Ladies and gentlemen, welcome to Volkswagen's conference call for investors and analysts on the results for the period January to September 2020. Based on the nine-month report we published early this morning. For today's conference call, I am delighted to be joined by Frank Witter, Member of the Board of Management, Volkswagen AG, responsible for finance and IT, and also interim board member for group components and purchasing. I would also like to welcome our Director of Group Sales, Dr. Christian Dahlheim. Most of you will have followed the webcast from this morning's press conference. Our focus now is to cover your specific needs as investors and analysts. Following the presentations, we look forward, as always, to taking your questions. Let me now hand you over to Frank.
Thank you, Helen, and a warm welcome to all participants on this call. Before we start to discuss the third quarter, I think it's worth to acknowledge the current worldwide COVID-19 situation. We hope that all of you are remaining healthy. Moving on to today's focus. As you can see from our Q3 performance, we have been recovering well in continued challenging markets. Back in April, May, I was much more cautious about the developments to follow. Luckily, the automotive sector seems to do quite okay in comparison to other sectors like airlines. Furthermore, also our Financial Services division is holding up quite well. The Q3 result for certain peers has already demonstrated this positive trend. We need to continue to also focus on the situation of our suppliers and dealers. All in all, I'm happy that we are back in the black zone on a cumulative basis.
This counts for both Group EBIT as well as automotive cash flow. Of course, we hope that our recovery path continues, and this is our base assumption for the rest of the year. Our still ongoing crisis management, with a strong focus on safe working environment, cost control, and safeguarding liquidity, has functioned quite well. We have been continuing to work hard, especially on our cost base, and have also achieved good working capital results. You can be assured that my statement from the H1 call that we are being pushing ourselves to the limit is still valid. Now let's shift our focus to our nine-month performance. Deliveries in Q3 have increased strongly by more than 700,000 units versus the previous quarter. With about 2.6 million cars in the single quarter, we are almost on par with Q3 of 2019.
However, please remember the base effect from WLTP in the prior year. Cumulative, we delivered around 6.5 million vehicles to our customers, still around down 19% versus prior year. On the back of our attractive new products, we have been able to gain market share, and we are doing everything we can to close the delivery gap to 2019 as best as possible. Of course, this doesn't mean that we will push out cars at all cost. As you are well aware, protecting residual values and our brand's reputation is key to us. Accordingly, you shouldn't expect overly high tacticals and marketing spend in the last quarter. Sales revenue in Q3 went up significantly compared to Q2 by around EUR 18 billion to over EUR 59 billion. Year to date, we are at around EUR 155 billion in total, which is about minus 17% against 2019.
The operating result in Q3 came in at EUR 3.2 billion, corresponding to a margin of 5.4%, strong enough to offset the losses of H1. Cumulative, we are now on an operating result of EUR 2.4 billion before special items. Due to COVID, there is still a long way to go back to EBIT levels of more than EUR 4 billion seen in the quarters of 2019. Due to this year's unprecedented situation, we are experiencing during the single quarters, certain distortions in relevant key figures. This is due to higher fluctuations, normalization later on, as well as catch-up effects. These effects vary significantly at times as well as between regions and markets. In relation to special items, there were no further bookings necessary in Q3. Minus EUR 700 million of special items have been expensed this year.
Consequently, the operating profit after special items came in year to date at EUR 1.7 billion. The operating profit was still burdened by the fair value valuation of derivatives that are not in hedge accounting. The negative impact for the nine-month period was minus EUR 0.6 billion. In addition, negative currency translation effects on receivables and payables burdened 2020 by around EUR 0.4 billion. This was partially compensated by the one-off non-cash gain of EUR 800 million resulting from the merger of AID with Ford Argo, the autonomous driving joint venture with Ford. The net equity result for the nine-month period, mainly relating to our Chinese joint ventures, was around EUR 2 billion, reflecting the proportionate operating profit of EUR 2.6 billion. This against EUR 3.2 billion in 2019. The continuing relative good performance in China is a very significant stabilizing factor in our group.
We hope that the recovery from COVID-19 there can be somewhat of a blueprint for other regions. For the nine months period, profit before tax also moved into positive territory, coming in at about EUR 3.6 billion for the quarter and driving the cumulative result to around EUR 2.3 billion. Our automotive net cash flow for Q3, including diesel and M&A, came in at a very strong EUR 6.2 billion. The drop-through of the improved operating results combined with positive working capital movements were the key drivers. While we, of course, welcome such an outcome, it would be the wrong conclusion to just assume the same trend for cash in Q4. I will explain the reasoning behind this in a few minutes when we speak about cash generation in much more detail. Net liquidity came in close to a very solid EUR 25 billion.
Before discussing the financials in more depth, I'll hand you over to Christian to take a closer look at the sales side.
Thank you, Frank. Ladies and gentlemen, I would also like to extend a warm welcome to this conference call and present to you the sales results of the three quarters of this year. As you all know, in the first half year, the corona outbreak left its mark on the whole automotive industry and negatively impacted our brands delivery results. Q3 showed a different picture with global deliveries almost reaching prior year's level. Year to date, the Volkswagen Group delivered a total of 6.5 million vehicles to customers worldwide, a minus of around 19% compared to last year. Our premium and especially luxury brands were less affected than our volume brands and the truck and bus division. The Volkswagen brand delivered nearly 3.7 million cars worldwide, a drop of around 19% compared to the prior year with the Q3 sales results of only 2.7% below last year.
Škoda delivered nearly 722,000 vehicles to customers, which is still 21% down versus last year. In Q3, Škoda managed to surpass last year's sales levels by 0.8%. SEAT deliveries fell by 30% to a total of 317,000 vehicles, with Q3 deliveries to customers of 12.1% below last year. Volkswagen Commercial Vehicles delivered around 272,000 vehicles to customers, a minus of 26%. Deliveries to customers in the third quarter reached almost prior year's level with a minus of 1.7%. Year to date, Audi delivered nearly 1.2 million cars, a decline of 13%. Driven by very good results in the core market in China, Audi surpassed in Q3 the prior year's level by 6.4% positive. Porsche's deliveries year to date shrank by around 5% to 192,000 vehicles.
