Ladies and gentlemen, thank you for standing by. I am Gayley, your Chorus Call operator. Welcome, and thank you for joining the Ford Otosan A.Ş. Conference Call and Live Webcast to present and discuss the 9-month 2024 financial results. At this time, I would like to turn the conference over to Ms. Gül Ertuğ, Chief Financial Officer, and Ms. Bahar Efeoğlu Ağar, Head of Investor Relations. Ms. Ertuğ, you may now proceed.
Thank you very much. Hello, all dear investor community. Thanks for your time. Thanks for attending our 2024 Q3 financial results and earnings announcement call. Like, just as we usually do, I will try to give the opening remarks, pointing out the key highlights. I will also give the word to Bahar, our investor relations lead for the market-specific updates and the key important changes since we last met, and also Ünal for the details of the financials. We will provide you with an update on our guidance, and we will open up the floor for your questions and answers. Let's begin, Duygu.
Overall, I can say that in fact quarter three, it has been a successful quarter for us. You might remember in our Q2 discussions, we were mentioning about the several launches we were doing within our plant this year and some ramp up issues. Due to that, we had some stockpile up issues. Thanks to the good run rate and good management of the operations over here, in fact, we have reached a steady state on our run rate. Overall, in fact, the results we have seen are in line with our expectations. If you look into a little bit detail, like looking into how we did in the domestic markets, we maintained our third position with 8.5% market share.
In total, the commercial market, you know, it's where our key strength is. We are keeping our number one position with a 27% market share. On the light commercial vehicles and heavy commercial vehicles in the market for nine months. In fact, if we compare that with the same amounts for 2023, we see a reduction. For the LCV, I can say that that impact is coming from the Q1 results that we had already communicated to you. In fact, within the course of essentially the Q3, the run rate has reached to strong levels. Going forward, usually in the automotive sector, Q4 is a stronger period.
Over there, we do not expect an issue, but we should also be mindful that in allocating our units to domestic and export markets, our LCV units, the Next-Gen Courier being quite a successful market, there is significant export demand on that one. That's why when we have the allocation to support the export markets, some of the reduction in domestic volume was due to that. For the heavy commercial vehicles, I have to state that we are seeing a decrease in the demand. The demand is softening both in domestic market and export. The story on the heavy commercials is different. On the LCV, we do not see an issue, but for HCV there is export and domestic volume reduction.
When we come to the guidance section, you will see also our updates in regards to how we see the export markets over there. We see some level of softening. Overall, for domestic, the volumes contracted by 16%, and out of that, the revenues came down by 21%. Over here, I have to state that the cost pressures, in fact, we are seeing due to inflationary environment, even though there is the inflation combating measures. I'm sure most of the companies dealing with the export operations you listen to, you are hearing the similar remarks. Unfortunately, over there, in the cost of goods sold, we are seeing some bad news. Plus, there has been more availability in the markets. That puts a strain on the pricing ability.
That's why the revenues came down by 21%. On the export story, we are keeping track with our volume. Accelerated shipments, like I said at start of my speech, the ramp up and launch issues were resolved. Overall, we see a good trend. The volumes increased for nine months total by 8%, and the revenues increased by 5%. Overall, the total capacity utilization of our combined, the entire consolidated plant view, we realized as 82%. In Turkey, this was 78%. Some of the low utilization is impacted due, in fact, due to the heavy commercial vehicles. Other than that, we are at our intended levels. For Romania, we have reached 88%.
In this period, we have seen the dilution in the profitability, as expected. We were speaking to you on our earlier talks that it should be expected to have some level of normalization. Over here we are seeing the effect of it. Our EBITDA margin came to 8%, pretty much due to the overall domestic volumes being lower. Within the entire mix of our operation, the weight of the export units are increasing with cost pressures, availability and pricing pressures, the EBITDA level achieved as EUR 1,700. Overall, still, even though like when we compare it to the last year same results, maybe on the EBITDA generation and PBT, we see some bad news impacts.
