Good morning, ladies and gentlemen. Welcome to today's conference call of Volkswagen AG. On the occasion of the publication of the Q3 2019 figures. Just for your information, this conference call will be recorded. And for that, it's over to Doctor.
Marc Langendorff, the Head of Corporate Communications at Volkswagen. You have the floor. Good morning, everybody. I would like to welcome you to our conference call this morning. Earlier today, we have reported 9 months figures and the figures for the Q3 of this year.
And now what we would like to do is to give you some explanations on those figures. Joining me here today this morning is our CFO, Frank Bitter. It was exactly a year ago that we organized a conference call for journalists on our quarterly figures. Generally, we have received very positive feedback. Many of you, we understand, appreciate that we explain you the figures early on as soon as they are posted.
But you also told us that we could actually reduce time wise the presentation of results and then rather keep more time for Q and A. And we're certainly happy to do that. We are not going to cover our sales part in greater detail. You've already received the unit sales figures a couple of days ago, and you know and understand how our deliveries to customers have developed over those past months. But you can also attend this conference call not only on the phone, but also on our webcast.
And with that, it's over to Roger Witter.
Thank you, and good morning to all of you. For Volkswagen, 2019 has been a successful year to date. After a very strong half year in the Q3, we did not lose momentum. After 9 months, we see a clear positive result in terms of sales and income. Of course, compared to Q3 in 2018, which had clearly shown good marks on account of WLTP.
We were able to bring this about in spite of the economic environment, which has become more challenging. The international economy has clearly lost in momentum or to put it, in my words, the best of the party is over. The growth rate in GDP, both in Industrial and Emerging Economies, are mainly below that of the previous year. The uncertainties are great. The Brexit trade conflicts and the geopolitical challenges in the Middle East keep us busy every single day.
Against the latter backdrop, we postponed the final decision concerning the construction of our multi brand factory in Turkey. And we observed the development we are observing the development with great concern. We do not consider alternative sites in different countries because our worldwide production network offers us sufficient flexibility for alternative solutions. Hence, there is no decision making pressure on us. Global uncertainties increasingly encumber the automotive markets in all regions.
The demand for passenger cars is declining worldwide. In the 1st 9 months, we had a we could observe a minus of 5%. So in this declining overall market, the books group has performed well and increased its market share. In North America, Canada and Mexico, in particular, declined in their economy. The market volume in the U.
S. Almost reached the high level of the previous year. In this region, we are particularly successful with our SUVs, the share of which in sales accounts for about 50% by now. As expected, the total demand in Europe in the 1st 9 months, among others on account of WLTP, was below the previous year's value. As a whole, the WTL topic was something that we coped with much better in this year.
In South America, the automotive demand declined in general. Particularly in Argentina, the deterioration of the overall economic situation had a very negative effect on demand. In Brazil, in contrast to this, the recovery of the market was continued with a high growth rate. The Volkswagen Group profited from this and was able to clearly increase both deliveries and market shares. The reason Asia Pacific, the number of new registrations was noticeably below that of the previous year.
One significant reason is the continuous uncertainty due to the trade conflict between China and the U. S. In this difficult environment, the Volkswagen Group was able to increase their market share in China. All in all, Volkswagen performed well in this difficult environment, particularly the improvements in truck mix and price. Sys gave rise to the decision that both earnings and income were considerably increased.
We're growing in the high margin SUV segment worldwide. 1 out of 3 cars of our group are SUVs. From January to September, the brands of the Volkswagen Group only delivered marginally fewer vehicles to customers compared to 2018. On top of this, as explained, we performed better than the total market. In Q3, for the first time in the calendar year, we slightly increased the deliveries compared to the previous year in absolute terms.
However, the previous year's quarter was considerably incumbent by WLTP, as mentioned above. Sales considerably increased with 11% up. And here, the Q3 with the growth of 11.3% was particularly strong. The operating result before is totally in fact in the 1st 2 months, increased with a plus of €1,500,000,000 clearly. And here again, the reduced incumbents of WLTP had a positive effect in Q3.
In the last few months alone, we had in operating results a up of about 37%. The operating margin could hence be increased to 7.9%, which means that after 9 months, we were slightly above our intended target corridor for the whole year. However, in Q3, we also had special items in the context with the diesel issue. With €275,000,000 they are clearly below the €800,000,000 level of the quarter of the previous year. In total, the negative special items in 2019 accounted for about EUR 1,300,000,000 after EUR 2,400,000,000 in the previous year's period.