The strong Q3 result of +8.4% in deliveries to customers versus last year was achieved in all core regions, Europe, North America, and China. With 7,500 cars, Bentley recorded a +5%. Q3 contributed with a +8.8% to this strong performance. In the first three quarters, the truck and bus division recorded a total of around 128,000 deliveries, a -29%, with Q3 deliveries to customers of -10.5% compared to the previous year. Let us now take a look at the performance of our deliveries to customers on a regional basis. In the North American region, our deliveries year to date fell by around -22%, slightly stronger than the market. Coming from a low of -26% in the first half year, Q3 improved to -14% versus prior year.
This performance increase was mainly driven by the U.S. and Canada, while Mexico remained weak. In Western Europe, passenger car deliveries year to date recorded a minus of 27%, while the total market dropped by 30%. We increased our group market share. After COVID-19 severely impacted the first half year, Q3 deliveries to customers almost reached prior year's level. In many countries, various governmental and OEM incentive programs contributed to this recovery. On a country individual level, U.K. and Italy contributed most to the Q3 performance. In Central and Eastern Europe, passenger car deliveries declined by 16%, while the market shrank by around 20%. Compared to minus 26% in the first half year, Q3 exceeded with a plus of 3% prior year's level. Despite high COVID-19 incidences, the recovery in Q3 was mainly a result of a very strong performance in Russia.
In the South American region, our deliveries decreased by 26%, while the market recorded a fall of 36%. We improved our market share in both core markets, Brazil and Argentina, significantly. While we lost around a third of our deliveries in the first half year, we managed to reduce our loss in Q3 to minus 12% in a still very difficult environment. In the Asia Pacific region, passenger car deliveries shrank by around 10% year to date, while the total market declined by around 15%. Overall market share in Asia Pacific has increased significantly compared to prior year's level, mainly driven by China and South Korea. The Asia Pacific car market recovered since Q2 and surpassed prior year's level in Q3, mainly driven by China. Volkswagen Group could follow this positive market development in Q3 by surpassing last year's volumes by around 3%.
In summary, we see a recovery trend on a month-by-month basis coming from the record low in April, with different speed and degree in each region. The recovery is led by China, which grows since April. On a global level, we have outperformed the market each month of Q2 and Q3. However, as we all know, the speed and degree of further recovery depends largely on the further extent of the outbreak or containment of the virus and its effects on the global economy. Individual market financial strengths, the state of the healthcare systems, and appropriate governmental countermeasures play an important role in this. Therefore, any projections on market and sales development remain highly volatile. As of today, we expect a global market decrease in the range of 15%-20% for the year 2020.
Our forecast for deliveries to customers should be slightly better than the total market development based on our strengths in China and a strong and new product portfolio with a noticeably increasing SUV share, a broadening range of new electric vehicles, and many fully renewed models like the new Golf, Octavia, and Leon. In Western Europe, we see a positive trend in incoming orders that have already surpassed the previous year's level since June. Last but not least, let's have a look on our e-mobility strategy. Year to date, we have delivered 123,000 battery electric vehicles to our customers worldwide, an increase of almost 175%. The recently launched first member of the ID family, the ID.3, is well received by the market, and we are very satisfied with the order intake.
This is the first car for a new dedicated MEB, which will be subsequently rolled out worldwide and which will play a crucial role in achieving our goal of 5%-6% BEV share in EU 28 this year. Still in 2020, we will follow our MEB-based product offensive with a brand new ID.4. With the ID.4, Volkswagen is offering a purely electric SUV for the first time that drives locally emission-free in the world's biggest market segment of compact SUV. Due to the global customer demand for SUVs, this car plays an even more important role in our e-mobility strategy. Since end of September, the ID.4 can be ordered by our customers. In the course of the first half of 2021, we will continue our MEB strategy with the Skoda Enyaq and the Audi Q4 e-tron. Now back to you, Frank.
Yeah. Thank you, Christian. Now moving from those great-looking cars onto the analysis of operating profit versus 2019. COVID has hit us hard like the whole industry. The biggest impact can be seen in the column volume mix price, with a decline of minus EUR 9.7 billion. Volume was a major negative factor at around minus EUR 9.6 billion, which is not a real surprise since automotive sales, excluding China and TRATON, were down by around 1.3 million units compared to the prior year. A negative country mix was almost fully compensated by a positive model mix, reflecting the success of premium in the crisis and the continued SUV trend. The block exchange rate and derivatives was also negative at about minus EUR 2.3 billion, thereof minus EUR 900 million in Q3 alone. As you are well aware, numerous currencies have devaluated substantially in the crisis.
Predominantly, South America was badly hit. Further negative impacts came from the currency developments in Mexico and Russia, and to a lower extent, South Africa and Turkey. The combination for the first nine months of the currency translation of both sales revenue and cost of sales, as well as the effect from dollar-denominated commodity hedges, had an overall negative impact. Product costs deteriorated by around EUR 0.6 billion versus the prior year. Fixed costs were positive at around EUR 2.1 billion, significantly lower than the prior year. This reflects our continued commitment to reduce our cost base. Please remember that the EUR 0.8 billion one-off non-cash effect from the contribution of AID and the Argo joint venture with Ford is included in the column.
Please did note that the cost for restructuring of MAN Truck & Bus, MAN Energy Solutions, and Volkswagen's operations in South America have not yet been booked. This is due to the fact that provisions are firstly triggered after all negotiations with works councils are signed and sealed. Of course, we will push as hard as possible for further cost improvements. Looking at the brands now in more detail. Volkswagen passenger cars operating results before special items declined to a loss of just under EUR 1 billion for the first nine months. The reduction in fixed costs and improvements in pricing could not compensate the COVID-19 related lower volume and negative currency effects. Audi's volume declines, the impact from the fair value of derivatives and exchange rate translations.
As well as higher incentives also caused the operating result before special items to decline to a level of plus EUR 200 million positive for the nine-month period. Reduced fixed cost and development costs, as well as the deconsolidation of AID, had a positive impact.
Škoda's operating result declined to around EUR 0.5 billion for the nine-month period. COVID-19 related lower volume, negative currency effects, and emissions-related expenses burdened the result. The improvement in fixed costs, development costs, as well as product costs improvements could not fully compensate the losses. SEAT could not avoid the loss of around minus EUR 0.3 billion in the first nine months due to the pandemic related volume loss and emissions cost. Bentley's operating result for the period declined to minus EUR 52 million due to higher depreciation, one-off restructuring costs, and currency impacts. With the plus EUR 1.9 billion operating result before special items, Porsche Automotive delivered a decent double-digit margin of 10.8% for the nine-month period, but remained below the prior year. Volume decline as well as digitalization and electrification costs burdened the result. Currency effects were also negative.