Going forward, we do not take this as an issue because this has been the year for our important vehicle launches. They are coming home and looking into some of the assessments before coming to the audio, I detected that maybe some of you have a worry, is this going to affect your further rounds? For Q4, I had to tell you that the launch related, especially on the Custom, the final piece of our launch is on track. We will be introducing our partner in Q4, and there is no issue around that one. Looking into 2025, we expect to see some level of softening in demand. We will talk about it in the later parts of our presentation.
Now for the special section level details, I'm leaving the floor to Bahar. Bahar, please.
Thank you, Gül. Hello, everyone. Thank you all for being with us today. Gül has already shared main highlights about the domestic market outlook. Let me also elaborate nine-month actuals in detail. In this period, Turkish automotive market demonstrates the flat performance, which is reversing the growth trend in the first half, and the sales volume reached to a level of almost 900,000. In this market, passenger car sales accounted for 77% of total sales, were surpassing last year's share. If you look at the segment breakdown, we can say that passenger cars and medium commercial vehicle sales saw an increase of 1% and 13% respectively. On the contrary, light commercial vehicle and heavy truck sales experienced declines of 11% and 21%.
These obviously indicate that the growth drivers from the first half were notably normalized in the third quarter, actually, along with the effects of tighter monetary policy and the stabilized demand. If we look at cumulative basis, the key drivers of this performance can be accepted as the increased Special Consumption Tax exemption limit for the disabled citizens. The second one is the robust local demand prior to the election, and the other one is the impact of the General Safety Regulation, the GSR, especially in the first half, which triggered the competitive pricing strategies, mainly from the Chinese brands. As a last point, I should say that the HCV sales was impacted with the new Courier's extended ramp-up periods and the end-of-life cycle of other players' products.
In this competitive market conditions, as for Otosan, we were able to maintain our fourth position in the total industry with 8.5% market share. Our market share in the PC segment, where our strategic focus is on profitability rather than market share, remains steady at around 3% level. However, in our core market, I mean, the commercial vehicle segment, we continued our leadership with 27% market share. We preserved our undisputed number one position in medium commercial vehicles with a growing market share of 27%, thanks to our renewed Custom and stronger availability in Transit. On the other hand, we secured second place in LCV and HCV segments, as we could not successfully respond to the market demand, especially in first quarter and partially in second quarter.
As a result, when we look at the full year, we consider that the demand will beat our expectations. Once again, we made upward revision in both the industry and our retail sales guidance. Now let me continue with the export performance. I can start by saying that in this period, a similar trend with domestic markets was seen in our main export markets. Although the passenger car and commercial vehicle markets grew by 1% and 5% respectively, Q3 results revealed multiple declines across all segments. In other words, with the end of GSR regulation effects on European sales, the market weakened significantly in the third quarter, with a 6% drop in PC and 8% decline in CV. Going forward, relatively weak demand is expected for the rest of the year.
In this market, Ford Motor Company showed an outstanding performance and maintained its leadership in the CV segment. With the support of our flagship and new products, by the end of September, Ford's market share rose to a record level of 15.3%, from 14.2% year-on-year. This is also evident in our accelerated export sales in the third quarter. As a result, we contribute to this success by producing three-quarters of Ford Pro's commercial vehicle sales and more than one-fourth of the passenger vehicle sales in Europe. On the other hand, we had a weaker year-over-year truck performance, also in international markets, since we were not responding sufficiently to pricing wars and impacted by the contracting market conditions.
However, unfortunately from October, we started to see the sign of slowdown in our order banks for the remainder of the year, which led us to adopt more cautious approach in our export guidance. As we were discussing the potential risk to our export guidance in our previous meetings, together with the results coming from European ACEA, we recognize that the previous export guidance is not achievable anymore. Of course, at the end of the presentation, Gül will provide an overview of our updated guidance. This is all from my side. Thank you for listening. Now, I leave the floor to Ünal Bey to explain our financial performance in the nine-month period.
Thank you, Bahar. Hello, everyone. I'll continue with financials very briefly. This quarter is what I can say in a very short summary is very stable compared to, you know, first half of this year. Our revenues in total decreased by only 2% to TRY 404 billion versus same period of previous year, whereas our total volume increased by 3%. That, Gül and Bahar already explained. Main driver of total revenue reduction is, as we discussed at the beginning of the presentation, domestic sales performance plus mix of the vehicles that has been sold. We have lower sales in trucks, Ford Trucks in heavy commercial vehicles, I mean, in both domestic and international markets, which has very high per vehicle revenue compared to other vehicles.
Also in the export business, although we have higher sales volume, two-tonne Transit sales in export business, this is the expensive vehicle line in the export section, that's lower as well. That's the main driver of the different directions in all sales volume increase versus revenue decrease. Our EBITDA also decreased from TRY 6.8 billion to TRY 32.3 billion, and EBITDA excluding other items decreased from TRY 52.4 billion to TRY 31.2 billion. Main reasons behind these decreases are lower domestic sales, where we have the highest profitability impact we had last year.
That's partially because of the extended ramp-up period of new models, especially at the beginning of this year, that we discussed in our previous call as well, and partially increased competitive environment. Increase in export share in our overall business, and also continuation of strong Turkish lira versus euro, throughout the first nine months of this year that I will also emphasize in the coming slides as well, and lower Ford truck sales in domestic and international markets, which had a very significant profit margin last year. In parallel to EBITDA, operating profit also decreased year-over-year by 57% to TRY 22.9 billion. Reason of higher decrease in operating profit is basically this year we couldn't enjoy as much good news coming from exchange movement as we had seen first three quarters of last year.
During first nine months of last year, average euro rate appreciated by 4%-6%, whereas this appreciation was around 17% this year, and 8% of that is in third quarter of 2024. Because significant part of our business is export, euro appreciation helps us in terms of export profits and profitability, which did last year, but not as much this year. We come to the PBT and PATs. Decreases versus same period of last year are lower, comparably lower. We continue to have monetary gain in PBT because of our high monetary liability position in the balance sheet. In terms of PAT, we continue our investment subject to incentives which derives a good level of deferred tax income. If you remember that last year we also had an earthquake tax impact.
This year, we don't have that one. That was a one-off item last year. In the next page, looking at our margins, normalization of the margins, which was our expectation last year, and also we discussed in our previous call of first half financials was realized. Our third quarter margins kind of stabilized around first half levels, current levels. Just a reminder, I mean, that expectation was mainly over an expectation of increased availability in the market and hence an increased competition in domestic market, along with continuation of new model launches and also exchange movements impacted that as well. Our nine months EBITDA margin is 8%, operating margin is 5.7%, and PBT margin is 6.7%. All are very close to this year's first half margins.
Even PBT margin is a little bit higher. This shows us that in the third quarter we are kind of stabilized in terms of profitability. Our EBITDA per vehicle became to be EUR 1,744 per vehicle, which was EUR 2,648 last year. In the next page, we see that our production volume is 3% higher than the first nine months of last year, and higher by 7% quarter-over-quarter, which is good for us. Cost of production in terms of raw materials is a little bit higher than last year. In the previous slides, I mentioned about euro TL movement, which we see here that for 6% last year increase in the first nine months and 17% this year.
Unfortunately, that has a big deterioration impact on our export profitability when we look at year-over-year financials. Interest rates, on the other hand, continue to be higher, and that shows that cost of acquisition and cost of holding a vehicle increased significantly versus previous year. These pages are some kind of details and already discussed pages, but we already talked about those. I'll not go deep into those slides. I can very shortly say that in terms of profitability, domestic market sales were where we have higher profitability are lower by 16%. In this slide, in terms of our debt profile, our net financial debt increased to TRY 99.2 billion from TRY 82.2 billion compared to 2020 year end, by the way.
We continue our investments for our new models, you know, and this is basically the main reason of increase in debt. Net financial debt over EBITDA ratio is 2.45 times. This is kind of well below our threshold of official threshold of 3.5 times, which was last year and 1.19 times. Our financial ratios in the midsection, including our current ratio, liquidity ratio, current assets over total assets, and so on the other ratios, they are very similar to the previous year and also first half of this year, and we can say healthy. Only the one that we discussed, the leverage ratio, net debt over EBITDA, and that's our focus under our focus.