Our R and D ratio in the reporting period increased from 6.6% to 6.8%. As expected, also CapEx clearly increased by 4.2% to a level of €8,200,000,000 Let me now talk about the main development with our brands.
Volkswagen Passenger Cars after 9 months is still performing well. We've clear seen clear increases both when it comes to sales and profits. Now this is also, 1st and foremost, thanks to improvements in terms of the product mix and pricing. In the Q3, the operating profit before special items compared to the previous year has more than tripled and is now EUR 866,000,000 which shows you that we're making good progress towards our targeted profit margin. Now in terms of Audi, despite all the efforts undertaken by the team, we cannot be quite happy with the results there.
The WLTP effect, also charges related to model launches and model phase out and higher upfront expenditure have left their mark on our profit and loss account. Now Porsche, after the 1st 9 months of the year, continued to be in excellent shape. Sales revenue has come up by 6.6%. The operating profit is about at the same level of the previous year. The operating margin is 17.1%.
Negative exchange rate effects and cost increases were contrasted by improvements in product mix and volumes. The increase of unit sales and turnover at Skoda resulted 1st and foremost from the first time consolidations after Skoda has taken over responsibility for the region of India. The operating profit grew less than sales, which means the margin has shrunk. Now SEAD has increased sales revenues from an already high level in the past year by 14% Profits also, thanks to volume and to product mix, increased by 4.2% and is now EUR 248,000,000 Volkswagen Commercial Vehicles increased its sales revenues to EUR 8,800,000,000 The operating profit comes in at EUR 497,000,000 which is below the prior year. This is due to costs related to fixed expenditure and developments for new products, but also limited availability of engine and gearbox combinations.
Volkswagen Financial Services in the 1st 9 months of the year has developed very positively. And operating profit of €2,000,000,000 means that Financial Services continue to be a very important revenue stream and a strong partner for our brands. So ladies and gentlemen, despite the increasing economic headwind, we are confirming sales and profit targets for the overall year of 2019. We continue to assume that sales revenues will be increased by up to 5%, and we expect an operating return on sales before special items within the target range of between 6.5% 7 0.5%. So while we are growing our market shares, we cannot ignore the fact that vehicle markets in many regions of the world are shrinking faster than originally expected.
So when it comes to deliveries to customers, we expect challenging market conditions and therefore those levels will remain on the prior year level. In the past, we assumed that those would increase compared to the prior year. But generally, let us say this, Volkswagen is successful even in those stormy waters. We continue to grow. We are growing even our profits even more significantly, and we are confirming sales and operating profit targets for the ongoing fiscal year.
As far as our guidance for the next year's is concerned, I'd like to refer you to the 18th November when we'll be talking about our new 5 year plan. So that is what I wanted to share with you at the top. And it's back now to Mark. Thank you very much, Frank. Now before we take your questions in a moment, I'd like to briefly give you a rough overview of our upcoming dates that are important.
On the 15th November, we have a small press talk to talk about the results of our planning round 68, which will be the Friday afternoon, and you can expect invitations to be sent very soon. Now there's another special highlight, which is on the agenda very soon. On the 4th November, we'll be celebrating the start of production of our ID. 3 model in the car plant at Zwicker with a large ceremony where the Federal Chancellor will be present as a speaker. The annual press conference of the Volkswagen Group will take place on the 17th March 2020, followed by the brand of Volkswagen the year after that.
Annual General Meeting will be held on the 7th May next year. And all of these dates, you'll also find in our financial calendar when you check our website. So much for that, ladies and gentlemen. Thank you very much. And we're now looking forward to take your questions.
Thank you. If you realize that your question has already been answered, you can also withdraw the question by keying in the Asterix button. So Asterisk 1 in order to ask a question. So we will wait for a short minute in order to give the possibility to all participants to signal that they have any questions. The first question is asked by Christoph Rauvelt by Bloomberg.
Welcome, good morning. I have a short question concerning the presentation. This refers to the evaluation of strategic options for the power engineering sector. Could you give us an indication within what period of time we can expect a decision in this respect? Thank you.
Good morning, Mr. Rauwold. Well, as announced, for the 2 power and engineering units, which have been combined. We're looking for strategic options. We're doing this without any hurry and with great care because it is not just a question of selling power engineering units, but we would like to probe the ground and to find out what possible superior strategic options exist in the 1 or the other combination.
So we haven't set any deadline to this process, so I can't give you any time indication. But we, of course, are working on this. We work continue to work on this, but I can't give you any final date. We are in the process of trying to explore the situation, and we do not have any information as yet to share with you. Maybe you can give us an indication as to how many interested parties have communicated the interest.
Well, I can't give you I wouldn't give you a figure, but sufficient there was sufficient request as a matter of fact. Ladies and gentlemen, let me remind you, in fact, please check first the Airfix Our next question comes from Marco Engelmann from DPA FX. The floor is yours. Good morning to everybody. Great that I may ask a question.
Two questions, if I may. Mr. Peter, in the PM, you mentioned that derivatives had an influence on the operating results. Can you tell us what the effect was in Q3? I remember that in Q1, you said EUR 4,000,000,000 and the special items for a decent €275,000,000 Can you give us an impression as to what this is about?
Are these legal defense costs? Or it does have to do with recalls? Thank you. Good morning. Special items on the diesel issue.
Basically, this refers to the topics of Australia, U. S, the U. S. And Canada. This will be entirely in the context of the diesel issue.
As regards the breakdown of the evaluation effect under IFRS 9, well, here we will have to check this up again, the 500 years to date, as a matter of fact. We, of course, did not mention this because there's high volatility, and we wanted to make sure that the result will be fully transparent. But of course, there will be fluctuations and whether this positive effect will remain until the end of the year or not or whether there may be even a negative effect is still open. We depend on the market development here in this respect. We will come back presently to what happened in Q3 because the volatility has been with us for the whole year, but I will comment on this presently.
No, I can do it right now. My colleagues have been very fast and they gave me that information. We're talking about €400,000,000 in Q3. After in Q2, we were at minus €300,000,000 So this shows you what major volatility we're facing here across the different quarters. And in many ways, this is in line with what we expected.
So €400,000,000 positive figures. These are commodity derivatives, mind you, in Q3. Our next question comes from Christian Hetzner from Automotive News Europe. Please. Good morning, everybody.
I have a variety of questions, I must say, but maybe I come back later on during our conference call. Let me start with those 2 first. First one is on the multi brand factory in Turkey. Can you share some insights in some greater detail? What currently is this state of play?
So why are you saying you're putting the decision on hold knowing full well what the situation in Tokyo is like. And this, mind you, hasn't changed over those past weeks. Now the region is what it is, the situation there. And I don't think that this will massively change in the foreseeable future. So you're either asking the question, let us quit, let us withdraw from Turkey?
Or maybe the military campaign is irrelevant. It's only a visual blemish for us to announce such a decision just after the military campaign by Turkey in the area. Now there are reports that Slovakia possibly vehicles can be built. But on the other hand, you would have to take vehicles out of the Bratislava plant to account for those 250,000 that you're looking at in capacity. So the upshot is, can you share some insights in your decision making processes there?
That would be appreciated. And my second question, the reports of a potential merger of PSA and FCA have been confirmed. Would you welcome endorse such a merger in order to get more pricing discipline in the European markets? Good morning, Mr. Hetzner.
Well, if you have a more colorful bouquet of questions, I'm certainly happy to come back to those later on. Your first question on our multi brand factory plant in Turkey. Let me put things into perspective here because whenever decision is taken on a new factory, you're not just looking at a short term horizon, but rather you look forward 20, 30 years, it is very much long term intentions when you develop a new site. Now for such decisions, this is precisely what we do. This is a major driver.
Now why do we put it on hold? Well, we do because like all other people, we are currently monitoring the situation. We're observing it in that region. So that causes great concern. And we're obviously focusing on people that are affected by what is going on there.
But let me say this again. The Turkish market is an important one for us in Europe. It's a large market. And you can be very controversial about seeing this or that, but if ever that investment goes through, it would contribute a major stability driver in a region that is not an easy one because you know that we are acting according to Volkswagen standards globally. And I believe that our standards and the way how we deal with our employees, we certainly have something to show and a good track record.
Hence, putting that decision on hold, I think, was a right one. And I said earlier that we are currently not under immense pressure to bring about a decision right now. And also, we have said before that we're currently not reviewing any alternatives for a new production plant, except Turkey that is. But of course, we are an international, a global, multi brand group of companies. So therefore, in existing plants that we have, there are a number of options.