Volkswagen Commercial Vehicles operating result continued to decline to around minus €0.4 billion due to lower volumes, higher fixed costs, less favorable exchange rates, and CO2 expenses. However, lower development costs, product cost optimizations, and mix at a positive impact. Scania's operating result declined to around €0.44 billion. Improved mix as well as reductions in fixed and development cost could not compensate the lower volume and negative currency impact. MAN commercial vehicles results declined to a loss of around minus €0.5 billion, largely on account of the reduced new vehicle volumes, a different used car truck market, as well as costs related to the introduction of the new truck generation. The operating result for Power Engineering fell to €66 million due to lower volume and exchange rate effects. Mix and cost reductions at a positive impact.
The famous and volatile other line came in at under minus EUR 0.2 billion, mainly driven by less elimination of intercompany profits. The Volkswagen Financial Services division continued to have a stabilizing impact on the group with an operating income of EUR 1.8 billion. Let's now talk about cash flow for the Automotive division, probably the most relevant KPI for all of us. The reported net cash flow for nine months came in at around EUR 1.4 billion positive. This was versus minus EUR 4.8 billion shown after six months. This substantial positive swing was caused by the very strong third quarter results of plus EUR 6.2 billion. The continuing recovery in operating business and resulting cash generation, especially from our premium brands, were key drivers. Moreover, a huge boost from working capital at around EUR 4 billion drove the majority of the improvement.
Within working capital, we managed to further reduce inventories by more than about EUR 1 billion in Q3, even reaching below ideal stock levels in most brands. The biggest impact at around EUR 3 billion is due to the significant increase in liabilities that are now more or less back to a normal level. Keeping in line with increased customer demand, we increased our production by almost 800,000 units versus Q2. As happy as we were about this achievement in Q3, we need to be reasonable about the expectations for the fourth quarter. As I mentioned earlier, such an increase is not typical and should not be seen as a normalization after the significant decreases in H1. It would be wrong to just expect a similar working capital development in Q4. We will continue to optimize working capital as much as possible.
This involves the continued focus on strict management of inventory to keep the balance with sales upright. To build the bridge to clean cash flow. Diesel payments of around €2 billion in the first nine months need to be considered. They're off around €400 million in Q3. This outflow related mainly to settlements with customers in Germany and other legal costs. M&A activities amounted to about cumulative €1.1 billion. This covered amongst others, the investments in diconium, Northvolt, and Argo AI. Outflow in Q3 was just minor at about €200 million. All in all, clean cash flow came in at a staggering €6.8 billion for the third quarter. Moving now to our capital allocation for CapEx and R&D. CapEx at around €6.4 billion corresponds to a CapEx ratio of 5.1% year-to-date, which is similar to the 5.2% of last year.
In absolute terms, we significantly cut CapEx by around EUR 1.8 billion versus last year, as one of the countermeasures to unavoidable lower sales revenues. Total research and development costs or cash spent came in at around EUR 10.2 billion, also below prior year with around EUR 10.7 billion. Without a doubt, we have not compromised on our E-Strategy, digitalization or software development, which are necessary to safeguard our future. Capitalized development costs came in at around EUR 4.5 billion versus EUR 3.7 billion last year. This reflects mainly the necessary costs to bring progress in our E-Strategy offensive. As usual, due to the seasonality, the absolute values for CapEx as well as R&D are expected to increase in Q4. For the full year, we expect the absolute amounts for R&D to be slightly below 2019. For CapEx, we expect the amount to be significantly below the prior year.
Moving on to the automotive net liquidity, which came in at a very strong EUR 24.8 billion at the end of September. This was mainly the consequence of the strong net cash generation in Q3. Please keep in mind that our dividend payment of EUR 2.4 billion was paid out this year in October. It is worth mentioning that we also received around EUR 500 million of Chinese dividends in Q3, bringing the Chinese dividends received this year so far to around EUR 2 billion. This compares with EUR 1.4 billion for the first nine months in 2019. We expect around a further EUR 1 billion more to come in Q4. In relation to further potential M&A impacts in Q4, firstly, we expect an inflow from the RENK transaction with a positive net liquidity impact of around EUR 450 million.
We expect outflows for the Audi squeeze-out at around EUR 200 million. The additional investment in our joint venture with Northvolt, around about EUR 100 million, and also for our Chinese transaction with JAC, around EUR 500 million. Payment for our investment in Gotion, the Chinese battery cell manufacturer, are expected to occur next year. In relation to the potential Navistar transaction, you can assume that any cash outflow would be in 2021. Finally, moving on to our full year outlook. We are pretty much sticking to the guidance which we gave at Q1. The situation is still very fluid, and giving ranges would give you a false sense of accuracy. Even though we have a more optimistic view on further recovery and normalization, no one can rule out worsening of the COVID-19 situation or reliably forecast the developments to come over the world.
Significant risks still remain relating to consumer behavior and the economic developments. We should also keep in mind that there's a significant amount of volatility in Europe since a hard Brexit is looking more and more to be likely. As already mentioned, the North American region will be difficult and who knows how the election next week will influence the economy there. Furthermore, Latin America is proving to be the biggest challenge and heading in a direction that will result in a slower and later recovery than the rest of the world. On the other hand, the continued rebound in China brings stability and certainty, and certainly continues to show what can be possible. Despite the challenges of the current situation, our base case assumption is that the economic conditions in the most important markets will continue to normalize.
In particular, we hope that no major setbacks due to COVID-19 will occur. Importantly, you can already see significant progress on our capital allocation, and we are stepping up on various restructuring programs that will give us a stronger structural base. No one can argue that we haven't performed quite well in the crisis so far, and we assume that our earnings will remain robust. In relation to automotive clean cash flow, we continue to expect that the full-year figure will be positive and increase somewhat further. For automotive net liquidity, it would be reasonable to assume it to be somewhere above our strategic target of €20 billion. To finish up for now, rest assured we will fight for the best possible results. Now let me hand back to Helen to get our Q&A round started.
Thank you, Frank. Thank you, Christian. We will now take your questions from investors and analysts. Operator, over to you, please.
Thank you. We can now take our first question from Dorothee Cresswell of Exane. Please go ahead.
