Thank you very much, and good morning and good afternoon to you all, and welcome to this first quarter 2012 Volvo Group presentation. Follow me to page number two in the presentation. I think we can conclude that the first quarter for the Volvo Group can be summarized with a good momentum on the sales side. We have increased our sales year-over-year to SEK 79 billion, and that's a 10% increase, and we are posting a 7.9% operating margin. I will come back to the Group, to Trucks and CE a little bit more in detail.
Just let me have a few minutes on the rest of the operations that we do have, and let me start in the bottom with Financial Services where we can conclude that in the first quarter we had SEK 10.4 billion new financing, which is very much in line with the growth of the sales. We are constantly having around 25% penetration, which I think is a good and balanced way of growing our customer financing. We also see that the result is improving. The operating income is posted at SEK 333 million, which is then a sign that we work ourselves through the issues we had, particularly in Eastern Europe, and we also are having a good development in the rest of the financing activities that we have seen.
Volvo Aero is very good to see that when the production disturbances and ramp-up issues that we have had in Volvo Aero for the last quarters have been worked out, we can see that the profitability comes back up, and we are posting a 14% operating margin in Volvo Aero, which is a good work done by the team in Aero. Penta is still struggling with lower sales, a very tough market on the marine side, and also a tough market on the industrial engine side. The decrease of profitability in Volvo Penta is mainly due to the lower sales. When it comes to buses: 10% increase year-over-year in sales, mainly explained by Brazil and the fact that we did produce our chassis for the Brazilian market back end of last year.
Those chassis went then to partners outside Volvo Group for building on the superstructures and then going out to the market and being invoiced. That means that Volvo Buses did have the industrial coverage and the industrial activities last year, which they don't have this year, corresponding to that volume. That's one explanation to the lower margin. We also have a very tough situation in Europe on the city bus side with lower volume and also under-absorption in the industrial system. Both when it comes to buses and Volvo Penta, there are activities and the teams are working on activities to make sure that we come back and restore the profitability going forward. Follow me to page number three, and then we talk about the group.
As you can see, we're now trailing at the 12 months sales trend of SEK 318 billion, and we're with an operating income of SEK 27 billion, and we're posting a SEK 6.2 billion profit operating margin compared to the 6.5% last year. We should remember that Q1 last year had a positive impact on a tax return in Brazil with a net positive impact of SEK 340 million. I will come back to leverage. I will come back to the development on the profitability going forward.
On page number four, I think it's an interesting picture showing that we now have a global position that makes us in a position where we actually can counteract ups and downs in the different markets, and thereby, despite we have lower than usual development, for instance, in Europe and South America, compensating that with other markets and posting a 10% increase coming from the SEK 70 billion up to the SEK 77 billion. That also is reflected on the right-hand side of the picture where you can see North America, Western Europe, and Asia now 24%, 29%, and 25% of the business, which is balancing out then throughout the globe. I think this is a strength in the Volvo Group today that we do have this geographical reach and also have the geographical distribution.
On page number five, we then highlight some of the balance sheet items, and we can see then on the operating cash flow, we see we have enormous seasonal minus SEK 4.9 billion in operating cash flow, creating a 12 months rolling of SEK 13.2 billion. I also would like to highlight in the middle there the cash conversion cycle. That's for the first time ever in the Volvo Group is below the 20 days recorded this quarter at 19 days. There's a lot of good work that has been done in order to ensure that we can grow our business organically with a very high cash efficiency. The return on capital moved up from 24% to 28%, found in a solid development there. If you look at the net debt to equity, we recorded 27%, including the pension liabilities. If you take out those, we are on 22%.
Good news, and I think a strengthening of the balance sheet, given that we are talking about the first quarter. If we then move into trucks and take page number six, we can see that we have a solid growth from SEK 45 billion to SEK 49 billion, and we are now again above the SEK 203 billion in terms of 12 months rolling. I would say that the development of the sales in the quarter corresponds very much with the indications that we gave when we gave the full-year market outlook in Q4, that the European market is coming down somewhat lower than we perhaps anticipated. I will come back to that. The North American, a steady growth with 42%, and then South America also being impacted by the switchover between the Euro 3 and the Euro 5, as we have said. Other markets worth mentioning up to 35%.