Now I give word to our CFO, Gül Ertuğ again, to give more information about our guidance for the rest of the year. Thank you.
Thank you very much, Ünal. Looking into the Turkish automotive market performance, in fact, we moved one notch up, I would say, for the overall expectation of the industry, 1.1K-1.2K. Within that, looking into our performance, especially the rates we have reached in Q3, like I said at the start, usually Q4 is a very successful period in the auto industry. We expect our retail sales volume in Turkey to go up to 105K-115K. On the export trend though, we made a downward adjustment. The earlier guidance was in between the range of 560K-610K. We moved it to 530K-580K.
The reasons being the ones that Bahar explained when she was speaking to the export markets. Looking to the indications we receive through ACEA, and also looking into the order banks and the stock levels of our partner, Ford, in the environment, we see some softening in the demand. Like we had advised you at the times of the starting from the chip crisis, we have been very carefully planning our production scheme, master production schedule together with Ford. We are optimizing for ourselves as well as optimizing for them. Seeing the result over there, it signals that the 530-580 region will be more reasonable. This is mostly the changes are mostly coming from the Turkey operations, the commercial vehicle piece.
As we introduce our partner in the one ton region, I can once more reiterate that the plans are on track and the launch will happen this year. On the earlier discussions, I had given this as a word of caution. I had made this explanation. Since we had seen in our other launches some okay-to-buy delays or some ramp-up issues, I had said that if other than that, we don't see an issue, that was the guidance or explanation that I had provided in the earlier talks. Over here, for the partner-related data, I'm reaffirming what I had said. In the general scheme, we are seeing some softening in the demand.
For this round, we are not just providing the 2025 guidance yet, but this demand softening impact on the export, we see that will also come our way in the 2025. However, since the arrangements for the partner is in place, even though on the normal setting, we will see some softening versus this year, since we will have a step function of the partner introduction next year, overall, when we go into that guidance, we will not look back. In fact, we will be showing our the effect of all this capacity and vehicle investments you will be seeing on our guidance. For the CapEx on the fixed assets, we have made a downward revision in our overall spending. From EUR 900 million to EUR 1 billion, that was the bandwidth.
Now we see that value being in between the range for TRY 700 million-TRY 800 million. This in fact shouldn't be interpreted as some of the things are not being done. In fact, there are two pieces going into this. When several of the launches within the year, they deferred or the okay-to-buy was not given in time. Similar to that pattern, some of the payments of the invoices were coming in a little bit late. Some part of this change is calendarization impact. You can expect that whatever was not done over here, it will have a flow over effect into the following year. Some of it, in fact, given in this heavy cost pressure environment, some of it is in fact real savings.
Like we carried out the action, but especially seeing these cost pressures and due to our business model, in fact, out of these cost pressures, our partners got affected more severely than us because we have a cost-plus markup mechanism in our export prices. That's why some of it is real savings and some of it is calendarization impact flowing into 2025. The plans, what we have declared in terms of both electrification and product launches plus capacity, they are progressing. They are on track. That would be pretty much the information I would like to share on this page. I think this concludes our presentation. We can open up the floor for your questions now.
The first question is from the line of Lorenzo Parisi with JP Morgan. Please go ahead.
Hello. Hi, and thanks for the presentation. I just have one question regarding leverage and trajectory. Given the increasing leverage over the course of the year, are you able to comment on when you expect net leverage to peak, whether it is fourth quarter or sometime in 2025? And roughly at what level do you expect that to peak? Thank you.
Like I should answer that question as we are, in fact, very dynamically keeping track of our actions in paying attention to our metrics over here. You can expect that 2025 will also continue to be a heavy CapEx because of the electrification journey and the capacities we are doing. 2025 overall spending, CapEx spending will be somewhat similar to what we have seen for this year. In fact, we do not manage ourselves in looking into a overall value, a face value of a debt level. This is the peak time. We do not do that because everything is dynamic over here.
