Ladies and gentlemen, welcome to the Volvo report on the first nine months, 2013. After a short introduction by Mr. Olof Persson, CEO, we will begin and go directly into the question and answer session. Please go ahead, Mr. Persson.
Thank you very much. Good morning, good afternoon to all of you. Thank you for joining this telephone conference. Let me just have a few words in the beginning. Then we will open up for question and answers immediately. When it comes to the third quarter 2013, we can conclude that it was a tough quarter. As we have stated previously, 2013 is the year of product renewal and product launches. We do have a record high introduction into production, which also means that we have parallel production systems, but also we should remember that we have since vacation time this year, at the same time increased our volumes and pushing our volumes to an elevated level because of the demand we have seen.
Just to give you a little bit of a flare of the complexity we are dealing with here is that the European system is now introducing +10 models. We have hundreds of variants, and we're also now introducing around 10,000 new parts numbers in the system. We're doing all this, and we do that because we believe it's a great investment. The good news for 2014 and onwards is of course that we now are establishing a very competitive product portfolio into the market. If we start with the UD and the Quester launch we did here in Q3, we saw already in the launch week in Bangkok that we received more than 700 orders. We are now ramping up production in 2014 to meet that demand.
The Volvo new range of FH, FM, FMX, and so on, has received a very well reception by the customers. Also that is reflected in the orders that we're taking. Both orders and prices are coming in at or even slightly above our plan. Finally, the Renault ranges , which is the largest renewal of the renewal range ever. Even if it's early days, we can now see that in trade press, and that shows that we show in the truck receives very good responses from presumed customers going forward. We should remember though that we have a number of activities ongoing for the years to come. We are now taking decisions in order to prepare ourselves for the efficiency improvements we want to see in 2014.
It's important to recognize, I think, that in order to be able to execute on the efficiencies that we want to see in 2014, we need to make the announcement now and this year in order to be well prepared. Therefore, we have done a number of announcements where we're now focusing on driving efficiency, which will be the theme for 2014. The first one came a couple of weeks ago when we then announced European Footprint Rationalization, which is the largest rationalization program we have had in the European production system in the Volvo Group. In short, we can then describe that as on the medium-duty trucks side, we are now having today 2 lines, 1 in France and 1 in Belgium, and we move that into 1 line in France. By that, we're actually then focusing the medium-duty production. We're creating a center.
We're also making sure that we have a highly efficient production of the medium-duty going forward. On the heavy-duty side, we're similar. We today have basically 6 lines of heavy-duty production in Europe, and we now by focusing the Gothenburg plant to 1 line, we are now then going down to 5. I would really like to emphasize that these activities that we're doing all in all will result in a significant productivity improvement for the European production system, and thereby also reducing the cost per truck.
In addition to that, we also today then announced a separate initiative where we're now focusing really on the staff and support functions, where we're then by analyzing where we stand today, where we want to be, and how we can make sure that we are efficient in all parts of the company, have concluded that we do see an opportunity to reduce staff in support and staff functions with 2,000. We are taking the decisions needed. We have our strategic plan, and we step by step implement that, and we do it in a very sequential and orderly way. We are building the plans in a structured way, and thereby also making sure that we are meeting the targets that we have set up for 2015.
Let me just, before I conclude and open up for questions, mention the Volvo CE, which is operating in a very tough market where we have the slow mining segment and also a foreign exchange rate headwind. If you would exclude the FX and capital gain, margin in Q3 is actually slightly better than last year. But it also shows that CE has done a good job when it comes to cost control and prepare itself for any movements in the market with good leverage going forward. So all in all, a tough quarter, but also a quarter where we continue to invest into the future, and we continue to make sure that we position ourself for 2014. With that, I would like to hand over to you, and you then steer by the questions, the information that you would like to have.
Ladies and gentlemen, if you'd like to ask a question, please press 01 on your telephone keypad. Our first question comes from Mr. Fredric Stahl from UBS. Please go ahead.
Yeah. Hi, good afternoon. It's Fredric here from UBS. I have three questions. If I could start maybe with Construction Equipment. You blame the mining mix and obviously currencies, but mining mix as a reason for the weak margins. Mining is not coming back to what it was. Is this the level of profitability we should look for going forward, or have you maybe fallen asleep behind the wheel in your other segments outside of mining? That was the first question. I wanted to ask about Brazil, where MAN just announced a big investment in capacity. DAF just opened a plant, and I believe Daimler is announcing another expansion later this weekend or soon at least. How do you respond to all of that capacity coming into the marketplace?
Finally, the inefficiencies that you talk about on the truck side, are those included in what has been described as launch costs, or is this over and above the launch costs? Thank you.
Okay. If we start with the CE, I don't want to send a message here that we have been sleeping behind the wheel, because that definitely hasn't been. When it comes now to moving CE and improving profitability going forward, there are a number of actions that we are doing. We are, for instance, going to continue to develop our dual brand strategy, that is in all kinds of different segments, and it will be in different markets. We have clear targets about how we then over time will increase the SDLG presence around the world and coming up to a level of 10,000 units, that's one example.
We do have, for instance, the new Volvo wheel loader, which was launched in China, which is a perfect example of how you can position yourself with a Volvo product in a new segment, not necessarily then based on mining. There are a number of other activities as well. I would say that CE is definitely not taking this easily, and they are, of course, looking at all kinds of alternatives to compensate. We should also remember that CE is, within the mining, we are then mainly focusing on the light mining and quarries, and there as well, we can have different opportunities when it comes to product and product lineups. We're working very hard on that and not just sitting and waiting for the mining to come back.
When it comes to Brazil, on the sort of competitive situation, I think that the history shows, and this year shows that the Volvo brand has an excellent position when it comes to the Brazilian market in terms of its standing, its reputation, its products, and its premium status. We also have, which is extremely important, we not only have a very efficient and good production facility, but we have a dealer network that is excellent. We do continue to invest in the dealer network for two reasons. One is, of course, to better serve our customers, to get a better coverage, but also in order to make sure that we are capturing customers throughout Brazil in a very good way. In order to be successful, you need to have a lot of different things, not only a factory.
You need to have all the other things above. We have been in Brazil since the 1970s. We're well established. Of course, we're keeping a very close eye on the development, and we will make sure that we are defending our position in a very competitive market. Then finally, the answer is simply no. The inefficiencies in the production system is not counted for in the launch cost. We normally in the launch cost, we then conclude it's the sales cost-
Selling expenses.
The selling expenses is the one we're looking at.
Could you give us a number on what the inefficiencies are worth?
No, I don't think I would like. It's very, very difficult to estimate. Even if we would, I'm not sure it would be particularly accurate. However, it's clear that if you look at the targeted and what we want to see in terms of per truck cost, that is, of course, a differentiation right now, which is quite logical.
Very good. Thank you.
Thank you.
Our next question comes from Mr. Austin Earl from Marshall Wace. Please go ahead.
Hi, good afternoon. I have three questions, if I could take them one by one. The first is the fact that you said that you were sold out of Euro V slots in the third quarter. Is it possible to quantify or how much that affected your order intake?
I think it's very difficult to quantify that other than saying that. I think from a capping up what has happened during this year is that we come out with a new FH. We had a very popular product with the Classic. I think people and the customers early recognized already in the first quarter that if they wanted, and many of them wanted to have the chance to buy the last go of the Classic, place their order quite early. That's why we have such a good order intake in Q1 and in Q2. Divvying that into exactly what that would have meant into Q3, I'm looking at Christer here, but I think that's very difficult to do, right?
It's difficult. I think it's what we're seeing on the Volvo brand. We can see that we are now gradually filling up the production slots for the first quarter with the new Volvo FH. It's actually coming in on a fairly normal pace, I would say. From customers not being able to buy Euro V during the third quarter, now in October, November is when they will come back to start to place orders for Euro VI in the beginning of next year. Typically, in Europe, customers are used to delivery times of 8 to 12 weeks, and therefore, it was too early for them in August, September to really start pushing for orders in 2014.
Okay. My second question is about the comment in the release where you say that you're preparing the system for potentially having weak production in the first quarter of 2014. Equally, I thought that you made a comment earlier today that the seasonality going into Q1 '14 looks actually quite normal. I'm not quite sure I'd interpret that. Are you saying you're prepared for the worst just in case it happens, but you don't actually expect that to happen?
I would say when it comes to the capacity and also the order intake in Q1, we have been clear, saying on the Volvo side, we do see for a season normal order intake given where we are in time right now. That's one. We're also being clear to saying that on the Renault side, the first quarter next year will be rather tough, but that is more due to the fact that we're now introducing the new products and that we also have the customer needs to get onto them and to making sure that we are getting used to them and then placing the orders. That's one part of it. That's the European system.
If we then look in the Brazilian system, for instance, or if we look at the American system, the fill rates going into Q1 next year looks ordinary to good, actually.
Okay. Last question was just whether you had quantified the financial services, the charge in Spain. Can you say how much that was?
Well, actually, if you look at the increase in credit reserves, you can see that they came up with SEK 150 million-160 million. However, we have also had some other positive impacts in the quarter in other parts of the world. I think the underlying EBIT in our customer financing operation in this quarter is more similar to what we had in the second quarter.
Okay. Understood. That's great. Thank you very much for your answers.
Our next question comes from Mr. Martin Viecha from Redburn. Please go ahead.
Hi, this is Martin Viecha from Redburn. I have just two questions, if I may. You mentioned a few times before the decline in the variable cost per truck, and I wanted to ask about the fixed cost per truck. How has that been developing given the fixed cost per truck is where you really gain the flexibility? Have you been transforming some fixed cost into variable cost? The second question on the SEK 5 billion charge, I see that there's some effort to merge a few assembly lines into one, and I just wanted to ask, will this consolidation of assembly lines continue in North America, Asia, and other parts of the world? In other words, are you planning to close down or consolidate more factories and assembly lines by 2015? Thank you very much.
If we look at the mix between fixed and variable, I would say, we have not moved any cost between fixed and variable. That is what it is. If you look at the fixed cost, and one part of the European restructuring we're doing now is, of course, to look at the fixed cost related to the production. That is a good example where we're addressing also the fixed cost. We should also remember that we talk a lot about the fixed cost in relation to final assembly, but we're also addressing the fixed cost around in our components and other parts of the organization as well. We are working when it comes to the variable cost.
That is, of course, very much the efficiency and how we measure that efficiency, given the infrastructure that we do have in terms of fixed cost, and that we're working with a number of activities. That's my point is that all these activities is something that we push now and are we working on, and we start to see the gains coming from that. We should also remember that the new trucks that we have designed is, of course, not only designed to be excellent for the customers, it's also new trucks designed for more efficient to produce. That is also something we start seeing coming into the factories, as we now get more and more skilled on actually producing the new trucks going through the factories. Your final question was around the-
The rest of the world
the rest of the world. If you look at the charges that we have put forward, we have said that it contains a number of activity and that we will communicate them when it's ready to communicate. So far we have communicated two of them. One, where we said in the European footprint, we clearly stated that this represented a smaller part of the charge. The 2,000 staff and support function continues a major part of it. We will then come back and continue to communicate when we are ready with the activities and when they're ready to be communicated.
Sorry, just one very quick follow-up question. Would you be able to say what portion of this SEK 5 billion charge are these two tasks which you have presented?
We have not quantified it's of course, a fairly significant parts of the SEK 5 billion that we have announced earlier. There is, of course, more to come.
Okay. Thank you very much.
I remind you that if you'd like to ask a question, please press 0 on your telephone keypad. Our next question comes from Mr. Peter Reilly from Deutsche Bank. Please go ahead.
Well, good afternoon. I've got three questions as well, please. Firstly, can you help us understand a bit more about the FX impact in trucks? How much is translation? How much is transaction, and what exactly is going on there so we can make our own assumptions about how the future might look? Secondly, can you rule out another big restructuring charge in 2015? Is the SEK 5 billion as much as you can see being required for the next few years, barring any major change in economic circumstances? Then lastly, maybe you could tell us what some your field experience is with Euro 6 engines. There have been some trade reports of some cooling issues on the Volvo trucks. How are you finding Euro 6 trucks out in the field, particularly for Volvo?
Okay. Why don't we take the FX first, Christer,
Peter, I don't know if you're looking to the report. On page 29 you have how much is translation and how much is transaction. You can say transaction from flows was SEK 843 million.
It's the major part.
It's the major part in this quarter. SEK 219 was the translation from foreign subsidiary. Yeah.
The transaction, is that mainly Brazil?
It has actually a number of different currencies you could say.
You said transaction or translation?
Transaction. I'm interested in where the transaction is, because historically you've had transaction issues with construction equipment, and clearly most of the issue this time is the truck, so I'm interested to know what's driving the transaction development, if possible.
You can say we are actually seeing many of the mining countries, if you want, having their currencies devaluated. It's Australia, it's South Africa, it's India, it's Indonesia. It's export from Sweden or Europe into many of these countries, and Brazil is included as well. We have other cross currencies like the Korean won versus the U.S. dollar, where we have an impact from construction equipment selling excavators from Korea to the U.S. It's a mixed bag of different currencies. In general, it goes into export from Sweden or Europe into these emerging market currencies.