Oh, hi there. It's Dorothee Cresswell from Exane. Thanks for taking my question. The first question is around the prospects for Q4 sales in Europe, given the additional COVID restrictions that seem to be coming into force at the moment. Could you just give us an indication of how far into the fourth quarter you have sales visibility, given that very solid order intake you saw at the end of September? Then I also wondered whether there's a risk in Q4 that we see downward pressure on margins from a mix shift towards BEVs and PHEVs. My second question relates to the planning around PR69 in November. Could you tell us whether you'll give us strategic targets for 2021 as well as for 2025?
Should we expect the target level for CapEx and R&D for 2021 to be that 6% of sales that was previously your goal for 2020? Then I also wondered whether planning around PR69 would be the right forum for you to give us a better feel for how you think you might streamline the brand portfolio, because it does seem to be that that's moving up management's priority list a little at the moment. Thank you.
Yeah, thanks for your question. Maybe I take the first part of the question, which, if I understood it correctly, was around Q4 sales for Europe. We are sitting on an extremely solid order bank, giving indication that roughly 800,000 cars in our order bank, which is well above last year's level. Based on that order bank, we expect Q4 actually to be, in terms of deliveries, to be at about the same level as it has been last year. That of course depends highly on the question if the dealers stay open, in all fairness. That is probably the biggest risk we have. You know that, for example, in France, some of the dealers are starting to close. I would put some caution on that number. If COVID worsens, we will certainly also see a deterioration in Q1.
For Q4, as I said, we stay pretty confident given our strong order bank for Western Europe. Frank, I think you'll take the other questions.
Regarding the portfolio, I think it's December, if I'm not mistaken, Christian will give you guys a deep dive regarding brand positioning. I think it would be worthwhile to really go more into the details so that you will get a full flavor. Yeah, PL69, we are obviously in the final stage, but it's not yet done. Just bear with us for a couple more days. As it pertains to, I think you mentioned 2021 and 2025. I don't think we have any intention to change the 2025 targets. For 2021, we need to obviously dive much deeper and obviously this is much more fluid than it tends to be under normal circumstances. We are certainly committed to get to 6% as quickly as possible. We are certainly also at the mercy of the revenue line to a certain extent. Bear with us.
In a couple more days, we will obviously shed more light on PL69. Margin pressure. It's no secret, and we mentioned it a couple of times, that the margins for BEVs, even though we are making money with each and every BEV of the new generation, they are dilutive to the overall margin. This is known and has been assumed in all our plans, and it's part of the transformation story which we explained to you guys back at our Capital Markets Day in 2017. The current situation is no surprise and is pretty much in line as it relates to margin. Obviously, Christian addressed the issue of order bank. This is actually giving us quite a bit of comfort and is certainly behind the outlook we gave for the fourth quarter, which is inherent in the guidance.
This is certainly assuming that we are not getting into a complete standstill under the current measures taken here in Germany, for example. We still assume that dealers are able to operate, even though certainly the situation is not getting easier. We have taken a lot of precautionary measures to make our production facilities a safe place and that our employees can continue to trust that it is safe to come in.
Thank you so much.
We can now take our next question from Patrick Hummel of UBS. Please go ahead.
Thank you, operator. Good afternoon, everybody. First, I'd like to focus on the profitability level. If we had that conversation in Q2 about the numbers today, probably we would have said back then we happily take those. If we compare it a little bit with the peer group that has reported so far, others are much closer to their pre-pandemic levels than you are, and you rightly highlighted that you're EUR 1 billion or more than EUR 1 billion still off in the quarterly operating profit run rate. I'm just wondering what your focus areas are to further narrow and close the gap, in particular on the fixed cost side. If I back out the first half improvements and just look at Q3, the Q3 fixed costs in the bridge just seems to be flat year-over-year. Will we hear more on the cost side?
Is the planning rounds a potential catalyst here to get more clarity and maybe a new cost-cutting program announced on the 13th of November? My second question relates to the EVPlus CO2 situation, that's maybe one for Christian. Can you be a bit more granular on the order backlog situation for ID.3 and ID.4? There were some headlines a few days ago about 39,000 units ID.3 backlog, which doesn't sound very impressive, because that was pretty much the first edition. Maybe that was also a story that was mixing things up. If you can just clarify what the current backlog is for ID.3, ID.4 or Škoda Enyaq, if you can share. How does that tie into the CO2 compliance topic? You already indicated that it's getting tight. Can you quantify the financial burden that you expect from non-compliance?
Is something already booked in the provisions line here? Thank you.
Yeah. Hi, Patrick. Let me start with your questions. Going straight to the fixed cost question, which is a fair point, particularly at times of crisis. We've showed you guys the EUR 2.1 billion improvement. I think minus EUR 0.8 is a net number of EUR 1.3, EUR 0.8 for the AID transaction. I think that is a net improvement over the first nine months of last year. I don't know whether you guys, at least I don't, whether you remember years lately in the Volkswagen history where we had an improvement on the fixed cost side. Yeah. I think year-over-year, our fixed costs have been increasing due to the investments, depreciation, salary increases, all that good stuff. We had to and have to and will break a trend. That is our ambition. For the first nine months, we overcompensated higher depreciation. We overcompensated salary increases.
One, if you interpret our first nine months numbers, please keep in mind, we had and wanted to finish our Monitorship. Not only this year, but certainly it was a particular focus to address each and every Monitor recommendation to make sure that our Monitor was given the opportunity to certify that we are a better, more stable company going forward. We didn't pay too much attention to the cost, in all fairness, because we wanted and needed to get the job done. That is also something what we need to keep in mind. Secondly, also in that area, we reduced CapEx by EUR 1.8 billion. Certainly, the impact from reduced CapEx by a lower depreciation, will only show basically a positive contribution over time. Also on the R&D side, roundabout half of it will obviously show over time an impact.
Last but not least, we addressed with public announcements that we are going to restructure MAN Truck & Bus, MAN Energy Solutions, and Volkswagen's Brazil operations. That certainly will also have, going forward, a positive impact also on fixed cost. The documents have, as I mentioned, not yet been signed and sealed. You can rest assured that we are well aware that our fixed cost performance gives us room for improvement, but we are not losing track of. This is what I basically wanted to confirm. In terms of profitability, if I look at Volkswagen passenger cars, it is truly a pity because the brand was very much on target for the calendar year in terms of cost and measures taken to be break-even in South America and North America.
That obviously is not possible, so a significant negative impact is being recognized from that perspective. I think these are a couple of those examples which I think are relevant other than obviously FX and commodity valuations, which I don't know to what extent others had the same to deal with. That's obviously quite a substantial negative in our P&L, EUR 2.3 billion for the nine months as mentioned. There's clearly more to do, but I wanted to shed some light on a discussion which I honestly expected.
Thank you.
Maybe, Patrick, let me add to your questions on ID.3. You mentioned roughly 39,000 order bank. That order bank is slightly above 40,000 now. Contrary to your perception, I would actually say this is satisfactory. If you compare to the pre-bookers, which you've done, I think it's fair to say we never assumed that 30,000 pre-bookers would convert 100%. In all fairness, given the Corona crisis, we're actually pretty happy with the conversion rate of around 50%. We would consider the current order bank of the ID.3 absolutely satisfactory to reach our sales targets for the end of the year, which, as you know, play an important role also for CO2 compliance. Before I come to that, just one sentence. I think the main question is your order bank healthy in terms of is it pushed?
We can generate sales, as you know, in some channels that are not too profitable. This is a healthy and solid order bank that brings us to the sales targets that we expect to reach end of the year. I already commented this morning on CO2 compliance. As I said, this is a tough fight and no firm commitment here, but also no commitment or no number on the financial impact. Regarding any provisions, I would probably revert back to Frank.
Yeah, we have a couple hundred EUR millions on provisions to be on the safe side. Obviously, our objective and target is even in this year, which is the most difficult one to accomplish, with a full run rate of MEB production for 2021. We are quite comfortable. In that respect, I confirm that there's no negative EBIT effect to be expected. Any risk which potentially could occur is being taken care for.
Okay, great. Thank you.
We can now take our next question from Horst Schneider of Bank of America. Please go ahead.
Good afternoon, and thanks for taking also my questions. I just have got two questions in total. Follow-up to the question from Dorothee on COVID-19. I found it yesterday quite interesting the TRATON guidance, which basically defined the range, and I think the upper end of the range that was more excluding COVID-19 impact, and then there was a lower end of the range for the COVID-19 impact. I think in the Czech Republic, for example, we are facing already the risk of a hard lockdown, which could affect Škoda. In total, could you maybe remind us what is the sensitivity in case we get new lockdowns? What would be the impact on earnings? That's question number one.
Question number two is more strategic one regarding electric vehicles, basically the fact that you nearly need to double the EV sales next year in order to make the targets. In that context, I remember to your EV Day beginning of September, where you basically said the contribution margins are fine, but of course, at an operating profit level, the problem is that there are not yet enough volumes on the platform. Suggesting basically that the operating margin of the EVs, it's still somewhat subdued, respectively still negative. Is that allowing the conclusion, or is my conclusion wrong with that regard, that we see a substantial profit dilution next year from the substantial increase in electric vehicles? Thank you.
Hi, Horst. No, I think the numbers you are assuming are overall quite right. This has been part of our planning. It's obviously the balancing is what we opt for. Yes, it's a margin dilution. This comes not as a surprise. You should not overstate or assume the impact to be too negative because the overall volume is still relatively small compared to total sales. The story is exactly the way you describe it. We are quite comfortable regarding the volumes we want to accomplish because the response to the product, particularly with the ID.4 going straight to the sweet spot of the segment, is overall quite positive. Maybe you refer to the very recent statement from our colleagues from TRATON, obviously indicating that they are getting closer to the break-even line.
It was basically the correction of the statement that the market sentiment was more negative than currently TRATON's internal plan, and that was basically the correction. The risk related to COVID do apply to all of us to the same extent. You mentioned Škoda. Yeah, the situation in the Czech Republic for suppliers and certainly for Škoda is currently complicated. It still looks to be manageable. Basically, we take it day by day. Overall, particularly as it pertains to the 2025 targets, goes back to the very first question, that has been assumed, and that is not a margin dilution, which wasn't fully included in the 7%-8% guidance for 2025. No surprises out there. That is not an easy mountain to climb, but this is exactly what we opt for.
For the time being, I think until the derail from COVID, we have been delivering accordingly.
I think I was more asking for the group for sensitivity of, for example, if you had to digest, let's say, one week complete shutdown in Germany or one month shutdown, what is the sensitivity, the impact again? Maybe can you remind us of that?
In all fairness, I don't really have a good number because it varies by market. The base assumption is that we are on a recovery path. This is compared to the very drastic situation in Q2. Obviously, it currently looks that risks are rising, but we still believe that the situation will be managed and that we overall will not see complete lockdowns, maybe regional setbacks temporarily, but not a general lockdown to the extent we've seen it in April or the Chinese in February.
Okay. Thank you, and good luck.
Thanks. I think that's true for all of us.
Yes.
We can now take our next question from Arndt Ellinghorst of Bernstein. Please go ahead.
Hi, good afternoon, everyone. It's Arndt Ellinghorst from Bernstein. Firstly, Frank, well done on the cash flow year to date. I think we've given you guys a lot of pressure over the years. It's worth mentioning that. Frank, on the fixed costs, it's obviously a big topic for you and for us. Can you give us some more color how you see fixed costs shaping out, not just for the quarters, but maybe most importantly for next year and the year after. Would it be fair to assume lower fixed costs in 2021, for instance? On total headcount, you reported about 664,000 employees end of Q3. Other companies give us pretty clear targets of net reductions of their headcount. It's a bit all over the place for Volkswagen.
Can you share what level of employment you would expect for the end of this year and also for the end of next year, please? Thank you very much.
Yeah. Hi, Arndt. I think headcount, you know that we are right in the middle of three major restructurings. I mentioned MAN Truck & Bus, MAN Energy Solutions, and also another wave of restructuring in Brazil in particular. These are obviously difficult negotiations as we are speaking, so we don't know yet the final outcome, but substantial headcount reductions are to be expected to be the result. I don't know yet the outcome. Otherwise, we obviously would have booked the corresponding entries. In a couple of weeks, I'm sure we will have more details.
On the other hand, maybe different to the one or the other supplier or of our peers, we started to agree with our social partner two, three years ago on headcount reduction plans already with a clear understanding what that transformation will do to our factories, may it be on the production side or the component business. You know that we have the Zukunftspakt, that we have Audi Future and respective programs in almost all brands. that we started quite early in order to adjust for the necessary headcount reductions and do that with early retirement programs, most of it. The incremental headcount reductions are to be seen what the outcome of those negotiations is. In terms of being more precise of 2021, please stick with us for the planning round discussion in a couple of weeks or when we also have, obviously, the budget concluded.