Our EBITDA generation capacity, the payment terms for the actual CapEx actions, you might even question what are you doing with your dividends. Looking into all of these actions, in fact, we are keeping a careful eye on our net debt to EBITDA ratios. We are carefully tracking that. In doing so, of course, we also execute the official dividend policy that we have declared to you. This means, there is the, at a minimum, you know, we always try to distribute the 50% of the distributable section. However, at times of heavy CapEx and at times of unfavorable economic conditions, I wouldn't say that this is an area like a crisis, like a turmoil period.
We all know the fact that currently the export operators are having some disadvantage operating in Turkey given the inflation curves and the exchange curves that Ünal has explained. That's why we are all taking these things into account in our decision-making and dynamically managing it. At times, wherever possible, if there is a way to defer the CapEx spending or it's like invoice collection, we are also looking into that. In that regard, I wouldn't give you a overall debt ceiling figure. I wouldn't do that. I would say that we are very carefully tracking the net debt to EBITDA ratios and honoring our covenant needs. That's our strategy.
Thank you very much. Just one follow-up. I think you have a target of keeping that leverage at or below 3.5x. Given the market dynamics that you outlined, especially on the export markets, do you expect over the next couple of quarters or three quarters to gradually approach this level or more or less to remain at current level of 2.5x on net leverage?
We are targeting to remain at these levels, like in certain instances. You would imagine there are some factors going, affecting this. Even from quarter to quarter, this number could change. There could be areas where we could be exceeding this. You rightly put it, Ünal also mentioned it. In fact, in our hard constraints, let's say this value is 3.5x. However, since now we are also, we have diversified our portfolio of funds. We also have access to the debt capital markets, paying attention to the needs of that area. You could assume, we do not have an intention to stay around those levels if we exceed that. Like the hard constraints levels we are targeting to keep away from them.
Maybe that will be a shorter answer.
Thank you very much.
You're welcome.
The next question is from the line of Gustavo Campos with Jefferies. Please go ahead.
Hi. Yeah, thank you for taking my questions. Just two on my side. On your CapEx-heavy 2025 year, how are you planning to fund this CapEx? More specifically, what kind of avenues of debt funding are you considering at the moment? That's my first question. Thank you.
Thank you very much. Like I advised, since we diversified our portfolio with like we already had several syndication lines from the supranationals. We have the Eurobond and this diversified portfolio brought us the better cost advantage and enhanced borrowing capability. We will be continuing over them. At this point in time, I'm not in a position to tell what timing, what to do, but since now we are in these forums, we will be continuing to utilize them. From a like if you ask, "Are you going to tap into the Eurobond market once again?" The answer would be yes. From a standpoint, what would the timing be? That will be coming from our, especially once we do the 2025 budget.
The overall needs and the timing is subject to a further like planning on our end. The current portfolio we have, we are happy with this, and we want to continue to tap into those resources.
Yeah. Great. Thank you very much. Second question would be on, and apologies if you covered this before, I might have missed it. The medium commercial vehicle, I see like, it has materially outperformed, in terms of like sales units, both domestically and in exports. Material outperformance of medium commercial vehicles, relative to light commercial vehicles and passenger cars. If you could please elaborate on like what's driving this outperformance, that would be great. Thank you.
Let me try to take the first part and, Bahar, if you would like to add anything more, just please jump in. In fact, the medium commercial vehicle area is like our key breadwinners. That's a very successful vehicle. It has been so for like as legacy and the one-ton Custom together with this Ford Motor Company alliance with Volkswagen, we will be introducing the partner units. It's both from a hardware perspective and software perspective, the operations in Europe through Ford Pro, it's a success story. That's what we are proud of. For the LCV, I wouldn't discount our next generation Courier. That is also a very successful vehicle. The time it took to complete the ramp-up period gave us troubles.
Currently, it came a little bit late, and when it came, I will proudly say that there was a little bit of a fight over who gets what. The European markets also liked it. We liked it. It's a successful vehicle. At the first quarter, some of the allocations and the distribution of the units out of the Craiova plant, they reached the export markets earlier. Later on, the overall allocation perspective, when we share the units between us and Ford, Turkey market versus export markets, over there, a little bit more of it than maybe originally we intended, let's say, or we wanted a little bit more of it went to the export area. That's why you are seeing the reflection in the numbers in that manner.
