okay. I mean, the way it looks, I mentioned our stabilization with BYD, which was really the drawback over last quarters, and that starts to regrow, but it will require new orders, also new businesses to kick in over the next semesters to really return to the full growth in Seating. We will be talking about the order intake when we approach the February call, and the full year results. In the meantime, I want to confirm that we take orders in, again, for the full portfolio of Seating. We are proving to ourselves that we are fully competitive, and that's the major prerequisite to that returning to growth.
We think and we believe and we know that the business is in the right cluster with the Growth cluster because through innovation, through technology, through the diversification into the commercial vehicle segment, through our geographical diversification, you read about India and the partnership with ANAND, it is definitely one of our two growth candidates. As far as Clarion is concerned, yes, we took a very conscious choice to have that in the Value cluster, and yeah, we do enjoy that growth that was foreseen, and yet we applied the well-known criteria, what's really the market attractiveness where we play.
Again, the infotainment market is a highly fragmented one with growth rates that start slimming down, and at the same time, we also said, what's our right to grow? Y es, as much as we enjoy the growth, we are not having this business at the top three market positions. That's why we say, no, Clarion remains in the Value cluster. Olivier talked about our internal CapEx allocation, and so you can expect in direct comparison that we go out of our way for Hella Electronics, right? That's in the Growth cluster, and we'll have a cautious investment approach on the Clarion side. Good. You want to comment a little bit on the guidance, Olivier?
Yeah. You were asking how do we trend on sales. You see the first nine months are quite clear. The trajectory, we are getting to EUR 15.8 billion in nine months at constant currencies. I think giving quite some indication on how we should be landing for the year between EUR 20 billion and EUR 21 billion at constant currency that we laid out as guidance.
Thank you.
Mr. Fischer, there are no more questions registered at this time. The floor is back to you for any closing remarks.
Yeah. We also don't have any written questions. I think that goes back to having had a very active exchange this morning, and I want to thank you all for your interest. In summary, despite a challenging market environment, we delivered solid sales performance in the third quarter, and we continue to execute our priorities with rigor and discipline. We are fully focused as we speak on delivering our 2026 guidance and on successfully completing the key milestones ahead of us. I want to thank you all for your continued support, and we look forward to our next touchpoints. Thank you very much, and have a good day.
Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones.