Good morning, ladies and gentlemen. Welcome to today's conference call of Volkswagen AG. On the occasion of the publication of the third quarter 2019 figures. Just for your information, this conference call will be recorded. For that, it's over to Dr. Marc Langendorf, 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 our nine months figures and the figures for the third quarter of this year. 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 Witter. 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. You also told us that we could actually reduce, time-wise, the presentation of results and then rather keep more time for Q&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. You can also attend this conference call not only on the phone, but also on our webcast. With that, it's over to Frank 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 third quarter, we did not lose the momentum. After nine months, we see a clear positive result in terms of sales and income. Of course, compared to a Q3 in 2018, which had clearly shown good marks on account of WLTP. We were able to bring this about despite of the economic environment, which has become more challenging. The international economy has clearly lost the momentum, or to put it in my words, the best of the party is over. The growth rate in GDP, both in industrialized 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 have postponed the final decision concerning the construction of our multi-brand factory in Turkey, and we are observing the development with great concern. We do not consider alternative sites in other 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 first nine months, we could observe a minus of 5%. In view of this declining overall market, the Volkswagen 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 first nine months, among others, on account of WLTP, was below the previous year's value. As a whole, the WLTP 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. In the region Asia-Pacific, the number of new registration 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 product mix and price, this gave rise to suggestions that both earnings and income were considerably increased. We're growing in the high-margin SUV segment worldwide. One out of three 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.
The previous year's quarter was considerably encumbered by WLTP, as mentioned above. Sales considerably increased with 11% up, the Q3 with a growth of 11.3% was particularly strong. The operating result before extraordinary effects in the first two months increased with a plus of EUR 1.5 billion clearly. Here again, the reduced encumbrances of WLTP had a positive effect in Q3. In the last few months alone, we had an operating result up of about 37%. The operating margin could hence be increased to 7.9%, which means that after nine months, we were slightly above our intended target corridor for the whole year. In Q3, we also had special items in the context with the diesel issue. With EUR 375 million, they are clearly below the EUR 800 million level of the quarter of the previous year.
In total, the negative special items in 2019 accounted for about EUR 1.3 billion after EUR 2.4 billion in the previous year's period. Our R&D ratio in the reporting period increased from 6.6%-6.8%, as expected. CapEx clearly increased by 4.2% to a level of EUR 8.2 billion. Let me now talk about the main development with our brands. Volkswagen passenger cars, after nine months, is still performing well. We've seen clear increases both when it comes to sales and profits. This is also, first and foremost, thanks to improvements in terms of the product mix and pricing. The third quarter, the operating profit before special items compared to the previous year has more than tripled and is now EUR 866 million, which shows you that we're making good progress towards our targeted profit margin.
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. Porsche, after the first nine months of the year, continued to be in excellent shape. Sales revenue has gone 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 Škoda resulted, first and foremost, from the first-time consolidations after Škoda has taken over responsibility for the region of India. The operating profit grew less than sales, which means the margin has shrunk.
SEAT 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 million. Volkswagen Commercial Vehicles increased its sales revenues to EUR 8.8 billion. The operating profit comes in at EUR 497 million, 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 first nine months of the year has developed very positively. An operating profit of EUR 2 billion means that financial services continue to be a very important revenue stream and a strong partner for our brands. Ladies and gentlemen, despite the increasing economic headwind, we are confirming our sales and profit targets for the overall year of 2019.
We continue to assume that our 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 and 7.5%. 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. 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. Generally, let us say this. Volkswagen is successful even in those stormy waters. We continue to grow. We are growing our profits even more significantly, and we are confirming our sales and operating profit targets for the ongoing fiscal year.
Now, as far as our guidance for the next years is concerned, I'd like to refer you to the 18th of November when we'll be talking about our new five-year plan. That is what I wanted to share with you at the top, and it's back now to Marc.
Thank you very much, Frank. 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 of 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. There's another special highlight, which is on the agenda very soon. On the 4th of November, we'll be celebrating the start of production of our ID.3 model in the car plant at Zwickau with a live ceremony, where also the Federal Chancellor will be present as a speaker. The annual press conference of the Volkswagen Group will take place on the 17th of March 2020, followed by the brand of Volkswagen a year after that.
