Hello, ladies and gentlemen. Welcome to today's telephone conference Volkswagen AG with a view to the publication of the numbers of the Q3. This conference will be recorded, and I'll hand over to Mr. Von Bestenboestel. You have the floor.
Ladies and gentlemen, I wish everyone a very good morning from Vossberg. The Q3 numbers of Volkswagen AG are available, and we would like to inform you about them. We, that is the CFO of Volkswagen AG, Frank Witter Head of Group Sales, Christian Dahlheim and my colleague, Nicole Mumsen, who has assumed the job of Head of Communication from Marcus Langenbaum. Nicole, you have the floor. Thank you very much, Pike, and good morning.
I am very pleased to be the facilitator for the first time for the Q3 call, and I will be the facilitator for the questions. I don't want to tell you anything else. Hand over to Mr. Evitter straight away. Over to you.
Thank you very much, Mr. Monson, and welcome, ladies and gentlemen. Now you know that in the last 5 years and when I've been in this role where we have always been engaged in dialogue and even when numbers were bad, I was openly reporting those. It started with a diesel issue years ago, and now it's COVID. So I must say that at the half year conference, it was rather more difficult to present the numbers because now quarter 3 was actually much more positive step in the right direction.
But still, COVID-nineteen remains a central problem. After the successful containment in the summer with a number of measures and programs, we now see that infection numbers are surging again in many places. So this situation now is anything but relaxed. But I still believe that the remedies that we've taken, our 100 points plan that we've applied across our manufacturing network, have been really successful. And it's a fact of the matter that our workforce has much lower infection numbers compared to the overall population.
All of our plants are operating. Our logistic chains are working with a number of ad hoc measures, of course, but still they are largely running smoothly. Now because this is not only about us, we are also in very close collaboration with our suppliers and retail partners, and we do the utmost to make sure that this continues to be the case. Now just yesterday, decisions have been taken by the federal chancellery and the state premiers of our federal states. And this has clearly shown that it's up to all of us to act responsibly in order to get a grip on the infection dynamic.
Measures taken are strict. There's no doubt about it. But I do think that if we all stick to those rules, we can make sure that in the next weeks months, we can report better figures when it comes to the COVID pandemic. And I often look to China if we have similar situations. And yes, we've seen there have been setbacks also, but it also means that if you act stringently, you can achieve good results.
And now ladies and gentlemen, I would like to have a look at our business figures in the 3rd quarter. Now there was a big unknown in the sense that we wanted to see whether we could see a continued recovery of the economy. And indeed, the market has bounced back in all significant markets. The month of September for the first line has been an increase in the overall vehicle market and also at Volkswagen compared to the prior year, and this has provided some good tailwind for us. What is also positive to point out is that in those difficult times, we have managed to gain market shares.
This shows you that we're in solid shape, and Christian Dahlheim will share with you a number of details related to our sales figures. But alongside this crisis management, we've found it equally important to push the restructuring of our group forward. So we are not letting up when it comes to the transformation of our company. Just to mention our electric car push, the RD3 and the RD4 models, and also the going digital agenda, like the car software, Roark, or our acquisition of HELLA Aglaia are just cases in point here. Now at the same time, we always had to take efforts to limit the financial impact of the COVID-nineteen pandemic, 0 based budgeting across all divisions with a stringent investment control, of course, without in any way jeopardizing the investments required for the future.
But also, necessary restructuring has been implemented across a number of important divisions like MAN Energy Solutions or also the Brazilian market. We have streamlined our portfolio by the successful divestment of RENK, just to give you a few examples. But something that also has been a priority on the Board of Management and across the company is to ensure liquidity and manage our working capital. So in total, I can say that the numbers that I'm going to show you in a minute will bear out this fact, namely that in those difficult conditions, we are in good shape. And that is yet another confirmation of our solid substance and the strength of our group.
So under the conditions of the COVID pandemic, we have seen a reasonably successful third quarter. Sales volumes and revenue are just slightly below the prior year level, which is a great achievement and an impressive performance of our workforce of our team. The high margin premium brands were less affected than the volume brands in the commercial vehicles. Now the deliveries for Audi in the 3rd quarter were up 6.4% or even 8.4% with Porsche. But continue to work in what we call a task force mode.
So countermeasures to cut costs, to ensure liquidity and to relieve our working capital have been successful, and they are remaining in focus. Our operating profit in the Q3 came in at €3,200,000,000 So as we talk about September here, we are returning into the black. The net cash flow of the Automotive division, which is another very important indicator, increases to €6,200,000,000 So year to date, this is also positive again after a very difficult number of minus €4,800,000,000 at the half year figures. So a driver for that is our working capital. So we see a normalizing of liabilities and much lower capital lockup compared to before in terms of our inventory management.
Our net liquidity has increased to a very robust €24,800,000,000 So it's about €6,200,000,000 more. The distribution of the dividends because of our later AGM will happen only in the 4th quarter, euros 2,400,000,000 now paid in October. The acute impact of the COVID-nineteen pandemic has been under control. We are back into the black market position. Our market footprint also has been consolidated also in these crisis times, and we've kept our financial scope in order to make investments for the future and also to shoulder the transformation of the Volkswagen Group.
Now our 9 months figures, however, because of this rather difficult second quarter, are still showing an adverse impact from virtually all significant figures. But the dynamic of the reduction has been mitigated across the board than they were at the half year numbers. In terms of vehicle sales, we are we have sold 1,700,000 vehicles less than the prior year. That is a minus of 21%. Our drop in revenue is minus 16.7%, slightly less but much better than in the second half year at the half year figures.
The operating profit before special items come in at EUR 2,400,000,000 still positive but substantially lower than in the prior year. The reason for that being that we've seen reduced volumes due to slower customer demand, especially in the Q2 of the year. There were negative effects of our fair value designations of derivatives outside the hedge accounting and also currency effects accounted for a minus of EUR 1,000,000,000 in the 9 months. But there was also a noncash gain of €800,000,000 from the business combination of AID and the Ford joint venture on autonomous driving. So there's a negative effect and a positive effect.
They almost were netting out. But we also need to say that we had no other special items in the Q3 year to date for the 9 months. In other words, we had EUR 700,000,000 that you also have known from the half year figures. Our pretax profit is at EUR 2,300,000,000. It's hardly comparable to the prior year where it was at EUR 14,600,000,000 But just like the operating profit, the pretax profit is back in the net income area.
This strict cost discipline also is effective. Our CapEx has been reduced by about €1,800,000,000 So it's almost a minus of 22%. The CapEx ratio has dropped slightly to 5.1% despite a drop in sales. The R and D costs have been reduced by EUR 500,000,000 compared to the prior year to EUR 10,200,000,000 But the R and D ratio, because of the significant drop in sales, have gone up to 8.1%, whereas in the prior year, they were at 6 0.8%. And in just a few minutes, I'm also, as usual, I'm going to give you an overview of our brands.
But before I do that, Christian Dahlheim will talk about the vehicle sales situation. Frank?
Thank you so much, Frank. I would also like to welcome you quite warmly to this conference call, and I'd like to present the sales numbers for the Q1, focusing on Q3. As you know, the corona outbreak in the first half left its severe traces in the entire automotive industry. And of course, it also meant a negative trend for our delivery numbers of our brands, as Frank Witter said. I would also like to say that for Q3, we have clearly more promising numbers.
Our worldwide delivery deliveries are almost at previous year's levels in the Q3. From January to September, we delivered 6,500,000 vehicles all over the world. That's a minus of about 19% year on year. Premium and, in particular, luxury brands are not so much involved as our volume brands and truck and bus. Let's now take a look at the deliveries depending on the regions.
I'll start with North America. Deliveries year to date are at 22%. So we are a bit weaker than the market. Starting from a low of minus 26%, the 3rd quarter improved to minus 14%. Main driver of increase was United States and Canada, whereas Mexico was minus 33% in the 3rd quarter stayed rather weak.
Let's go to Europe. Now passenger car deliveries year to date in the 1st 3 quarters were at minus 25%, whereas the overall market went down 28%. We see diverse development in Western and Eastern Europe. If you take a look at Western Europe, passenger passenger car deliveries year to date at minus 27%, as the overall market went down by 30%. Thus, we increased our group market share.
Strong corona related deliveries to customers declines in the first quarter were improved in the first half year were improved in Q3 with minus 3% were almost at previous year's levels. In many countries, many state NOI incentive programs contributed to the recovery at state level in Great Britain and Italy. Those need to be mentioned that have mainly contributed towards the Q3 results when it comes to increase of deliveries to customers. Central and Eastern Europe, passenger car deliveries in the first three quarters went down by 16%, the overall market by minus 20%. So again, there, we were able to increase our market share.
Compare this to minus 26% in the first half year, the 3rd quarter had a plus of 3%, which was beyond previous above previous year's levels. Despite very high corona incidences, recovery in the 3rd quarter is mainly drawing from the strong performance in Russia. South America, one of the most difficult markets. Delivery is minus 26% year to date. Overall market went down by minus 36%.
So in our core markets, Brazil and Argentina, again, we were gaining market share in a rather difficult market environment. In the first half year, we lost about onethree of our deliveries and we were able to reduce our decline in the Q3 to minus 12% Asia Pacific, which naturally is strongly influenced by China for us. Passenger car deliveries were at minus 10%. Our deliveries, the overall market went down by minus 15%. So there and in particular in China, we were able to increase our market share.
Passenger car market in the Asia Pacific area has been recovering since the 2nd quarter and the third quarter, went above previous year's level, which, as I said before, is mainly drawing from China. And we go beyond our previous year volume in the Q3 by 3%. So as a summary, we can say on a monthly basis, we see a clear recovery since April where we had the most difficult month. This recovery was spearheaded by China. We can say that at the global level in every month of the segment Q3, we went above the market.
We were able to gain market share. Of course, for us, these deliveries are still far below the numbers we would like to see. However, we all know velocity and the degree of further recovery depend on the further outbreak on the containment of the virus. And we see with the stricter measures in Europe that we're not through yet by far. Situation of the market, situation of the health systems and state countermeasures play an important role.
Each of the forecasts that I'm giving you on market and sales development is considered to be rather volatile. Still we confirm that from today's point of view, we see that there will be global market decline in the bandwidth of between 15% 20 percent. And furthermore, we confirm that our deliveries to customers, we see that a bit better than the overall market development. We continue to believe that we'll stay with our market share. It's based on our strength in China, the strong and new product portfolio with a broader range of electric cars and many completely upgraded models, core models like the Golf Octavia and the Leon.
Please allow me at the end to give you some information on our e mobility strategy. Since beginning of the year, we delivered 123,000 battery electric vehicles, which is an increase of almost 175%. Particularly to be highlighted is the first member of the ID family brought on the market recently, our ID3. It's well accepted by the market, and we are very happy with the order entry. ID3 is the first half of our new modular electric toolkit, the so called MEB, which will be rolled out worldwide and will play a decisive role to reach our target of 5% to 6% battery electric vehicle share in the EU 28 this year.
And this year when I say this year, I'm referring to 2021. In 2020, our product drive based on the MEB will be continued with the all new ID. 4, with the ID. 4 Volkswagen for the first time offers an electric SUV, fully electric that will locally be going with 0 emissions in the compact SUV class, we will sell it in China and the United States. This is a major part of our e mobility strategy.
Since the end of September, our customers are able to order the Audi 4. In the course of the first half of the next year, 2021, we'll continue the MAV strategy with the system model with Skoda, Enyaq, Ivy and Audi Q4 e tron. I'll hand over to Frank Wittermell.
Christian? Thank you very much, Christian. Now what I'd like to do is to look at the performance of some selected brands. And if you want to get more details from other brands, you can get that from the quarterly report and also the press release. But as you have always wanted, we leave obviously a lot of space also later on for your questions that we're going to take in just a moment.
As far as VW passenger Cars is concerned, we have progress made in the Q3. The operating loss before special items compared to the half year figures was reduced by about €500,000,000 But still, we end up with a major task to address, which is a minus of EUR 1,000,000,000 after 9 months. So our claim and our intention is that after 12 months, we will equalize that without a loss. Cost management at Volkswagen is effective. Fixed costs have been significantly reduced, but this obviously is not enough to set off the negative effect from the much lower sales figures.
Without China, we're talking about minus 31 point 1% or in terms of sales revenue, which is a minus of about 28%. The volume market has been hit harder than the Luxury segments, but even there in the Q3, we have seen a rebound. Worldwide deliveries of the brand from July to September are only at 2.7% lower than the prior year for the entire 9 months. We're talking about minus 19%. Now let's move on to the south of Germany, namely Audi.
The high margin premium segment, as I said before, is much more crisis proof than other segments, which means that we have had a successful Q3 of the year. Vehicle deliveries increased by 6.4% and sales revenues also above the prior year. Important drivers, and this is something that Christian Dallermesh just talked about, our deliveries in China. After 9 months, we are posting a new delivery record at a plus of 4.4% versus the prior year. The operating profit before special items in the 3rd quarter is clearly positive at EUR 900,000,000 So we've achieved a breakeven here after 9 months at €200,000,000 Porsche is also strong.
It continues to be an important revenue driver for the entire group, especially now in these crisis times. The operating profit is at €1,900,000,000 Obviously, the prior year before special items was €3,200,000,000 So that could not be achieved. But still, the return on sales, the margin is impressive at 10.8 percent. It is double digit. Deliveries in the 3rd quarter, as I said before, is higher by 8.4% over the prior year.
And here again, the Chinese business was a major asset, a good revenue driver. Across the 9 months, so year to date, deliveries are slightly below the prior year at minus 5.3%. Sales revenue, minus 6.3% after 9 months under those conditions, is still relatively stable. Drayton, and in particular, the Industrial business, here the operating profit compared to the half year figures, which was minus €300,000,000 has improved, but it's still slightly in the negative with minus €100,000,000 Revenue year to date has been shrinking by 21% to €15,400,000,000 The main reason being, of course, that the new truck business is reducing because of the market slump as a result of the pandemic. And even cost savings, although they have been helping.