You just mentioned Slovakia as a case in point. We have other production facilities as well. And it's true that we are thinking about
a
number of options. But once again, the decision has been put on hold. It has not been canceled. Now the PSA FCA merger that has surfaced today, it's not a new discussion, let me say that. And there can be consolidations in our automotive industry.
And often, we have been talking about the ongoing transformation and more challenges that means also in terms of carbon compliance. So it shouldn't come as a surprise to anybody that there are talks ongoing between different players in the market. And it's not for us to say, and I'm not going to say anything here, to vote in favor or against that. So clearly, every OEM will decide on their own what the right decisions are. And you also know full well that we have positioned ourselves really well early on.
We believe that our portfolio, our network of multiple brands, but also the sheer volume, the size of our company gives us the critical scale in order to embrace this transformation. And this is true for technical competence on our hardware side, our MEB, our MQB are just 2 cases in point, which help us to position ourselves really well. We have powerful platforms to do what we want to do. And when it comes to software, we also announced that this is going to be one of our 5 strategic modules. We are going to be a software enabled company.
Alongside our current capabilities, we will literally put some more gas on, and others will be pursuing a different avenue possibly. Thank you very much for the moment. Ladies and gentlemen, once again a reminder, Our next question comes from William Boston from The Wall Street Journal. Please. Good morning.
Thank you very much. I have a question on Fiat and PSA. What would the impact be on your collaboration with Ford? Now in that environment, which seems to trigger a wave of consolidations now. Could you see your relationship with Ford to become tighter?
I mean, still in the U. S, your market share is relatively small. And now you're going to face a potential new European competitor that has a very strong foothold in the United States with FCA. Now wouldn't that mean that Volkswagen gets pressurized by that in the United States? Thank you very much.
Good morning, Mr. Boston. Now I talked about PSA and FCA just a moment ago. I don't see that this will impact our cooperation project with Ford. Why?
Because with Ford, we are focusing on 3 important modules, which is light commercial vehicles, which is autonomous driving and which is also a collaboration with Argo. Our MEB, technology platform for electric vehicles in the high volume segment, this is something that Ford is interested in, we are also collaborating. So these are the pillars that we base our cooperation on. And in the earlier press releases, we've said any capital involvement or capital stakes are not part of our collaboration, are not intended. So with that, you rightly have pointed out have rightly pointed out that the market share of VW Passenger Car in the United States is relatively small.
Now within our brand, we are focusing on minimizing the losses that we've done in the past and, in fact, neutralize them by 2020 to achieve a breakeven by next year. So we're working on that. So my clear answer would be no. It has no impact on our collaboration with Ford or any other strategic considerations after the PSA FCA talks.
We now have a question asked by Jan Schwartz from Thomson Reuters. The floor is yours. Good morning. Thank you. I have two questions.
First of all, I would like to know, Mr. Witter, what the start of Q3 was Q4 was like, Correction, Q4. The background is that possibly in view of the deteriorating outlook in the automotive economic cycle, we may expect further corrections in the guidance for the sales figures. Last question on the planning round. Concerning your midterm goal until 2020, and analysts expect that you will have to readjust this a bit, taking the assessment with the enormous increase from 16% to 220%.
For sales here, I think we would have to be a bit more conservative. Can you give us an impression as to what your plans are in this respect? Thank you. Good morning, Mr. Schwartz.
As regards planning around 68, I also like to ask you to bear with me because I have to respect our Supervisory Board. We have to present this to the Supervisory Board meeting on the 15th November. And after November 18, we'll be able to give you more detailed information. 2020, yes, I know what you referred to within the planning around around 67 for 2020. Here the targets were presented and I cannot rule this out because certain parameters have changed, but we will report about this on the November 18 in a more definite manner, but we will present the quarter for the next year.
Then the targets will be rendered more concrete. One thing is clear, and I think that much I can say about the planning around 68 at this point. Within the scope of the budget discussion, we will have to take account of the latest developments as all other players also have to do. But we have a good basis, which we have created with our 9 months figures. And experience has shown that normally the world doesn't start from scratch as per the 1st January 1st September rather.
And we are working very clearly and therefore it's happening outside the world. And we are working great pressure on these improvement programs in the brands and the group. You always ask about Q4. Well, we explicitly and here I talk about the pretax result, this corridor from 6.5% to 7.5% was confirmed. And if I take a look at the October figure, as we have them now, there is no reason to deviate from the forecast of consolidated results.