Overall, the reaction we get from the markets also for the Courier, it's quite a successful vehicle. Currently, I'm not in a position to give the numbers just yet, but when we concluded our plant shutdown periods in our Craiova plants, we also did several enhancements to our operations, not just for Courier and also Puma. Overall, going forward in Q4, hopefully, we will be seeing larger run rates. I hope they will reflect itself into Q4. As a guidance or as a full commitment, I'm finding it a little bit early to say it just now. You will see that when we come up for 2025.
In general, Ford Pro, for the medium commercial vehicles, it is successful because, now Ford has a strategy in, the key profitable units of Ford are also coming from the commercial vehicles. In Europe, Bahar provided the details. It's quite successful. It's not just coming from the vehicle itself, but also the idea behind providing the service to the professionals using the vehicle. This uptime logic, keeping the vehicle always up and running. If there's an issue, if there's a problem, solving it, making it connected and providing some value-added services through the vehicle, over a really healthy network is differentiating it from the others. Usually, I receive a question regarding how do you combat the Chinese? The Chinese are everywhere.
We saw on the listing in Turkish domestic market, especially on the passenger, there are a lot of Chinese units. Once they showed up, there were some tariff wars. Now they are being kept away both in Europe and, like after some time also in Turkey, they were kept away. They can do something else to combat it. It comes how do you defend yourself, is the question. The key answer, the key strength, let me put it that way. The key strength Ford Pro is betting on is this, the vehicle itself is of high quality. If you check the quality versus some other Ford plants and some other Ford nameplates, our vehicles, both in the LCV, the Courier and MCV, they are the Transit Custom, they are much more quality vehicles.
The cost of warranty, those things are better when compared to others. If there is a problem with all this Ford Pro network, they are really providing good experience to the customers. That's why the loyalty level is much enhanced, and it is creating the stickiness that we want in the value proposition. We are, like I would say, proud to say this, and we will try to keep our units in this way.
Okay. Thank you very much. Just very quick last question here. You covered in the call, like 8% EBITDA margin might be more of like a normalized run rate level given the current market environment. Also, like if I would branch out here, like previously we've seen like 70%-30% domestic to export split in your revenues, and now it's maybe trending closer to 80%-20% because of again the softer environment domestically. Would that be closer to a run rate here in terms of revenue split and EBITDA margin? That's it from me. Thank you.
Yes. I would say yes. Yes, this is the normalization we are expecting because like you said, the export mix is increasing in our portfolio. As we create even more capacity, as the partner volumes come into the picture, the business will be more and more skewed to the export end. Within our business in this talk, we didn't speak too much about the Puma, but we are also doing important actions on Puma. Its electrification is also progressing. Puma being the passenger vehicle, in general, the passenger vehicle profitability is less than the commercial vehicle profitability. That piece is also having an impact. Within the electrification we see a little bit of a delay in the demand for electric units. We are lucky, we have a mitigation plan.
If the demand for BEV doesn't come, we can exchange it for ICE. In fact, that is what we are doing to keep our utilization ratios high. In that regard, we are not disclosing them separately, but an ICE you could assume, at least at the start of their life cycle, an ICE version is somewhat more profitable than the BEV. All in all, when you combine all of these actions, we are expecting a steady state EBITDA margin of around like 7%-7.5% to 8.5%-9% levels. That's our expectation. That is the reason why I said these results are in line with our expectations. If we compare everything to what we had last year, in fact, we see deterioration everywhere.
We also say that last year was an extraordinary year, and so we are not taking it as the norm. These values, you could take it as the norm. Yeah. That would be my answer.
Great. Thanks again. Appreciate it.
You're welcome.
The next question is from the line of Giran Hazandaroglu with JP Morgan. Please go ahead.
Gül, thank you very much for the presentation. I have two questions. One of them is regarding the currency risk. Can you please confirm whether your cost plus export contracts also cover the euro-dollar risk?
Yes, because like, our contracts are cost-plus markup, and within those costs the impact of the exchange is also flowing into our cost base. Like, whenever we have the structure, if the inflation, euro, all of those things are giving us a bad edge and somewhere in the presentation, in fact, I already mentioned about this. Unfortunately this year because of the trajectory, our products became expensive in hard currency terms. Because of our business model and because of our contracts, we have been able to pass that on to Ford. In that regard, we are protected. Of course, this still gives us a headache.