Here we talk about Africa and Australia in particular. All in all, I would say that our growth in terms of sales has followed very much the market development that we predicted in Q4. If we then look at trucks profitability, we can definitely conclude that the leverage is not where it should be. We have an operating leverage on, if you exclude the currency effects of - 20%. There are a number of, and also I would say excluding the non-recurring items. There are a number of explanations to that. One is, of course, the market mix moving out of Europe and/or having Europe and South America on a lower level, and then having the growth in North America, which we then have lower margins in.
We also have an effect on the fact that the industrial systems, both in Europe and in South America, due to the sort of slowdown we initiated end of last year and also in the first quarter, as of course, less coverage of the fixed cost than it had the year before. Whatever and however, this is a situation that we over time need to address, and that's one of the key issues I've talked to you so many times about, the leverage on both on the top end of the volumes, but also the leverage when it comes to the different market and the market compositions, that we over time need to be more neutral in the way the market's impacting our leverage and profitability. This is something that is high up on the agenda and is something we work on.
I also want to stress that this is not a Monday-Friday fix. This is, of course, where you have to work through a number of items in order to make that happen. If we then move to page eight and look at our orders, I think that we have on the sequential side, quarter-over-quarter, + 5%. Starting with Europe, I think 23,416 order intake in Q1 on a sequential basis, + 19, and a book-to-bill ratio of 117%. This has meant that we, for some models, particularly in the Renault system, are starting to get a little bit too long delivery times, and therefore we have decided to put up the system and put up the production rate in the Renault system somewhat in order to cope with that increased demand. In North America, we are basically in line. You can see 107% book-to-bill.
I think in that respect, we have now a balanced production system in North America. You might have seen that we do have a couple of stock weeks in the U.S. during the spring. I just want to emphasize that this was planned since long. This is normal maintenance. We need to do certain things also when it comes to improving efficiency and those kind of things. Those stock weeks have been in the plans since before. In North America, a balanced demand and output situation, I would say. In South America, you have the 109%, which is impacted by the fact that we do have a situation or did have in Q1 where we did have a one week longer closing time in the beginning of the year, and that meant also that the book-to-bill ratio then has moved during the quarter.
We will, in order to make sure that we don't build any inventory, have somewhat reduced productions during the springtime here in order to have the inventory level in line with the demand coming forward. I will come back to the Brazilian market a little bit more in detail later on. All in all, with those small adjustments, I would say, in Europe, up a little bit on production rates on the Renault side. In North America, we do see that we have a good balance. We are doing slight adjustments during the springtime in Brazil. With those adjustments, I would say that we have a good balanced output versus market demand. That is, of course, something we really follow now very carefully and making sure that that is continuing. Moving then to the market and the market forecast for 2012.
As you can see, we are keeping our North American forecast on 250,000. We do see some hesitation with our customers due to the fact that the diesel prices are on the level they are. On the other hand, that makes, of course, the business case even more appealing to shift over to our more fuel-efficient products with our own engines and our own gearbox. Basically, when we put everything together, also the input from how our customers are doing in terms of financial, the freight volumes, and so on and so forth, we feel that the market is then pacing towards this 250,000 for the full year. In Europe, we have increased the forecast from 220,000 to 230,000. By doing that, we're indicating the fact that we have, and there are mainly three areas. One is, of course, our own order intake, which we're looking at.
The second is that we feel that the market did come down as expected. It did stabilize as expected, but it did stabilize on a slightly higher level than we anticipated when we did the last forecast. On top of that, we also see and have a feeling that at the back end of the year, we probably will see some of our customers starting to look for a renewal of the fleet and thereby also driving some sort of a replacement demand coming at the back end of the year. Putting all these facts together, we call the market 230,000 instead of 220,000. In Brazil, we have, as expected, seen a rather messy first quarter with the transition from Euro 3 to Euro 5. We had the overhang of Euro 3 vehicles coming into the market.
We did see the infrastructure build-up issues, as we talked about, getting urea in place, and so on and so forth. That was pretty much what we expected. We're now working through the Euro 3 vehicles coming out in the market. I think that we are looking at this quarter before everything is out in the market. On the positive side, we see that the spare part volumes are really high. We do see that the incentives that the Brazilian government put in place will drive the market. Even though we had a messy first quarter, we believe that we will then move on and have a stabilizing in the market, and therefore we call it 105,000, which is then unchanged forecast since before.