So the basis, EUR 14.8 million rather and the margin of 7.1 7.9% for the 1st 9 months is relatively stable. So that we can expect that we will not leave this corridor and certainly in a downward direction as you referred to. So we're quite confident and have confirmed this, but business will not be easier. And if I take a look at the present fiscal, when more than 1 year ago, we planned for the fiscal 2019 as any other player in the industry, we were much more optimistic. Just to give an impression, I think the production 2019, about 900,000 units were taken out of the production plant figures compared to what we have expected for this fiscal originally.
This had to do with the underlying general conditions and the outlook ahead certainly still has one of the other question marks. But if you have good products and strong brands, of course, you are well aligned and that is what I would also say concerning the 1st 9 months. Our next question will be asked by Markus Clausen, Deljones. The floor is yours. Good morning.
Thank you. Mr. Peter, I would like to check back concerning your forecast for the total year. EUR 7,900,000 you have attained now, EUR 7,500,000 is the upper end. Is this too conservative?
Or are you simply a bit wary or overly wary concerning the Q4? Can we take it that the upper end of the forecast will be reached? 2nd question, the share of SUVs. Can you give us a percentage for the Q3 compared to the previous year for the group? Thank you.
Well, whether the 7.5% will be the upper end of the corridor, whether this will be too conservative remains to be seen. Here, I would like to refer the volatility in the derivative valuation, which cannot be predicted, which will have a one to one effect on the operating results. So it could be positive to €500,000,000 but it can also turn around very readily. I gave you a first insight as to how these figures from Q2 to Q3 have changed and moved. Of course, we had guidance also for CapEx and investment in PPE.
And here, it also became clear that in absolute terms, we will incur higher development costs, in particular. We take it that the corridor of 6.5% to 7.5% for CapEx and R and D can be adhered to and can be maintained, but the absolute figures will be higher. That again is an encumbrance. For those who have a liking for heavy commercial vehicles. It is not a secret that the order intake are developing in negative terms worldwide.
This is another factor which must not be underrated in our situation Concerning the profit development, concerning light commercial vehicles in the course of this year, you could also observe that as regard to registrations of commercial vehicles, we have had WITB 1 year later, but of the same color, so to speak. But we can also we also have to mention that we have major start productions for the Gulf and the ID family, which also has to do with SOP and launch costs. I don't want to be overly negative and pessimistic. I'm quite confident that we'll be reached we'll be set within the corridor at the upper end. But within this environment, many colleagues had to amend the full costs.
I do not think that if things turn out better because many things depend on factors that we cannot control, we would certainly accept them. But everything else would be overly optimistic. Concerning the that on the basis of the present 1st 9 months, figures concerning the share of the 1st 9 months 2018 compared to the 1st 9 months 2019. So it's about 24% to 33%. That was the increase.
But I don't have the quarterly figures, but we could supply this subsequently. But you will see that one of the driving factors was the improvement in our product mix, which we have already presented. So that was amazing driver in terms of the sales development, but also in terms of the operating results? Thank you.
Now let's move over to a question from Joe Miller from the Financial Times, please.
Mr. Miller, please you have the floor. Hello. Good morning, Mr. Miller.
Sorry, I was on mute. I just wanted to reiterate the decision on the the election of the members of that meeting there could be a slowdown if you don't identify an alternative to Turkey or don't make a decision on Turkey soon. And another question is, you noticed the disappointment at Audi again. I'm wondering whether that makes a spin off of Lamborghini any more enticing. We have agreed with our interpreters
to answer in German and you get the English translation. Now the phone connection was really bad. So we didn't quite understand what you said was Audi and Lamborghini, I caught there in your question. Now the disappointment of Audi is in inverted commas. So this is how I want it to be understood.
If you look at the numbers of Audi, you could actually see that they're performing really well competing with others. Now for everyone, for all OEMs in the Luxury segment, the market situation at the moment is not an easy one, as you will realize. And therefore, we must recognize how focused the entire Audi team was and how well they have performed in those rather difficult conditions. So when it comes to some market speculations of whether or not one or another brand will be sold or not, This, I think, is nothing I can comment on. And generally, we are not commenting any rumors out there in the market.
There's a clear plan that has been announced by Bram Schott, and Bram Schott and his team is going to drive that forward. They're negotiating also with the social partners, so the labor side. But I'm very confident that the Audi team will turn that plant into good effect. Now the other question on the Turkey plant. As we said before, this has been put on hold for the moment.