Great. That's helpful. Thank you.
Thanks. When it comes to the reduction charges and the program we have put forward, this is what we see today, and that's why we came up with it to give you a good sort of estimation on what sizes and what time frames are we talking about. Behind this is, as Christer said before, a number of activities of which we now have communicated to. Also, as Christer said, there will be more announcements going forward.
Yeah.
On the Euro 6 side, our overall impression and also the feedback we're getting from the Euro 6 is actually very good. We have, I believe, a strong technology. We have seen also that we are meeting the targets we're setting up for the engine. I must say that I'm very comfortable that we have a good and a very successful introduction ahead of us when it comes to Euro 6.
Okay. Thank you very much.
I remind you that if you'd like to ask a question, please press zero on your telephone keypad. Our next question comes from Mr. Ashik Kurian from Goldman Sachs. Please go ahead.
Good afternoon. It's Ashik from Goldman Sachs. I've got two questions. First, I would like to get your thoughts on your market share development in 2014. A couple of your competitors who managed to gain share have attributed the fact that they're being quite early with the Euro 6 technology out there in the market. Is that a concern, given that you are slightly late compared to peers, that you might risk losing some market share in 2014? The second question is, if I look at your cash flow for 2014 with the pressure from the cash charges for restructuring and also with the potential Dongfeng acquisition, is there a risk on the dividends or should we accept any asset disposals maybe on the Volvo Rents side?
We start with the market share, I think it comes both in Europe and I would say also in U.S. We had a troublesome first quarter in 2013, where we actually lost out on the market share somewhat, which we both in U.S. and in Europe have regained now, in particular on the Volvo side. We're back on historically a high level there. We have a full line and full offer to the customers. As I said, 50% of the new FH in the order book is actually Euro 6. No, we don't see that.
We basically look at it differently, where we look at it in a way of we have now the most modern, updated, and complete product line ever in the Volvo Group's history, and that is something we look at as something very positive when it comes to actually go out there and capture market and making sure that we get our fair share of the market. We look at completely different. We look at it as a great opportunity going into 2014 with our new product ranges that, as I said in the beginning, has received very good feedback from the customers. When it comes to the cash flow per se, and you're asking a number of questions there. When it comes to the Q3 cash flow, first of all, I would like to state it's about SEK 2 billion better than the cash flow last year, the same quarter.
It's, as you also can see, to almost 100% a consequence of the trade payables given the vacation period that we have had. That, as you know, comes back then when we start to deliver going into the fourth quarter. I think we said in the press conference earlier today then that we will see a seasonal normal cash flow coming into the fourth quarter also. When it comes to dividend, as you know, that's a board who proposes to the AGM about the dividend, and that is something that the board always has done and also will do this year, and I have no comment on that going forward. The same goes also for disposal of assets, as you mentioned, the Volvo Rents. That is something that we never comment upon in either, in those kind of asset keeping or not keeping.
Dongfeng.
Dongfeng, yes. What was the question around Dongfeng?
Sorry. I was probably not being very clear. My question was actually more on the 2014 cash flow. If I factor in the cash charges for the restructuring measures you announced of anything between SEK 3 billion-SEK 4 billion, plus the cash out that you will have for the Dongfeng stake acquisition, it looks to me that your net debt or the cash flow for 2014 might come under pressure. I just wanted to get your thoughts on that, whether you see any effects going against it.
Oh, sorry. When it comes to the balance sheet and the way we are handling the cash efficiency is, of course, something that we keep a lot of focus on. If you look at the C2C days, for instance, that is something we now see that we can improve and will improve going forward.
It is going in the right direction, actually, you can say.
We are moving ahead with that in a very good way, and I think the efficiency of the balance sheet is something we focus a lot in order to make sure that we generate cash enough to facilitate those kind of investment and activities we're doing.
Thank you.
Our next question comes from Mr. Michael Tindall from Barclays. We phone him.
Yeah. Hi there. It's Mike Tindall from Barclays. 2 questions, if I may. Just the 1st one, I wonder if you could help me. I'm still struggling with the orders, particularly in Western Europe. If I add together what you've reported, what Daimler's reported, and Scania has reported, and I look back across the last six or so quarters, on average, you've taken roughly 50% of the order intake across Europe. In Q3, you took 35%. I understand what you're saying in terms of you saw it early, but it does seem that you've seen a big drop in terms of your share of the orders coming through in Q3. I wonder if you could talk a little bit about that. The 2nd point is just really a clarification, if I may.
You mentioned this morning that basically the increase in production has been sourced completely out of temporary workers. When I look at your report and accounts, you're saying your temporary workers were roughly 16,000. Sorry, correct myself here, 17,000. Effectively, the number of temp workers appears to have gone down year-over-year. It's 17,216 now. It was 18,600 last year. Am I looking at the wrong numbers here? Because it looks like your full-time staff numbers have gone up by 10,000. Thanks very much.
Okay. You said you had not done, Christer wasn't here, done the analysis you have done. How big was our share of the orders in the 1st quarter for the industry?
You were 53%.
In the first quarter?
Yep.
Okay. Yeah.
47% in Q2 and then 35% in Q3.
I think if you look at it, we have a situation on the Renault side where you've seen that we have a lower order intake this year than what we had last year. Clearly, the Renault brand is affected by the transition to the new product portfolio. If you look at the Volvo brand, they are up 29% so far this year, which I think is quite good.
Okay.
When it comes to, let's see, the second question, I don't recognize the numbers you actually pointed out. I believe, I'm looking to find the numbers here.
It's on page eight of your report.
Yeah.
You talk about having 17,206 temps. If I look at that same number for last year, it was just over 18,000. I can come back to you on it. It's fine.
No, at the end of this year, if I'm reading this correctly, we had 13,452 temporaries at the 1st of January this year.
Yep.
13,452, that is now 17,216.
Yeah, I was thinking more in reference to Q3 of last year.
Yeah, that is quite difficult to compare with.
Okay
what has happened is that we cut production in December last year because of the weak order intake we had in connection to the fiscal cliff.
Yep.
We cut back on production a lot in December, January this year. Then we have ramped up since January, February, and that has been done then with adding the temp from 13,000 up to 17,000.
Got it. That makes sense. Thank you very much.
Thank you.
Our next question comes from Mr. Alasdair Leslie from Societe Generale. Please go ahead.
Hi, good afternoon, everyone. A couple of questions, please. Firstly, just a clarification. I guess, you said that you can quantify the production inefficiencies in trucks heading into the first half of next year. You suggested the incremental launch costs were around SEK 500 million in Q2, and those were still on a high level in Q3. Can we just get a sense of what the year-to-date figure is specifically for that number and perhaps the full-year expectation? Just clarification on whether you feel that those will fade through 2014, or should we still expect some residual costs related to the launch of Quester and some other activities? Secondly, on the 2,000 employees that are going to be affected by the efficiency program, can you give a sense of what portion might come in terms of research and development? Thank you.
While Christer is looking at the numbers on the first part, I work myself backwards here. The 2,000 is staff and support functions not connected to research and development. That is typically staff functions in the traditional staff functions, if you would like to say, and support there, we including them, finance, IT, and those kind of functions as well. It typically not has anything to do with engineers or research and development. When it comes to the impact also for launch costs this next year, I would say will fall off dramatically. We will basically have then been through the whole launch as I've said many times, that for us, launch cost is very much actually very little, the actual launch event. It is about the investment in training for salespeople and technicians all around the globe.
We are very much through that by the end of this year. Quester will not drive any substantial amount next year doing that. I would also like to, before we get into the numbers, state that when we look at this double production next year, we will have, as we said this morning as well, on the Volvo side for the first quarter, then we will have a rapid, a very immediate changeover, and then you would have Renault going through the mid of the year. However, of course, there are two things I would like to stress here. One is that even though we're running double production, we're getting better and better at that. We are getting productivity increases within the situation we have. That we can see already now.
Secondly, given the volumes that we see ahead of us, of course, the Volvo one, which comes early, is the one with the greatest impact. Therefore, once you're sort of out of the double production on the Volvo side, we will then go into a much leaner and much more productive
Production system already Q1 next year. You would have some for Renault going forward to the second half. I just want to clarify that from this morning. Christer, still looking at the numbers for the elevated selling expenses?
Yes, we said SEK 500 million in the second quarter, we are about SEK 300 million for the third quarter, it will probably be about the same in the fourth quarter. As Olof said, for the first quarter next year, it should be very, very small. I don't have the first quarter this year on top of my mind here, you asked for the year-to-date one, maybe we can come back to you with that one.
Okay, thanks. Just, I guess a follow-up on the kind of productivity coming through. When you move to the new model range on Renault, you're obviously up and running on the FH, how much productivity improvements can you get just from increased parts commonality? Is that a big driver across Renault and Volvo going forward?
I think it's much deeper than that. Of course, we will have some of that coming through that commonality. I think what we're also looking into in the design of the products, we have really put a lot of emphasis in making sure that we design it in a way that now makes it easier and faster with a higher quality to produce. That is, of course, what we will see coming through in the efficiency number going forward. How much that is, I don't think we disclose. It's, of course, something we have put a lot of emphasis in once we now replace the whole product line.
Great. Thank you.
You're welcome.
I remind you though, if you'd like to ask a question, please press zero one on your telephone keypad. Our next question comes from Mr. Fraser Hill from Bank of America. Please go ahead.
Hi, good afternoon. It's Fraser Hill from Bank of America. Just really wanted to address 2014 a bit more directly. I mean, we've still got consensus forecasts here looking for just around about SEK 21 billion for 2014 EBIT, and it looks like we're going to run rate here for this year maybe SEK 10.5 billion or so. I just wondered how you really felt about that sort of growth in profit expectations, especially in the context of your restructuring program. I mean, the way I look at that restructuring program is if we take the 300 basis points off of the 2011 base, then maybe on a blue sky, we're looking at SEK 9 billion of total cost-saving opportunities from a base actually when the business was slightly bigger. What proportion of those cost savings are you going to save in 2014?
How much incremental benefit in an absolute sense will we get from, let's say, that SEK 9 billion overall cost saving dynamic? Therefore, how does that stack up in terms of your own projections, maybe against the SEK 21 billion forecast that we have in the market today? My second question was just to follow up on the dividend. I take the point that it's a discussion for the board, but I just wonder, could you remind us of any publicly stated policy that you have? Is it a particular payout ratio policy, or how should we think about that ourselves?
In terms of policy, there is no dividend policy that we have had. I think that's the way it is. As I come back to that is a decision for the board to propose to the AGM. I don't want to go in or comment or discuss the consensus out on the market. The only thing I can sort of provide and also give you the confidence is that, of course, if you look at the different areas, we have talked about the sales, the elevated sales cost, which will go down. We talked this morning about the cash R&D, which is on a downward trend. We talked about the increased efficiency that is coming out of the production, which is not part of any restructuring program, you should remember. That is something that comes through the stopping of parallel production.
We are looking at the back end of 2014, seeing the impact coming from the staff and support function reduction program. We should also remember that we have already announced the restructuring program and the reorganization of the European sales network and the sales organizations which is also there now once the launches are sort of done will start to kick in as well. We have already announced a number of activities which will start to give and bring effects into the next year. I don't get into any forecasting mode here, which we don't do. I think I leave it with that and just give you the sense of the number of activities that actually will have an impact coming into next year. Hello?
Yeah. Thank you very much. Thank you.
Okay. Thank you.
I remind you though, if you'd like to ask a question, please press zero one on your telephone keypad. That's zero one to ask a question. We have a question from Mr. Hampus Engellau from Handelsbanken. Please go ahead.
Thank you very much. I just wanted to follow up on the dual production we'll be running in first quarter in Volvo and also Renault. Would it be possible to maybe give us what you're aiming for in terms of split between the new and the Classic version from Volvo in first quarter and also for Renault, please?
On the Volvo side, you can say it will be a very high level of new Volvo range because it will basically only be the markets outside Europe that will be supplied with the old Classic version. That's Middle East, Africa. All trucks for Europe will be Euro 6 within new FH, FM, et cetera. I don't have the split, but it will be a high ratio of the new range in the first quarter. On the Renault side, it will be also a large portion of the new range. It's the same thing there. It's the market in Middle East, Africa, and Asia that will be still running on the old Classic versions. Since the Classic versions are not coming with Euro 6, they will be phased out for the European market.
I don't have a split there either, but it will be a fairly steep ramp-up on the new ranges already in the first quarter.
All right. Maybe could you remind us the reason for Renault being prolonged also into second quarter with the old version also in the production system?
Well, it's just that Because Renault is a bit later in the whole launch setup here. They came in with a range later than Volvo. It's just that we have staggered it with one quarter's delay, you can say. Having said that, it will not be a lot of the old Classic models produced in the second quarter in the Renault system because it will be mostly new range for Europe, Euro 6.
All right. Thank you very much.
Okay.
No further questions registered on the telephone.
Okay. I thank you very much for joining and if there are any further comments or questions, you can always get in touch with Christer and his team. With that, I would like to thank you very much for joining and talk to you, if not earlier, at the Q4 release. Thank you very much and have a good, nice weekend. Thank you.