I certainly with you guys that fixed cost is an area where others have been doing better. There's nothing to be taken away. I talked already in great length on, I think, some of the major accomplishments in the context of fixed cost reductions. We obviously need to continue to push, but also some of the measures on the restructuring side will also certainly have an impact on the fixed cost going forward. It is work in progress. Direction is clear. Nothing to take away from the criticism. PR69 2021 is when we start, obviously, guiding for next year. Today is a bit premature because we haven't even presented our new planning round to our supervisory board.
No, thanks, Frank. Just if I may, I think I'm asking the question because we have these labor agreements and plans in place for quite some while, and the net number of workers in the company is just not really changing. It seems you're taking out some people and then you're adding maybe more expensive people elsewhere. I think it would help investors to better understand where the net movement of total employment and also labor costs ultimately will end up.
I think from the top of my head, I think we are 7,000 roundabout in total for the Group below the number of September 2019.
That's 1%, right? That's 1%.
We are also increasing headcount quite significantly, for example, in the software arena, as we committed ourselves to have our handle on the technology and the software stack. That is one of the areas, for example, which is rising quite significantly. As I said, the restructuring programs should also improve the reduced headcount. These are extraordinary measures. You know what we striving for. We probably will not get 100%, it should be a substantial reduction. If I go through some of the brands, on Audi, we have a significant contribution from early retirement schemes. We have Volkswagen passenger cars in Germany, also in, for example, Slovak Republic, 500 people. There are sizable adjustments. Overall, I agree with you, no question about it. We certainly need to continue to take a hard look.
The restructuring programs will be part of it, but we also have those programs which are aligning the workers' interest with ours and the early retirement programs, even more than 10,000 people for Volkswagen, for example, signed up. They will leave the company two, three years later as a planned and agreed-upon headcount reduction. Obviously, the Brazil contribution will also be a major one, but this is also not yet final. That's work in process, Arndt.
Thanks. Yeah. Of course. Thanks, Frank.
We can now take our next question from José Asumendi of JP Morgan. Please go ahead.
Thanks very much. José, JP Morgan. Hi, Frank and Christian. Maybe just three quick ones, please. Frank, do you think it's reasonable to be hitting maybe the level of around three million car production by the end of the quarter, Q4? A sequential improvement Q4 versus Q3 again. Second question, can you provide some clarity, please, behind the CapEx guidance for the fourth quarter? Just give us maybe some absolute numbers to work with. I think Q4 is probably the most difficult quarter to forecast in terms of absolute CapEx. Finally, coming back to this fixed cost discussion that we're having throughout the call. Look, the way I perceive this, on the Audi front, you already have announced a labor cost reduction plan, which was actually announced pre-COVID, right? You've got about 7,000 workers coming off the lines.
I'm expecting tomorrow, actually, when we go through the call on Audi, to get that confirmation that workers are coming off the lines, and that should be, I think, very similar to what we're seeing across your German peers, right? I guess my question is, as we think about Volkswagen brand, should we expect maybe in the coming months, maybe coming quarters, more focus on early retirement packages for the Volkswagen brand, specifically in Germany? Should that be the focus maybe on fixed cost reductions for 2021? Thank you very much. Thank you.
Yeah, a couple of question. I think production Q4, if I understood it correctly, I think is three million for the entire world. Seems to be a plausible assumption, José. CapEx for Q4, I think it's probably, if I'm not mistaken, probably in the range of EUR 5 billion. This is what might be a good assumption for the very moment. The other question is, as I understood it, whether there are incremental headcount reductions and programs for German factories.
Yeah, with a specific focus for the Volkswagen brand. For me, there is absolutely no doubt that you're working on reducing the fixed cost base. When you look at Audi, you already implemented the labor reduction plan pre-COVID to lay off 7,000 workers. We're going to get evidence of that tomorrow. I guess what we're missing is the focus a bit more on the Volkswagen brand, and whether you think maybe there is some early retirement packages that could be offered for the Volkswagen brand, and specifically in Germany.
From where we go today with the volume we are assuming for 2021, this is obviously not assuming an extremely disrupted COVID-19-related scenario. Yeah. We expect the normalization also to continue in 2021. With this Zukunftspakt, which you know for 2.5 years, I guess, by now, and the agreed-upon reduction of net 13,000 people, for those production programs to come, we need the people we will have on board for Volkswagen passenger cars. As I said, we already started the transition years ago, and in that respect, we have the programs in place. With that scenario I described for the overall economy, no incremental headcount reduction programs for brand Volkswagen passenger cars in Germany are planned.
Excuse me, operator. Just keeping an eye on the time. If we could request the next analysts who are in the line, we have quite a few, to stick to one question per participant, please. Thank you.
Thank you, Frank. Thank you very much. Thank you. Over to you. Thank you.
We can now take our next question from Tim Rokossa of Deutsche Bank. Please go ahead.
Yeah. Thank you very much. Good afternoon, Christian. Good afternoon, Frank and Helen. Thank you for taking my one question then. That is, Frank and Christian, why are you not making more out of your BEV story? Christian, you said you are quite happy and satisfied with the ID.3 order intake. I think some people would disagree with that, If you are quite happy with it, I still see exactly the same slide deck that I see for several quarters now. There is one nice picture of the ID.3 and ID.4. There is no BEV sales numbers. There is no BEV story really that you are giving us with the quarter. There is no real view on capital allocation or potential revenues.
Why are you so reluctant to really inherently make this a story that you update us on a very frequent basis, considering how key it is to your equity story? Could, for example, be the five-year planning round a bit into Dorothee's direction at the very beginning, be a moment in time to do so since you do talk about capital allocation anyway. Thank you.
Tim, I think if we sum that up, we're definitely over one question, so we'll allow that anyway.
Thank you.
Hi, Tim. Thanks for your question. Point taken. It's certainly worthwhile to talk more proactively about our BEV story, because we are actually very satisfied with how it's developing. We have promised to you that we will give you more detailed BEV reporting numbers as of next year, and we'll do that. Look, given the current numbers, they are so small, we're just in the ramp-up and start. I think we gave you aggregated numbers for this year, but I think we'll take your point. We're committed to this, that as of next year, we'll commit more specific numbers on the quarter regarding the sales figures, and regarding any other information, probably I refer to Frank.