And of course, we're thinking about alternative scenarios. But as I just said, we are under no pressure at all when it comes to timing. The plans for our Emden factory have not changed. We're not cutting back on any of our plans. So the existing plans remain in action.
And in whenever that is necessary, we will reassess the situation, possibly also when there will be positive developments in the regions that we have talked about. Back to the operator, please. Now here comes a question by Stefan Mintel from Handelsblatt. Good morning. Hello, everybody.
I'd like to follow-up on Audi as well. Now 200,000 cars in this car minus is actually quite something. Now does that mean you will have to make even deeper cuts now at Audi? And how do you want to make sure that the big plans of Nekazolm and Ingolstered can be guaranteed with those shrinkages? I mean, can you at least give a hint of what to expect at Audi?
Good morning, Mr. Mendel. Now let me explain the Audi result again. In our guidance for 2019, together with our colleagues, we have always said that the first half year of twenty nineteen will have still some ripple effects from WLTP and then that the second half of the year will not be affected by WLTP that much. And this is precisely what we have now observed in the Q3.
So all I can say is we believe that the negative deviations that you've seen in our charts there on in comparison to the previous year will not be that pronounced going forward. So those gaps, I mean, also with operating profits, those gaps will narrow. So it is just over the course of the year, between the first and the second half of the year, we will see some improvement. And let me remind you that also in terms of Porsche, the Q1 this year was for Porsche very much below the prior year. So our capacity utilization in our factories.
I talked about earlier the Audi plan. And there, of course, capacity utilization is part of our discussions in that Audi plan. And I don't want to preempt discussions here at all. So those talks are still ongoing, and it's not for me now to make another contribution or to comment. But again, of course, those two main plants are part of what we are currently discussing when it comes to factory utilization.
And in some segments, obviously, with model changes, we need to address a number of things, and our colleagues are precisely doing that. Okay, thank you very much for that. Okay, ladies and gentlemen, key. Next is Marco Engemann from DPA. Hello, Mr.
Wisser. You've said before that the economic party is over. And you also said something about order intake in the heavy trucks business. Now Daimler has certainly cut back on its expectations for this year. And I understand that Daimler is working in different markets as well.
But still, they also have margin problems here in Europe.
Now do you see
a similar picture within TRATON? Or do you think that business is going well in TRATON? And there's a question that others have asked before. What about the interest in the PPA platform with Ford? Do you think there's anything you can comment on?
Mr. Ringemann? Now Ford with Ford, we're talking about the MEB platform, the modular electrification system. And the question is, are we going to put 1 hat or 2 hats, body styles on top of that? But again, it's MEB.
And in terms of trucks, commercial vehicles, TRATON in the 1st 9 months, you have seen, has developed well. But clearly, the dynamic of order intake is not disconnected from the general market developments in that industry. Now when it comes to Europe, as we are talking about here, that picture is a very specific one because in Northern America, we only have a marginal footprint. So yes, these are significant drops, double digit percentage losses we're seeing there. And therefore, it makes it all the more important to consolidate and start the new truck generation with Scania.
And MAN is also going to launch that new truck in the next weeks months. So it is true that the general picture for all truck makers here in Europe is a bleak one. As far as the party is concerned, I said the best bits of the party are over. Not didn't say that the entire party is over, and I don't want to be too subdued at all. And in fact, the chart that we've been showing you earlier here as part of that webcast has actually shown you that, of course, the nicest or the best bits are over.
Why? Because we've had a prolonged phase of sustainable growth in the past years. So those growth rates are gone. But that doesn't mean that we're now in a situation where you should become frustrated and therefore relating to the earlier 9 months, I think it's still in line with my earlier picture that I've drawn. Well, can I still follow-up on that?
Now I've talked about PPE earlier. This is the Audi and Porsche platform. Therefore, my question is, are you talking to other partners as well? Are you going to share the PPE with other OEMs perhaps? Now we're focusing on ourselves.
There's no names that I could possibly announce here. I wouldn't per se rule that out, but there's nothing at all where I would be able to give you any short notice information. Thank you. Next question comes from Jan Schreiber from AFP.
Good morning. Thank you for giving me the opportunity to ask my question. I wanted to ask the following question. In a market environment which is declining, do you think that the sales and e mobility will be impaired by this? Or what is your planning in this respect?
Thank you. Answer? Well, this is a very exciting question. Independently of the economic development, we can say that this is the question here. We're talking about the volume segments, which will be important here.