Our annual general meeting will be held on the 7th of May next year. 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. Ladies and gentlemen, if you would like to ask a question, please press the asterisk button and number one on your phone, and make sure that your mute key is deactivated so that your signal will be received by us. If you realize that your question has already been answered, you can also withdraw the question by keying in the asterisk button. Asterisk one in order to ask a question. 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 Rauwald by Bloomberg. From 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. Rauwald. Well, as announced, for the two power engineering units which have been combined, we're looking for strategic options. We're doing this without any hurry and with great care. It is not just a question of selling power engineering units, but we would like to probe the ground in order to find out what possible strategic options exist in the one or the other combination. We haven't set any deadline to this process, I can't give you any time indication. We, of course, are working on this. We continue to work on this, 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 their interest. Well, I wouldn't give you a figure, but there were sufficient requests, as a matter of fact.
Ladies and gentlemen, let me remind you of that. Please press the asterisk and plus one button in order to ask a question. Our next question comes from Marco Engemann from dpa-AFX. The floor is yours.
Good morning to everybody. Great that I may ask a question. Two questions, if I may. Mr. Witter, in the P&L 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 billion, and the special items for diesel EUR 275 million. Can you give us an impression as to what this is about? Are these legal defense costs, or does it have to do with recalls?
Thank you. Good morning. Special items on the diesel issue. Basically, this refers to the topics of Australia, 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 EUR 500 is year 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.
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 EUR 400 million in Q3, after in Q2 we were at minus EUR 300. This shows you what major volatility we're facing here across the different quarters. In many ways, this is in line with what we expected. EUR 400 million positive figures. These are commodity derivatives, mind you, in Q3.
Our next question comes from Christiaan 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 two first. First one is on the multi-brand factory in Turkey. Can you share some insights in some greater detail? Why are you saying you're putting the decision on hold, knowing full well what the situation in Turkey is like? And this, mind you, hasn't changed over those past weeks. The region is what it is, the situation there, and I don't think that this will massively change in the foreseeable future.
You are 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. There are reports that Slovakia, possibly vehicles can be built, but on the other hand, you would have to take vehicles out of a Bratislava plant to account for those 250,000 that you're looking at in capacity. The upshot is, can you share some insights in your decision-making processes there? That would be appreciated. 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 on the European markets?
Good morning, Mr. Hetzer. 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 a 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're currently monitoring the situation. We're observing it in that region, and it causes great concern, and we are obviously focusing on people that are affected by what is going on there. Let me say this again, the Turkish market is an important one for us in Europe. It's a large market.
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. You know that we're 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. Putting that decision on hold, I think, was a right one. I said earlier that we are currently not under immense pressure to bring about a decision right now. Also, we have said before that we're currently not reviewing any alternatives for a new production plant, except Turkey, that is. Of course, we are an international, a global multi-brand group of companies.
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. 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. The PSA FCA merger that has surfaced today, it's not a new discussion, let me say that. There can be consolidations in our automotive industry. Often we have been talking about the ongoing transformation and more challenges that means also in terms of carbon compliance. It shouldn't come as a surprise to anybody that there are talks ongoing between different players in the market. It's not for us to say, and I'm not going to say anything here to vote in favor or against that.
Clearly, every OEM will decide on their own what the right decisions are. 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. This is true for technical competence on our hardware side, our MEB, our MQB are just two cases in point which help us to position ourselves really well. We have powerful platforms to do what we want to do. When it comes to software, we also have announced that this is going to be one of our five 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, please press asterisk one in order to ask a question. 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 it seems to trigger a wave of consolidations now, could you see your relationship with Ford to become tighter? 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.
Wouldn't that mean that Volkswagen gets pressurized by that in the U.S.? Thank you very much.
Good morning, Mr. Boston.
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 three important modules, which is light commercial vehicles, which is autonomous driving, and which is also our 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. 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. With that, you have rightly pointed out that the market share of VW passenger cars in the U.S. is relatively small.
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. We're working on that. 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 Q4 was like. 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 a mid-term goal until 2020. Analysts expect that you will have to readjust this a bit. Taken with the enormous increase from 2016 to 2020 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 Round 68, I should like to kindly 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 of November. After, on November 18, we will be able to give you more detailed information. 2020, yes, I know what you refer to within the Planning Round 67 for 2020.
Here, the targets were presented, I cannot do this now because certain parameters have changed. We will report about this on November 18 in a more definite manner, when we will present the quarter for the next year. The targets will be rendered more concrete. One thing is clear, and I think that much I can say about the Planning Round 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. We have a good basis, which we have created with our nine-month figures. Experience has shown that normally the board doesn't start from scratch as per the 1st of September.
We are working very clearly and observe what is happening outside in the world, and we are working with great pressure on earnings improvement programs in the brands and the Group. You always ask about Q4. We explicitly, and here I talk about the pre-tax result, this corridor from 6.5%-7.5% was confirmed. If I take a look at the October figure as we have them now, there is no reason to deviate from the forecast concerning the result. The base is 14.8%, million rather, and the margin of 7.9% for the first nine months is relatively stable so that we can expect that we will not leave this corridor, and certainly not in a downward direction as you refer to. We're quite confident and have confirmed this. Business will not be easier.
If I take a look at the present fiscal, when more than one 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 concerning the production 2019, about 900,000 units were taken out of the production plan figures compared to what we had expected for this fiscal originally. This had to do with the underlying general conditions and the outlook ahead certainly still has the one with the other question mark. If you have good products and strong brands, of course, you are well-aligned, and that is what I would also say concerning the first nine months.
Our next question will be asked by Markus Klausen, Dow Jones. The floor is yours.
Good morning. Thank you. Mr. Witter, I would like to check back concerning your forecast for the total year.
7.9% you have attained now, 7.5% is the upper end. Is this too conservative? Are you simply a bit wary or overly wary concerning the fourth quarter? Can we take it that the upper end of the forecast will be reached? Second question, the share of SUVs. Can you give us the percentage for the third quarter compared to the previous year for the group?
Thank you. 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 and the derivative valuation, which cannot be predicted, which will have a one-to-one effect on the operating results. It could be positive for 500, 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. 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%-7.5% for CapEx and R&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 a WLTP one year later, but of the same color, so to speak.
We also have to mention that we have major start of productions for the Golf 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 safe within the corridor at the upper end, but within this environment where many colleagues had to amend their full costs, I do not think that if things turn out better, because many things depend on factors that we cannot control, we will certainly accept them, but everything else would be overly optimistic. That on the base of the present situation. You asked about SUVs. Here I only have the figures concerning the share of the first nine months, 2018, compared to the first nine months, 2019. It's about 24%-33%.
That was the increase, but I don't have the quarterly figures, but we could supply this subsequently. You will see that one of the driving factors was the improvement in our product mix, which we have already presented. That was a major 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. Witter. Sorry, I was on mute.
The decision on the factory in Turkey.
Decision on the factory in Turkey. I'm wondering whether that will affect the electric position of Emden. Does that mean that there could be a slowdown in Emden if you don't identify an alternative to Turkey or don't make a decision on Turkey soon? Another question is, you noted the disappointment at Audi again. I'm wondering whether that makes a spin-off of Lamborghini any more enticing.
Define.
We have agreed with our interpreters to answer in German, and you get the English translation. The phone connection was really bad, so we didn't quite understand what you said. It was Audi and Lamborghini I caught there in your question. The disappointment of Audi is in inverted commas. 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. For everyone, for all OEMs in the luxury segment, the market situation at the moment is not an easy one, as you will realize. Therefore, we must recognize how focused the entire Audi team was and how well they have performed in those rather difficult conditions.
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. Generally, we are not commenting any rumors out there in the market. There's a clear plan that has been announced by Bram Schot, and Bram Schot and his team is going to drive that forward. They're negotiating also with the social partners, so the labor side. I'm very confident that the Audi team will turn that plan into good effect. The other question on the Turkey plant, as we said before, this has been put on hold for the moment. Of course, we're thinking about alternative scenarios. 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. The existing plans remain in action, and 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.
Here comes a question by Stefan Menzel from Handelsblatt.
Good morning. Hello, everybody. I'd like to follow up on Audi as well. 200,000 cars in this car minus is actually quite something. Does that mean you will have to make even deeper cuts now at Audi? How do you want to make sure that the big plans of Neckarsulm and Ingolstadt can be guaranteed with those shrinkages? Can you at least give a hint of what to expect at Audi?
Good morning, Mr. Menzel. 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 2019 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. This is precisely what we have now observed in the third quarter. All I can say is we believe that the negative deviations that you've seen in our charts there in a comparison to the previous year will not be that pronounced going forward. Those gaps, I mean also with operating profits, those gaps will narrow. It is just over the course of the year between the first and the second half of the year, we will see some improvements.
Let me remind you that also in terms of Porsche, the first quarter this year was for Porsche very much below the prior year. 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. Those talks are still ongoing, and it's not for me now to make another contribution or to comment. Again, of course, those two main plans 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, let me remind you once again, if you want to ask a question, press the asterisk and one key. Next is Marco Engemann from DPA.
Hello, Mr. Witter. You've said before that the economic party is over. You also said something about order intake in the heavy trucks business. Daimler has certainly cut back on its expectations for this year. I understand that Daimler is working on different markets as well. Still, they also have margin problems here in Europe. Do you see a similar picture within TRATON, or do you think that business is going well in TRATON? As a question that others have asked before, what about the interest in the PPE platform with Ford? Do you think there's anything you can comment on? Mr. Engemann.
Now with Ford, we're talking about the MEB platform, the modular electrification system. The question is, are we going to put one hat or two hats, body styles on top of that?
Again, it's MEB. In terms of trucks, commercial vehicles, TRATON in the first nine months you have seen has developed well. Clearly the dynamic of order intake is not disconnected from the general market developments in that industry. When it comes to Europe, as we are talking about here, that picture is a very specific one because in North America we only have a marginal footprint. Yes, these are significant drops, double-digit % losses we are seeing there. Therefore it makes it all the more important to consolidate and start the new truck generation with Scania.
MAN is also going to launch that new truck in the next weeks and months. 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. I've not been saying that the entire party is over and I don't want to be too subdued at all. 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. Those growth rates are gone.
That doesn't mean that we're now in a situation where you should become frustrated and therefore relating to the earlier nine months, I think it's still in line with my earlier picture that I've drawn.
Well, can I still follow up on that? I've talked about PPE earlier. This is the Audi and Porsche platform. My question is, are you talking to other partners as well? Are you going to share the PPE with other OEMs, perhaps?
No, 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.
The next question comes from Yann Schreiber from AFP.
Good morning. Thank you for giving me the opportunity of asking a question. I wanted to ask the following question. In a market environment which is declining, do you think that the sales in e-mobility will be impaired by this? What is your planning in this respect? Thank you. 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 e-tron. The question is that for us, as a volume producer, the ID.3 and the volumes will be the decisive factor. 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 first customer feedback. It is very convincing.
It's quite impressive, and I'm convinced that the ID.3 in particular reminds us of the fact what a good start the Prius had as a hybrid in the U.S., and the outside effect by which it stood out against the classical vehicle concepts. This gave rise to euphoria in the United States, particularly on the West Coast. I could imagine that these highly effective vehicles that will come now, that are in the pipeline, will find people who like them. Although not everybody will immediately be ready to change over, to switch over to e-cars. This will develop over time. 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. I think that should be our main focus.
To state very clearly, the world is not just black and white. It's not just electric. Drives 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. 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 Christiaan Hetzner, Automotive News Europe. The floor is yours.
Thank you for the opportunity of asking this question. Two topics I would like to touch upon. First of all, autonomous driving. Maybe, Mr. Witter, 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 3.1 billion to invest it in Argo AI.
When will Level 3 come at the Volkswagen Group? Audi has developed the A8 now, to date, we do not have an indication as to when this will be released, whether we're going to go ahead and whether it may be done. Secondly, as regards the Golf diesel. There's this twin-dosing system with which it is marketed. You have already had it 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 whether this will give the right decision whether this can be further expanded in the market.
Answer. Yes. We're talking again as promised. 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 two to three years ago, because these are highly complex topics that need to be taken into account, the legal framework, the legal conditions, but also the technology and the software stack. You also referred to the figures that were published. These are investments to the tune of billions. I think the approach to be committed together with Ford at Argo is the right approach. 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. 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, the share of diesel stabilized and even slightly increased in the key countries of EU Five. In absolute terms, they are below the levels of four to five years ago. In the key markets, this has 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 the 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 Audi is willing to disclose this to the public already. As regards to diesel development over the past few months has stabilized.
Back to the question of investment in focus on Volkswagen Autonomy, the new subsidiary, the Volkswagen subsidiary. Could you give us an impression as to what the capital amount could be? I think the figure was about EUR 2.6 billion. That was an order of magnitude, a ballpark figure. Christian, I will come back to that later. As you got the capital injection for the Volkswagen Autonomy, we didn't say anything. To put this very clearly, this is the company which will test and validate the solutions, the SDS solutions, which ergo, if this will come to be, because there are some regulatory obstacles to overcome, will test and validate. The size of the team of Volkswagen Autonomy will amount to 200, roughly. As you got the capital expenditure, we haven't said anything. It's an interim company. It's not a major subsidiary, no.
Thank you.
Very well, ladies and gentlemen. On that note, I would like to thank you all for having attended the conference call today. I think many of you we will meet again on November fourth in Zwickau for the SOP of our ID.3. Thank you very much.
Tim.
Ladies and gentlemen, this concludes today's conference call. Thank you very much for attending. We wish you a pleasant rest of the day.