We are not very much happy with this situation because from a business perspective, yes, we are protected, but we do not want this to adversely affect neither us nor our partner in a negative way. We don't want to get affected in a negative way. For the entrepreneurial part of business where we sell in Turkey and in the Ford Trucks markets, we have also seen the impact of this cost. That's why we are increasing our cost reduction targets even more. Usually, historically, that has been a strong muscle of us. Seeing this environment and anticipating that this environment will still continue for some more time, the inflation is coming down. We have started to see some real positive interest rates, but still the inflation is high.
For a continued period of time, we expect to see strong Turkish lira. These two effects are in fact going to make us a little bit more expensive. Maybe for 1.5-2 years this trend will continue. That's why even though we can pass this cost to our partner, we don't have an issue over there. For longer periods, strategic relationship, we are doing what we can in our hands to combat that cost. Short answer, yes, Euro-related actions, the effect of the cost increase due to exchange, yes, we can pass it in our transfer prices.
Okay, great to hear. I also want to pick up your opinion about the outcome of the U.S. election results on Ford Motor's positioning in Europe. I mean, could the European market be a more competitive market next year and could there be more demand pressure?
Maybe that's a little bit like early to judge on that one. Like, I shouldn't, since this question is more related with the Ford part of it, maybe I shouldn't be giving a binding answer, but I can at least share my perspective how I see this. In general, for the product portfolio, the Ford Pro and its enhanced vehicles with electrification, that goal is over there. With respect to product plans, what we do, I do not anticipate a change. How the market dynamics affects through U.S. Like there were some talks about the attitude change possibly towards electrification. Internally, we are not expecting that, and we are not expecting this to have any change on our original plans.
However, since we are in a position, we already placed ourselves on a risk mitigation view. We always said, once we have the product portfolio, it could be electric, it could be ICE, whatever it is. If the demand shifts in other direction, we can very quickly answer that change because we do not have dedicated lines. We have interchangeable lines. The products are being produced on the same area and in general, sustainability related goals are over there. That's why I do not anticipate a change on our operations. That's my take. Overall, what happens, like there are talks, maybe there will be further wars, trade wars with China. If some products being produced in not in North America, but elsewhere in America, how it will get affected, we will see that.
I shouldn't make comments on some tariff play, some trade play. I'm more approaching to this from our position. Since the growth strategy of Ford Otosan from both capacity, volume level and product level, it wasn't driven from any political view. That's why I don't think this will have an immediate impact on us. But let's see. Let's see how it unfolds. Later when we speak about the Q4, if we detect that there will be some change over there, maybe we mention about it then. But currently, I wouldn't anticipate something changing our direction.
Okay. Thank you very much.
Welcome.
There are no further audio questions at this time. We will now proceed with the webcast participants and their written questions. The first question is from Yağız Mehmet Güzeltekin , and I apologize if I'm not pronouncing that correctly, from QNB Portföy. I quote, "Thanks for the presentation on your recent analyst meeting. You seemed more confident about delivering the export guidance numbers in full year 2024. However, after third quarter results, there was a downward revision in export guidance. You mentioned that it is mostly because weakened demand in export markets and weaker order book. Do you expect this weak demand trend to continue going through 2025 and onwards? Also, on what frequency does Ford Motor Company change its orders book? Monthly, weekly, etc. Thanks.
Thank you. Yes, in fact, I tried to answer that question while I was speaking. This demand softening we expect that to impact 2025. At the time when we were making the analyst meeting, in fact, the signals were not fully there. That was the reason. I mean, I wasn't expecting that to happen because there is also some time lag. We distribute our vehicles. The Ford Motor Company updates product programs, in fact, monthly. The official run rate is monthly, but at times of serious action.