Obviously, we're not in a position to fully compensate for that slump. The new leadership team with Matthias Gruntler is now single mindedly pushing the restructuring measures, and we assume that for the future, we'll see a major increase in competitiveness of that brand. And finally, our Financial Services division. In times of crisis, it's also a very important factor of stability for the group, not only financially but also as a partner for our retail businesses. The operating profit at €1,800,000,000 for the entire division is at a very continues to be at a very high level.
Our outlook for revenue was increased for the Financial division, and we expect it to be on the level of the prior year figures. And finally, ladies and gentlemen, let me give you an outlook for the overall year for the entire Volkswagen Group. We maintain outlook in principle with the deliveries and sales revenue clearly be below the prior year and the operating profit severely below the previous year, but still positive. There have been a number of news, as I said before. For instance, financial services revenue is at prior year level.
The net cash flow of the Automotive division is positive. But clearly, below the prior year, the net liquidity in the Automotive division will also come in at prior year levels, something that we had not seen before. But we do still assume there will be high volatility in the market. Infection numbers are very hard to predict, not only in Germany but globally. So therefore, we will not, as in the future, provide any ranges or corridors, which would provide a sense of accuracy that cannot be maintained at this point.
But fundamentally, we assume that the recovery will continue in the Q4 of the year, although the general conditions, of course, are challenging. Our order intake in September is above the prior year level. And in terms of October, we are reasonably optimistic. We do not assume at this moment that there will be comprehensive lockdowns in larger markets. We will leave no stone unturned to finalize and to finish this financial year of 2020 under those conditions in the best possible way.
For us, this means we want to achieve our operation operating and financial targets but also to suit our transformational strategy at full steam. The Volkswagen Group needs to be made future proof, and the changes in the world of mobility will be shaped by us. And something that's also part and parcel of our strategy is to make a contribution towards our sustainable development because we share responsibility not only for today's but also future generations. And with that, ladies and gentlemen, it's back to Nicole Monson.
Thank you very much, Mr. Witter and Thank you, says the operator. Thank you, Ms. Martin. We start with Mr.
Schwartz from Reuters. Yes. Thank you so much. Good morning to Wolfsburg. What I would like to know I have two lines of questions.
What I'd like to know is as to whether you can give us numbers, which order of magnitude are you talking about when you say when savings contributed to this turnaround? And the second line of questions would be whether you can say something on M and A situation. Despite this rather difficult situation, you want to completely take over Navistar. How does a potential change look like with Bugatti, Lamborghini and Ducati? Thank you.
Mr. Vitter. Good morning, Mr. Schwartz. I start straightaway with the M and A question.
Well, you know, Navistar, the Navistar issue, this is positioned at the Triton colleagues. It's one of the major cornerstones of their global champion strategy. And so far, we still deem this to be an important step. Of course, it's not easy under the framework conditions as we have them at the moment. But all in all, it is a rather sustainable step in order to strengthen Triton's competitiveness and to turn Triton into a truly global player.
Of course, there are some reservations still, due diligence depends and we also hinge on the decision by the committees, but we moved a step forward and open questions need to be addressed. So we still deem this to be an important and the right type of step. You also know from other rounds of questions that other M and A issues are being discussed. There's rails and I think it's completely right that there might be public speculations on what one might envisage, one might think being core business or not. To fire those up does not improve the possibility to move it forward.
You see with Rink that we are able to go the way of certain steps and you know that the Board of Management has a certain opinion that portfolio clearing has not been finished. But we, of course, will have these discussions internally in our committees. And once there is a decision, we communicate it. But the Board of Management does have a couple of ideas, but we won't give our opinion publicly and we won't want to go the way and move forward with speculations ourselves. Now on saving and fixed costs, I referred to CapEx and discipline when it comes to capital expenditure.
With Volkswagen, Eddy, just to give you an example for the Q3, we are talking about an order of magnitude of €200,000,000 Now I know when you put these numbers into perspective that with some of you, there might be bigger numbers around. But please keep in the back of your mind that in the third quarter, like the entire year, we have been at the end of the monitorship period. We wanted to give the monitor the position to start to end the certification. So to work through the to do list, to work through recommendations meant a lot of funds, meant a lot of personnel and financials. We did that being firmly convinced that this makes the company better and sustainably more stable.
And that, of course, was another factor why general overheads maybe have not been as influenced as with others. And of course, we invested into audit facilities and risk management in order to turn Volkswagen into a more stable and better company. So it was a sustainable investment. So there's no contradiction, but that's the way you need to see the numbers for the 9 members. Monetorship was an important task for us.
Mr. Menzel, you have the next question. Handelsblatt, Mr. Menzel, please. Yes.
Good morning to Wolfsburg. I have a rather specific question on Navistar. In the press release on Page 4, you're referring to the fact that further liquidity decline from mergers and acquisitions is to reckoned with. Mr. Vitter, is that are we referring to Navistar?
Do you think that Navistar will be closed this year? No. Navistar won't burden liquidity this year, provided the prerequisites are set. That's a topic for 2021, and that's for the second half of the year. Okay, next question.
So what kind of money will leave under mergers and exposition? Is it HELLA? Is that going to become effective? And so, well, the bigger numbers, the bigger things that I can come up with spontaneously, that's one thing is the squeeze out Northvolt as a tranche that needs to be paid out. And a larger contribution is for JAC in China that should be to the tune of €500,000,000 Those are the major issues that are meant here.
Navistar, that's an issue for the next financial year, should it happen? Thank you. Okay.
Next is Bill Boston from The Wall Street Journal. Good morning and thank you for taking my question. I have a couple of questions. Number 1, can you say what the relative importance of China is in your net result for the quarter? And how does that compare to the previous year?
And then you also said you expect a recovery in the Q4 to continue. But just yesterday, we heard about more restrictions in Germany and France. So this creates more uncertainty in the global markets of the world. And although industry will not be affected by that lockdown, but there's still psychological changes. People probably will be very uncertain.
People will be losing their jobs in different areas. So generally, the world economy will be experiencing yet another slump. Now these are indicators that in the past years have always been weighing on the volume of vehicle sales. And I'm sure it will leave a mark on Volkswagen. So how do you see the deterioration generally of the mood now in your business?
And my final question, your portfolio restructuring that we have read about in the press in the past days as far as Audi is concerned. What's your objective with Bentley, Lamborghini and Ducati? So what are you planning to do there? And will it all be moved under the Audi brand? Will there be an IPO?
So how do we go from here? Thank you very much. Bill, this is Christian speaking. I'd like to take the second question first, the question of a recovery in the Q4 or risks related thereto. Well, the risks that you have mentioned are, of course, correct, and we look at them as well.
What makes us upbeat is that, number 1, that China for us is a market, because of that current situation, is less affected by the corona pandemic. And secondly, in Europe, we have a record breaking order book, which is actually much higher than it was in the past year. Now as far as deliveries are concerned, in the next 3 to 4 months, we're a positive year as well. We look at order intake as well, but even order intake is stable right now. If they were to shrink, obviously, we would have to adjust our production and would see a positive impact on the 4th sorry, Q1 of next year.
But we're optimistic when it comes to our existing order book here in quarter 4. In North and South America, we have been more conservative in our estimates because there are a number of risks, also the economic impact of the crisis, unemployment, etcetera. But we do think this is already reflected in our current figures. All right. Frank Ritter speaking.
Let me say a word or 2 here. Earlier, I said that conditions are not going to be any easier in the Q4. That's true. And it's true that measures taken are not ideal. But they still allow us, given as we see the situation today, we can continue to manufacture our vehicles and sales will continue to work.
It also means that we all need to stick to the rules and follow the restrictions in order to contain the further spread of the pandemic. Now when I talk about ongoing recovery, our baseline would be the Q2 of this year, which has been extremely hardly hit. And I think I'm slightly more optimistic for the remainder of the year to maintain production figures. So therefore, our outlook for quarter 4 means additional bounce back based on the original situation of the Q2. But again, let me say no one believes in this organization that it's going to be easy.
And therefore, we always critically look at our supplier and retailer network. Now China is and remains a very important revenue driver for our entire group. And in fact, it's very impressive to see how the Chinese market has bounced back in a V shaped fashion. And if I look at our equity results from our Chinese operations, we see a relatively slow drop of €30,000,000 between the 2nd and the third quarter. So this is consolidated in our financial result, but parts of our Chinese business is also in the operating business.
So therefore, China continues to be a very important stabilizing factor both in our financial and our operating result. But as I said before, the larger chunk of it goes to the financial result. But we see a deterioration of results that is still much less than in any other region of the world. Okay. Next question comes from Christoph Reubelt from Bloomberg News.
Good morning to everyone from Frankfurt. I have two questions. Number 1, referring to your supply chains. I think in the spring when you had to halt production, you've had the situation under control when it comes to the different production stops. How would you rate the resilience of your supply chains now given that potential production restrictions would still have to be taken and for the lockdowns would take place in markets?
So that was number 1. And question number 2 is something a popular topic for analysts, working capital. Mr. Dahlheim, can you talk about your current inventories you have? And what about pricing in your main markets, so Western Europe and China and the United States.
So if you could respond to that, please. Okay. Franklyta, I'd like to start with supply chains first. What we can say is that we need to say give a big thank you to our team who have managed the situation really well before the Q2 situation really has hit us hard. But they've been dealing with the situation really well, and it's true that with all of our suppliers, we have direct relationships, and we have also taken some liquidity boosting measures.