Yeah. Christian basically made the key points. I would also like to highlight, there are also limits to what we should report, also in the best interest of the shareholders, because we don't want to be predictable. We shouldn't be predictable on what number of BEVs we have to register in order to be CO2 compliant. We don't give too specific numbers of any specific model, because competition would love to know exactly what we have in the books, yeah? What our production plans look like. There, I think similar to the ICE world, I certainly understand that you want a handle on our ability to be CO2 compliant on the transition, and we try to be more specific, Christian mentioned it, but also to manage expectations going forward.
There are also for competitive reasons, so to speak, good reasons to not to tell the public and the competition in particular everything. It's a balancing act. We understand the desire. We will improve reporting. I think going forward, giving, for example, forecast numbers for specific models in markets, I think we would do ourselves harm in all fairness.
The planning round may be a good next catalyst?
Yeah. We gave you guys a flavor of the number of cars we are planning to sell in 2021. Obviously, the 6% is a pretty good number. Overall, obviously, it will vary by regions. High focus on Europe. Certainly in the planning round, we will give some more details to give you guys a handle for your models on what we are doing and how we are ramping up. It's very clear that Europe, in the next two years at least, is for us the main focus area. We are quite comfortable regarding our CO2 targets for next year with the full lineup being available. This year, we will fight for each and every current customer and count until December 31st.
Thank you very much.
We can now take our next question from George Galliers of Goldman Sachs. Please go ahead.
Thank you. Thank you for taking my question. I wanted to return to the topic of CO2 compliance for this year, because you did mention that it sounds like the financial risk has already been provisioned for. You earlier on the press call also said that you would push ahead and sell internal combustion engine vehicles to maximize profits and cash for the year, which most investors will find encouraging. However, what do you see as the ESG risk of not being compliant? You obviously have a very low rating from independents such as MSCI. Do you see an ESG risk for the investment opportunity at Volkswagen, from your fleet customers and also from your retail customers and the brand's general perception within the marketplace if you're not CO2 compliant this year when your competitors are? Thank you.
Hi, George. It's a fair point and a fair question, we are committed to CO2 compliance, if possible in 2020. Obviously we will not do stupid things, as Christian outlined very clearly in terms of incentives or registrations. Certainly, we are well aware that it would be quite favorable to be already in the first year of the new CO2 scheme compliant, we take that to heart, we don't want to do stupid things. For the greater scheme of ESG, I think the S has never been a concern as it relates to Volkswagen. I think when we started after diesel, obviously from a very low point, we were probably amongst the first ones who committed to the E and to the Paris Agreement and invested quite severely in the technology necessary to build full electric vehicles.
I think that we are pursuing and committed to that strategy, I don't think is in question. Certainly would be great to be already compliant in 2020. Since we are talking a 10-year horizon at the very end of the day, yeah? Where electric vehicles will make inroads. Personally, I don't think it would be the end of the world. Would it be good? No. Therefore, we are fighting. It is one snapshot year in case that there would be a little, small miss. Yeah. That's the way I would positioning and on ESG, we have our homework to do anyhow. That's I think another story. Certainly would be not great, but not the end of the world. That's the way I personally would summarize it, if there would be a small miss.
Thank you.
We can now take our next question from Stephen Reitman of Societe Generale. Please go ahead.
Yes, good afternoon. One question. On the MEB, initial reviews have tended to be pretty positive about the way the car drives, and the economy seems to be quite good, but there have been obviously questions about the software issues on the thing. Could you update us on how far you are down the road in fixing these software issues, and how confident are you that a lot of this will be behind you when you have the ID.4 in the general public as well?
Yeah, Stephen, let me take that question. First of all, yeah, we agree, it's a fantastic driving car. We also agree, we've been open about that we're not quite where we need to be in terms of the software. That's why you know we're launching the ID.3 first edition. We intend to update the software around calendar week 45 for the ID.3, also for all existing customers, and we will not deliver the ID.4 with the first edition software. We will deliver the ID.4 with the software ready. Just to remind you, the two key features that we're not delivering on the first edition is the head-up display and the Apple CarPlay. This is now fixed, and we will update that on the customers that consciously bought the first edition.
We actually get great feedback from these customers who see themselves also a little bit as pioneers and givers and help us to further improve the car. Yes, we fully acknowledge not there yet on the software, but we should solve all these issues by around calendar week 45 and deliver both ID.3 and ID.4 then with the new version.
Will the software updates require dealership, or are you able to deliver some of these over-the-air already?
Partly. The first edition ID.3s will have to come back to a dealership for a short update. Going forward, we can do a lot more over-the-air then.
Thank you very much.
We can now take our next question from Henning Cosman of HSBC. Please go ahead.
Hi. Thank you. Good afternoon. I have a question on pricing, please. Frank, you said for the volume price mix bucket, it was virtually almost all volume in the nine months, and the two mixes basically offsetting each other, leaving virtually zero for pricing. You're also talking about the FX, of course, being huge negative, so I imagine you've done some pricing to offset some of the FX, which in turn means you've done a lot of incentive and tactical action, I imagine. Can you confirm that, and can you comment a little bit on if you were expecting to have to do that and if you're happy with that? Thank you.
I think, am I happy with incentives? No, I'm not. I think given the market environment, I think we acted very reasonable. Yeah, we did some pricing partially offset, which was recognized in the revenue line as a reduction. Overall, I think, given the circumstances in the nine-month period, particularly obviously Q2 and Q3, I'm not dissatisfied with Christian and the sales guys given what was happening out there. I think particularly Q3, the pricing was quite strong. I think we certainly saw different quarters, and we executed the pricing steps we had in the books accordingly and admittedly in challenging market conditions. I think a balanced approach in particular conditions.
Okay, thank you.
We can now take our next question from Harald Hendrikse with Morgan Stanley. Please go ahead.
Yeah. Thanks, guys. It's Harald from Morgan Stanley. Thanks for taking my question. Frank, very easy as per the discussion today for us to forget about all of the things that you're facing and you're doing in the company, which I think we do realize just how difficult things have been in the last 12 months. Suddenly the EU is proposing to change the rules on you again for 2030. You already have the most ambitious and impressive plan for BEVs in the industry. Suddenly, we're going to have to double up to get to the 2030 targets. Can you just talk a little bit about the sort of things that we should be expecting that if that does become the new law, what can you do? Can you get to that target?
How will you have to react, and how will we see that in the numbers, please? Sorry, difficult question, but seems an important one.