Currently, luckily, we are not going through such a thing, but some of you might remember at the time of the semiconductor chip crisis, we were doing things more often and we were in fact prioritizing Ford Otosan units because they are commercial vehicles and they are also profitable units for Ford just like Ford Otosan. Currently the planning period is monthly. Of course, even though we are strategic partners, at the end of the day, we are different companies and within Ford's national sales companies, we do not have direct access to see their stocks or their dealer stocks. That's why as some of the information comes with a lag within the MPS planning period as we see this data.
The moment we see the data, that's the moment where we take an action towards it. At the time, this was not applicable, but now it is applicable. That's why we are reacting to that. We are expecting this impact in 2025. Luckily, we will, as Ford Otosan, we will not be showing bad news regarding volume next year because we will have our partner volumes. Whatever I said for the partner volumes are still valid. Even though demand softens from a overall production and overall wholesales perspective, in fact, we will be seeing a step function increase for next year.
Thank you. The next question is from the line of Dominic Leone with Consilium Investment Management. I quote, "Could you please go over the competitive environment in both domestic and export market?" Thank you.
Like, I think it's a broad question. For the domestic and export markets, the key question we had received earlier was regarding the Chinese. For that one, and I mean, I don't want to repeat myself, but I think it is something to mention. In Turkey, especially in the passenger vehicles, we have seen the impact of it. Bahar, I think on her list she showed the performance of Chery. That is like an important action because these vehicles are high quality vehicles at quite competitive prices. For the short term with the impact of the tariffs, there could be some level of protection in the markets. However, like I tried to explain in detail in the value proposition for Ford Pro, we are not betting on that.
We are betting on the quality of our vehicle and service as a total package together with the network effect. Because we believe we will have constituted that network much earlier than any Chinese brand coming in and making a partnership, maybe a JV development with someone either in Europe or Turkey. Our bet is that our network establishment will happen much earlier than that, thanks to Ford Pro value proposition, and it will be hard for them to break it. That's the stickiness that we create. Within Turkey, you must have heard, like maybe also the question thinks about it.
There has been a notification about BYD investments, and there are rumors, most probably in the near future, we will hear that Chery is going to also make an investment over here. This mentions that there will be an increased competition. This is true. We are not necessarily seeing this as a negative development. In fact, on the contrary, we are seeing this as a positive development because looking into the cost schedules and inflation, exchange movements, everybody was talking about the loss of competitiveness in Turkey. However, these signs show that okay, maybe mostly they are trying to come to Turkey to avoid the tariff walls, but still, they are coming.
They are to make FDI, which says, "Hey, Turkey is the right place to be in." I think this keeps everybody up and alert. For the case of commercial vehicles, we do not see them as a big risk, but this doesn't mean that we are complacent. We are taking them seriously, and that's why we are investing in our own quality, the customer experience and also costs. We don't just sit on our model saying that we are protected. Whatever cost we have, just sell it. It's not our logic. Since it is not our logic, that's why we have been together with Ford Motor Company for so long, and we have done these significant, important investments together with them.
If we consider the overall global Ford volumes of production, like around maybe 2.2 million units, out of them, 15% of that volume is coming from our operation. That's why we are taking it seriously. We are also taking the Chinese competition seriously, but we have plans to combat it. I hope this has been an explanatory enough answer for your question. If you have any other specific competitor other than this, maybe we can elaborate more later on if this hasn't answered it well.
Thank you. The next question is from Ogeday Gürbüz with Garanti Portföy, and I quote, "Do you see risks relating to Volkswagen deal considering Volkswagen's recent production cuts in German plants?
No, I don't. Like, this has been a part of a strategy for the long term. It is with Ford Motor Company, Volkswagen Alliance, especially on the commercial units. There are, of course, it's not just with us, there are some other parts to it. I would say we are very eager to deliver our partner units. For the ones who had the chance to see the units in Hannover Messe, they are also looking forward to the launch, and we are currently giving our utmost attention and care to make it happen on time.
Thank you. Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to Ms. Gül Ertuğ for any closing comments. Thank you.
Thank you very much. Thanks for your interest and time. I hope this has been also satisfactory for you. If you feel like some question or some detailed information that you wanted to have wasn't answered, you can just feel free to reach to us through our investor relations group. I'm sure everybody knows our mail address. Thanks again and take care until next time. Thank you very much.