But in general, what I can say is that our supply chains were not discontinued. It is true that there have been some regional corona hotspots that have made the situation rather hard, but the management of those supply chains have been done really well. And this gives us some good experience and makes us upbeat about the future. Now if we look to the Czech Republic at the moment, you actually see how quickly, how dramatically the situation has deteriorated there. So we are on high alert in our task force mode, as I called it, and it means what we have done so far will continue to be a decisive factor when it comes to supply chain management.
It includes also air freight to be taken at some point. And in other places also, we need to provide some liquidity support. But our team has stood the test of time. We are qualified to do that. But it continues to be a major challenge.
That is true. Mr. Robert, Christian Dahlgren speaking. The question on your working on the working capital. In the past quarter, we had lower inventories than we had in the ideal world.
Now what ideal inventories mean is to be able to deliver vehicles to our customers quickly. Now for instance, if you order a T Roc, a VW T Roc today, it will take you a few months before that car is available. So we're currently 10 to 15% below our ideal stocks. And by the end of the year, we expect to come in at 5% to 10% minus 5% to 10% of our ideal stocks. This is also the goal provided by the Portrait Management in order to control liquidity and working capital.
And then there are different modules that have our diverse different stocking levels, of course, that's true for Europe. In China, we are on normal stock levels just because their sales figures are better to forecast than here in Europe. As far as pricing is concerned, my answer would be twofold. We had higher dealer rates in some core markets. That's certainly true.
And I think all OEMs have done that. In Germany, we have seen some sales incentives with a reduced VAT rate. And especially in the A0 segment, we've taken pricing measures, and they actually have an impact on the bottom line. And just now, we're looking at our plugged in hybrid vehicles. There is great customer demand with scarce battery availabilities there.
So we do aggressive pricing there. And when it comes to all electric vehicles, we are not taking any pricing measures because there's government subsidies or support out there. But with our good price positioning, we are selling those vehicles without any additional incentives.
Thank you. So next question comes from Christian Hetzner from Automotive News Europe. Please. Yes, thank you so much and good morning to everyone. I have three questions.
First question goes to Mr. Dahlheim. Are the diesel cars that you can no longer sell this year with higher emission levels with lower conformity factor that you would then have to sell from January onwards? 2nd question, ID 4, once the car has been presented, the contingent for the 1st edition of the United States was sold out. Do you have already envisaged more value volume for the United States?
Have you allocated more? Or do you need each and every car for reaching CO2 targets here in Europe? And as regards that, where do we stand there? Mercedes last week said that they are rather confident they will reach their fleet targets for 2020 without any assistance by Renault or other partners. Can Volkswagen claim that as well?
Or is it possible that more partners, MG, will be funnily enough, not mentioned in the interim reports. Maybe that's a sign that you can do it on your own. Thank you. Mr. Ted, thank you very much for the questions.
Question on diesel, that's pretty easy to answer. No, there are no diesel cars that from this point of view, you from this time, we see that we can't sell. The diesel share is declining in all of the core markets, but the residual value for diesel cars are surprisingly stable, which probably is also due to less available cars. We see a stable demand for diesel at a low level. So much on question 1.
Question 2 on ID4s, yes, we're very pleased about the high demand for ID4 from this point. From today's point of view, you can't take it that we significantly transfer cars to the United States for two reasons. At one, we focus on Europe with selling those cars because of customer demand and of course also because of compliance. But we have to be honest, the contribution margins for cars are typically higher in Europe than in the United States. That's also true for the ID4.
So therefore, of course, we love to sell the cars in the U. S, but we won't have larger volume from Europe to be reallocated to the United States. And lastly on CO2, I'd like to confirm with Pramck Witte in a couple of calls has mentioned and have at least as well. It's going to be a tough race for us. So today we can't clearly commit to being able to be in line with the CO2 compliance, but we're intensively working on it to solve this issue by the end of the year to be fair.
We have to say that a couple of points are there. Forecasting this is really difficult. We don't know how the registration offices will be relevant in December. This is not something that I want to use as an excuse. It's just a matter of fact.
We don't know what the effect on the ICE engines will be on in Q3 and Q4. And most importantly, we won't be crazy. We won't push electric cars, damaging residual value to reach compliance. If so, we want to do it with healthy business. And last but not least, we will not artificially pull back ICE engine cars.
The result situation don't allow us to interfere with anything. We want to make customers happy and get our results on board. So it's going to be a tough race, but we haven't given up on the target yet. Thank you so much. Right.
Ms. Bombardier, we have a last question by Jan Schreiber from AFP. Yes, good morning. Thank you very much for listening to my question. 2 of my three questions were asked already.