Although we are very happy about the order intake and the take on, for example. And also at Audi with
the Iton,
the question is that for us as a volume producer, the ID3 and the volumes will be the decisive sector. So in that respect, one of the exciting questions, which have been discussed at length in public is whether the customers, the public will accept these vehicles. We are absolutely convinced about the product and the dealers have given us the feedback. We have also received already 1st customer feedback. So it's just very convincing.
It's quite impressive. And I'm convinced that the ID3 in particular reminds of the fact what the good start to plan aside as a hybrid in the U. S. And the outside effect by which it stands out against the classical vehicle concepts, this gave rise to euphoria in the United States, particularly on the West Coast. And I could imagine that these highly attractive vehicles that will come now that in the pipeline will find people who like them, although not everybody would immediately be ready to change over to switch over to e cars.
This will develop over time. So I would rather like to focus on this discussion for the time being, not the question as to whether we are in an overall economic situation, which is growing more slowly or faster. So I think that should be our main focus. But to be stated very clearly, the world is not just black and white, it's not just electric price that count, but we have a small portion in 2019, which would still be below 5% for 2020 in view of the number of fully electrified cars sold as a share of overall sales units, factories. So I think that the economic development will make much of a difference in this respect.
Thank you. The last question will now be asked by Christian Hesse, Automotive News Europe. The floor is yours. Thank you for the opportunity of asking this question. Two topics I would like to touch upon.
1st of all, autonomous driving. Maybe Mr. Witte, you can give us an impression as to how much startup capital will be invested into the foundation of this new subsidiary. After you have announced EUR 3,100,000,000 to investors in Algo Real. So when will Level 3 come at the Volkswagen Group?
Audi has developed the A8 now, but to date, we do not have an indication as to when this will be released, where we're going to go ahead and whether it may be done. Secondly, as regards to Gulf, diesel, there's this wind dosing system with which it is marketed. You have already added in the Passat facelift. You have it in the market since September. Can you give us first impressions and first indications as to how this system has performed, which will have a reduction of NOx emissions of 8% or even more into what whether this would then give the right decision whether this can be further expanded in the market?
Answer, yes, this is the answer. So we're talking again as promised. Well, when will autonomous driving be ready on a broad basis? This is one of the most exciting questions. We all agree in our industry that it will be rather later than sooner, later than optimists
hoped 2 to
3 years ago, because these are highly complex topics that need to be taken into account, the legal framework, the legal conditions, but also technology and the software stack. You also referred to the figures that were published. These are investments in the tune of 1,000,000,000. So I think the approach to be committed together with Ford and Iago is the right approach. So we share this development expense, so to speak.
And I think this is a meaningful and correct step, which was also adopted by the Board of Management. And Ford obviously has taken a comparable decision in this respect. As regards to the diesel situation, the figures that I saw recently were the following. Here is the share of diesel stabilized. And even slightly increase in the key countries of EU5, in absolute terms, they are below the levels of the level of 4 to 5 years ago.
But in the key markets, this is stabilized, which presumably will have to do also with the increased share of SUVs. Hence, this development is not a complete surprise. It may vary, of course, from model to model. As regards to Level 3 question, Audi, here, honestly, I have to tell you that we will have to check back. I don't have any further information available here right now, and I'm not sure to what extent Adi is willing to disclose this to the public already.
So as regards to diesel development over the past few months has stabilized. And back to the question of investment in Volkswagen Autonomy, the new subsidiary, the Volkswagen subsidiary, could you give us an impression as to what the capital demand could be? I think the figure was about EUR 2,600,000,000 that was an order of magnitude, a ballpark figure. Christian, I will come back to that later. As regards to capital injection for the autonomous, we didn't say anything.
To put this very clearly, this is the company which would test and validate the solutions, the SDS solutions, which are go if this will come into being because there's some regulatory obstacles to overcome, we'll test and validate. And the size of the team autonomy amounted to 200 roughly. But as you got the capital expenditure, we haven't said anything. So it's an interim company. So it's not a major subsidiary, no.
Thank you. Very well, ladies and gentlemen. On that case, I would like to thank you all for having attended the conference call today. And I think many of you, we will meet again on November 4 in sickle for the SOP of our ID3. Thank you very much.
And Terje, Kim?
Ladies and gentlemen, this concludes today's conference call. Thank you very much for attending, and we wish you a pleasant rest of the day.