Very important one, Harald. Certainly, we have a lot of folks working on it as we speak. The goalposts have been shifted, we react. We have the technology. We have certainty to even more aggressively address the question, where the battery cells are coming from, pricing for battery cells. From the technology perspective, we already had for 2025 quite an ambitious target. We laid a foundation. That's the way I would describe it. We have dedicated models behind it. With the MEB rollout, also on the luxury side, Porsche and Audi in particular, the other brands follow pursuit. It will be a stretch. There's no question about it.
At the very end of the day, we certainly need a lot of enthusiasm on the customer side-Being willing to drive BEVs notwithstanding what the policymakers does want and what we need for CO2 compliance. I think we have the right answer on the product side, a lot of the other aspects to be worked on. Even more focus on charging, for example. We have another dedicated round of discussions how to improve the situation even more quickly, lobby for it, but also working with others, team up in corporations or even joint ventures to make sure that the infrastructure is improving even faster. Very comprehensive challenge. I think you've heard loud and clear Herbert's message, how we positioned ourselves. It will be a very ambitious task, but we accept the challenge.
Let's wait what the final numbers will be, but it will be a substantial increase over what we knew before. From today's perspective, very challenging, but not mission impossible.
Frank, will you allow me a short addition? We come tying back to an earlier question that George had asked. Look, launching a new BEV platform in 2020 for the first year of CO2 compliance probably makes the task not easier. If you tie it back to your question on 2030, we feel far better prepared than maybe most competitors to reach these targets. Just want to put these two things maybe in perspective.
Yeah, makes sense. Thank you.
We can now take our next question from Daniel Schwarz of MainFirst. Please go ahead.
Yes. Daniel Schwarz, MainFirst. Thank you for taking my questions as well. It would be on Porsche in Q3, the profitability declined quite a bit, and that's despite the quite solid sales that you had. You mentioned before that this was due to cost increases for electrification and digitalization. Is that an earnings dilution that is coming with higher Taycan sales? What does that mean for the Porsche margin going forward as EV share is supposed to increase even more than for the rest of the group? Thank you.
Obviously, your point is well taken, but I don't have Porsche by no means on my problem child list to give you a little bit of a flavor what the expectations for the full year. We have a negative volume impact to we had currency and derivatives being negative and obviously with those initiatives which I was referring to, a fixed cost increase, which obviously is more visible at a time where revenue has not been growing substantially. Obviously some key investments in future technology. You know that Porsche is also certainly very clearly and very strongly committed to the electrification of its fleet. Temporarily a little bit behind where we've seen them, but double digit is still strong and I think they are still on target for their strategic objectives, in terms of margin.
Obviously that environment also was putting a big task to Porsche with the launch activities and market conditions. Q4 should be stronger for Porsche, if there isn't a major COVID-related setback, which we obviously don't assume. No concerns from my perspective that Porsche will continue to be our top-performing brand.
You mean to return to 15% is realistic, maybe already next year?
Next year we talk in a couple of days, but this is their strategic target and they have the brand and product momentum. Whether they achieve it next year already, we will obviously fine-tune the planning, but we are not moving away from the strategic targets. Even with more BEVs in the portfolio, the brand is strong, the mix overall tends to be very good. Obviously, China is doing very well and Porsche is participating in that. I think the ingredients are there that Porsche remains to be on track.
Thank you.
We can now take our next question from Jürgen Pieper of Metzler. Please go ahead.
Oh, yes. Hi, gentlemen. I make it quickly. There's one question on R&D spending. You spend probably around EUR 13 billion this year, around 8% of revenues. Is the picture still right that this is the peak level, at least in relative terms or possibly also in absolute terms? Has anything changed in that context during 2020 that maybe the electric platforms have become more expensive so far than expected or something else? Can you say in brief, is it the peak of R&D spending, at least in relative terms? Thank you.
Overall, we continue to target a 6% ratio, as I indicated earlier. You can see from the first nine months that obviously we were a bit more successful on the curtailment of CapEx versus R&D. A lot of technology and product stuff is at a stage where it just would be a mistake to risk SOPs. The software part of it is essential. We have very critical SOPs in order to obviously support our CO2 electric initiative. R&D is, if you ask the CFO, R&D is certainly, if I talk about the 6% ratio, the harder one to accomplish, but we will not take the 6% off the table. In today's environment, with the top-line reduction on revenue, obviously we will miss on R&D and will not get to last year's ratio.
Overall, I think in that range, the absolute numbers are probably not to go beyond.
Okay.
We can now take our final question from Tom Narayan of RBC. Please go ahead.
Hi, Tom Narayan, RBC. Thanks for taking the question. You need a fair amount of cash to pursue your electrification ambitions, I would think. VW Group has a number of assets not really contributing to this very specific goal. Notable, a 90% stake in TRATON. With TRATON likely consolidating Navistar, presumably this stake could be maybe sold down some more to generate some cash. Furthermore, you have Lamborghini, Bugatti, Ducati, that don't share 100% platforms with your core brands, VW, Audi, and Porsche. I know your liquidity is strong, just wondering how all these other assets fit into your overall strategy. Thank you.
It goes a bit back to the discussion we had a little earlier during this call. I think in terms core, non-core, the board of management could clearly envision to streamline the portfolio a bit more. As I outlined, those discussion we continue to have internally first and get the necessary consensus and support, because any public comment from my side or from others in the management ranks would complicate the situation. You can rest assured that we are not running out of ideas, but obviously at the very end of the day, we have to deliver. RENK was one step, the 10% stake of TRATON another. This is not the comprehensive picture the board of management could envision. Trust me that any more firing the discussion up by myself today would reduce the likelihood of delivering.
Okay. Thank you.
Okay. Thank you very much, Frank, and thank you, Christian. As we've already hinted, just for your planning, that our five-year planning call will be on the Monday, the 16th of November. I have one other announcement, which is some good news for the IR team. We have a new colleague that has joined the team. Ms. Lai Wang has taken over the responsibility for our investor relations in the China Asia Pacific area, and she is now your key contact there, and you'll find her contact details, of course, on the website. Just a little background on Lai. She's got a very broad set of financial competencies. She's been in Stuttgart at a certain peer company of ours, doing asset-backed financing for about five years. She's worked with Deutsche Bank in digital banking and also corporate banking in China.
Probably the most unique factor, she speaks fluent English, German, and of course, Mandarin. We'll wrap up for today with a thank you to all the participants and also to all my internal colleagues and our IR team who've been helping for the event. If you have any questions, the IR team is available now to take further calls. Thank you. Have a good day and stay healthy.