There's one question left. That's the one for the electric car models. And how far maybe Mr. Dahlheim this goes to you and how far do you see an effect on the demand for electric cars in rather uncertain times? I might want to speculate here.
You said people might be losing their jobs. The situation is a bit insecure. Do you think people would want to dare to go into a new type of technology, which may be in the next generation will again improve and the cars are a bit more expensive now. Are you concerned that the electric share of your cars will be rather damaged because of this? Well, funnily enough, Mr.
Witter asked this question to me 4 months ago, and that's why we have 2 answers. Yes, we did customer surveys statistically relevant surveys. And funnily enough, we find out that in the crisis, and this actually is true for all of the regions, the interest to buy an electric battery electric car has actually been risen, the rise of about 3% in interest. So one third of our customers are deliberating buying such an electric car. That's a positive piece of news.
And you also see it from the demand situation. Technology uncertainty, you can explain it, the cars that come to the market now, that's a technology that will be the technology for the next 3 or 4 years. So maybe we would answer the question differently. If we were still with an e Golf on the market without wanting to belittle the car, but since we have the ID. 3, the ID.
4 and the system model, the Taycan, this removes a lot of the technology uncertainty. So we see a stable situation, slightly risen demand for electric cars. Right. And we have Marco Engemann from DPA Ifix. Mr.
Witte, in a couple of days' time, the United States will elect the next President. Do you have an outlook as to what you expect? Should there be a change in the top drop in the United States, whether maybe in the trade front, things might be a bit calmer over the next 4 years? Answer, well, of course, we are pretty far with our planning around 69%. But with all the criteria that we set the end of the United States election wasn't decisive when it comes to selecting the volumes.
No matter whether the President is being confirmed or a new one will be put into the office. This has no influence on our volume expectation. We have a clear plan forward for North America under the conditions that include the region that's Mexico and Canada as well as the United States. In our industry, we are moving in longer periods and cycles. So we'll consistently move through our plans no matter what the outcome is of the election.
Thank you. A further question comes from Markus Cloughen from Dow Jones.
Thank you. Follow-up question referring to electric vehicles in this crisis time. Now we've heard in a number of calls from other OEMs that because of different consumer spending, the demand, particularly for premium vehicles, has actually increased, which has mitigated the pressure on the industry. Can you confirm that? And do you see also a different consumer spending behavior now?
And is that people still, despite the corona crisis, people want to buy their own cars because they feel safer? Mr. Claesen, the second part of your question. Especially for North America and China, we exactly observed this phenomenon as you described. Both in North America and China, we've seen a relatively large share of people who are making a first time purchase decision or are buying a vehicle that they have not owned one but used it before.
So given the mobility situation in those countries, this is understandable. But we don't so much observe that phenomenon in Europe because people still own vehicles. And if they don't want to use the public transport system, they can use other systems like sharing services. So we see really a record demand for mobility sharing services. People are swapping public transport for sharing.
Now we see a trend across all regions that the market is moving upwards. I mean, segments are going our consolidated premium segments are rather consolidated because people who can afford a premium product are less affected by this crisis than people who cannot or who are to be purchasing higher volume models. And it's over to Stephen Wilmot from The Wall Street Journal, please. Good morning. Two questions, please.
You talked a lot about investments in electric mobility, but can you also tell us how much you are planning to invest in software development, like for instance with your car software organization? And the second question would be, can you also talk about the contribution margin of the ID3? Was it better than expected given the current situation that we're facing here in Germany and France? Answered by Frank Ritter. Well, yes, the ID 3 contribution margin is pretty much exactly where we expected it to be.
In other words, it doesn't come in as a surprise, but we're only just at the beginning of the vehicle launch. So by the end of 2021, we have a full year. And then after that full year, we can give a more accurate analysis referring to the earlier situation there. Not generally on the contribution margin, but also we can then make a statement on production, production costs, which will also have an impact for other e mobility platforms. Now given the subsidy situation that we have expected here in this market or generally end markets, there's no deviation in terms of our budgeted figures there.
Our investment figures for software, just to talk about the order of magnitude here, it's already an expectation of several €1,000,000,000 that we're going to invest in our software backbone. It's a substantial commitment that Volkswagen has made, and we expect there will be significant economies of scale, and we will bolster our competitiveness with that. It's one of our investment activities that will be in line with our IFRS margin guidance for 2025, which is 7% to 8%. So we have to do obviously more in this area there, and we're certainly happy to increase investments here, which at the end of the day is going to help us durably. So when we talk about software, it's several 1,000,000,000 of euros that we're going to invest in the next couple of years.
And especially when we talk about the new investment plans, the planning around €69,000,000 in a couple of weeks' time, we'll be in a position to say more about this. And did you have a follow-up question? And then we have Mr. Johansen from Automobilbocher. Yes.
May I please follow-up on portfolio adjustment? You said earlier that there's not much you can't say. But as far as Bugatti and Bentley are concerned, I mean, are these plans already clear? Can we expect an announcement by the end of the year? Because as you said, the planning round is coming up.
Can we reasonably expect to get some final statement by the end of the year? For this year, I wouldn't want to expect too many news here, especially given the fact that we're really approaching homestretch before the end of the year.
Thank you. So we have a redirect from Bill Boston from The Wall Street Journal. Go ahead, please. Thank you so much. I wanted to say, so you take it that you will sell 300,000 electric cars this year, next year 600,000 that is far more than just ID, which effects will the electric cars that's plug in cars have on your operating profit?
Is that a negative business? And how will that look like next year? And can you maybe also take a look at your business? You talked about the Q4, good order levels, But take you do you take a look beyond this year when uncertainty rises? I can't imagine that this won't leave traces at your side.
So how does that look like? Do you have a bit of insight into the first quarter of 2021? And last question, battery capacity, you have invested a lot in building up capacities in Europe. Is that enough what you have now? And if so, for how long?
Or will you maybe invest more in battery capacities over the next 6 to 12 months? Thank you. Well, till 2025, we are in a good position. However, the new green deal will, when we look towards 2030, significantly increase the share of electric battery electric cars. So all of the OEMs are trying to find out how they guarantee the supply with battery sales.
So it's not just us, it's the entire industry that is called upon to find out how to bring together the capacity. Add 1, this is the cooperation with suppliers as we have them today. This is the development of new suppliers such as Northvolt. You've seen that many joint ventures have been started. So yes, the industry will require more battery capacity and this is one of the core issues that we have to answer over the next few years.
We are prepared wherever it's meaningful and necessary like within China with a joint venture with Northvolt to directly make a commitment, but I'm sure it's going to be a combination of everything. We have to cross the mountain and we have a demand that we need to cover and that has risen significantly. And you asked, well, battery electric vehicles, does that burden our result? Well, if you take a look at the margin here, which we communicated variously, battery electric vehicles with the margins that we have today, they're below ICE engines. So they are dilutive.
But there is one question which we must not lose sight of. CO2 is one very important side condition to stick to. So if we don't have battery electric vehicles, we would pay significant fines. Christian Dahlheim has explained that neither for 2020 nor in one of the years afterwards, we want to go that way. So the contribution of battery electric vehicles can't just be seen with the margin, but also be the avoidance of fines.
That's the overall package that we're dealing with here, which is why none of the battery electric vehicles that we sell in 2020 or 2021 make us sad. And order entry, Christian Dahlam, over to you. Yes, you asked for the Q1, and I'm just referring this to overall sales. You also have to take a differentiated look at the regions. We said in China, we're basically on track on the normal growth track.
In Europe, we are still confident that in the Q1, we won't see any dramatic negative traces. But to be honest, this depends on as to whether the measures now in November will be good in all of the markets where the infection numbers go down. If that's not the case, then of course, we'll have a clear impact on the first quarter. Now as regards battery electric cars, you have mentioned the order of magnitude that we want to sell in 2021. We deliberately confirm that it is more or less irrespective of the overall market development, we see this stable more or less without any interference.
Of course, if the market broke down, that's something different. But we deliver the percentage of battery electric cars. We think we deliver that even if the market develops negatively. We said North America and South America naturally will take to 2020, 2022 till they are at the level of before the crisis. Mr.
Hetzner, you have another redirect question. This is a similar issue. This is battery sales Tesla. During their battery day, they have mentioned that they will expand their own capacity to 100 gigawatt hours till 2022, irrespective of the usual deliverers like Panasonic and Delight. You built the plant in Salzgitte with 16 gigawatt hours from 2024.
Do you have a similar order of magnitude we are about to assess the Green Deal and the implications thereof. I said the investment in Goshen and Northvolt, etcetera. We know that with solid state batteries, we're also involved there. That's something which we are assessing now, which is why I can't give you any further statements. I have clearly sketched out that we have to take a look at the situation, in particular, after 2025, see how the demand is.
And then we need to take a look at the different regions. So I won't exclude this from happening, but it's in a decision making process. And at the moment, we are about to assess all of this. Thank you so much. Right.
Currently, there are no further questions. I'll hand over to the operator once again. Thank you, ladies and gentlemen. So we don't have any further questions. Thus, our Q and A round is ended.
This conference call comes to an end. Thank you for your participation. Have a great day. Bye bye. Thank you so much from our side, Ms.
Mommsen, Mr. Witte, Mr. Dahlheim, Mr. Umisch Fall. Financial communication, they will be available today.
And of course, I will also be available for the rest of the day. Thank you very much and have a good day. Thank you.