I just want to, in this relation here, also mention that for us, we don't have any Euro 3 in inventory to be out in the market. We are now selling only Euro 5 into the market. In Japan, reconstruction after the tsunami and the earthquake is building up demand, and we see that the development is approximately what we estimated last time. We keep that one unchanged. Basically, nuances to the different markets, but we keep our forecast except for Europe, where we then top it up with another 10,000 units to 230,000. Leaving Trucks and moving into Volvo CE and looking at the sales, I think that we have managed to create a good sales momentum. It's driven by North America, and we also then have maintained our volumes in China. We're now running on a 12-month, SEK 66 billion turnover for CE.
We can see on the right-hand side of the picture that we have growth all over. In particular, I would like to stress that we managed to keep the Asia volume, including China, in positive territory despite that the China volume has decreased by 25%. In total, you can say that CE has managed to have a flat development year-over-year, both in terms of volumes in China and in terms of profitability. Leaving, of course, the fact since the market went down by 25%, a major market share gain in China, which is very, very positive to see. I think the CE team has done a great job there. Also, I would say that the growth in North America, 111%, is higher than the market in general. One explanation for that is, of course, that we have been very active and in a good position in North America.
We should also remember that in the fat buildup in North America, which was happening last year when the volume started to come, we had some issues during the end of last year to actually provide the North American market with enough machines. Those machines now are coming, floating into North America, which means we have a little bit of a catch-up effect in North America in terms of the volumes. Very nice numbers with 111% growth there, that for sure. In terms of margins for CE, and that is page number 11, you can see that we're then moving from SEK 1.8 billion to SEK 2.1 billion and the margin from 11.4% to 11.8%, leaving an excluding currency leverage of 12%. I must say that I think that is a good development. It's due to good price management in China.
As I said, we have managed to keep the profitability despite the market situation. It's also a positive sign that CE has managed to shift them because you could see in the previous numbers of North America growing as it has and still be able to create those kind of numbers. I think that's good. It's also price management, but it's also good cost control in CE. Moving into page number 12, we see the market slides. The biggest change here is, of course, that we have revised our forecast 2012 for China from ±0 to - 15% to - 25%. Two reasons for that. One reason is, and I've told you all the time, that in order to get to the ±0 , we needed to see a reasonable spring season. The spring season has come in lower than we expected.
That means that the catch-up on the autumn season comparable numbers would be very difficult. Therefore, we have stated that's one part of it. Another part of it is, of course, also that we probably underestimated our ability to take market shares when we were out and asking our dealers and our customers on the market scenario going forward, which basically so far in Q1, they have managed to keep a flat market situation. When it comes to Asia, excluding China, we have done a revision downwards as well to 0 to 10%, coming from 10% to 20%. Here it is mainly two markets, it is India and it is South Korea. That is having a little bit of an uphill battle compared to what we expected before. Apart from that, we have unchanged market development in both Europe, North America, and South America.
Moving into page number 13 and give you a quick update on the reorganization status after 180 days. Of course, the focus has been very much on the processes and structures. As you can see there on the slide, we have done a lot of things with new senior management teams in place. If you look at all the new managers, we're up to almost 440 new managers appointed. Almost all of them are internal Volvo managers, which I think is a big strength. We also looked through the whole governance process and our decision bodies, and we are in the process of reducing those substantially. We're talking about a reduction of up to 60% of the decision bodies. All that we do in order to ensure that we get higher efficiency, higher pace in our decision process.
We have also put the process ownership and governance is now defined and in operation. Finally, we also got the new financial steering model implemented, where we now keep management accounted for the same type of targets that we do have on the financial targets externally, meaning we're looking at operating margin, meaning that we are looking at competitors and that we focus on the growth in the same way. We now have a good alignment between the external financial targets into our strategies and then into our incentive models throughout the company. On page number 14, we are talking about the customer offering. Here we have this very substantial work and project that we're running, the brand segmentation, which I've talked to you a number of times.
This is the project where we really go through each and every brand, each and every market, each and every segment, each and every product, and see how we can better utilize the brands, looking at it at the total group asset. It's well underway. It's making great headway. We will be finished with this in Q4 according to the timeline. We have also moved ahead on the new Asian product that I've talked to you about before, and we have now product plans in place and under implementation for trucks, buses, and construction equipment. This is, of course, to utilize the group's full potential. I've talked to you before about the detailed mapping.
With the new structure in place and all managers in place, we can now take this to the next level, meaning that the task for this new management in the group is to go through all the opportunities, starting from the stage line, going through the different lines in the profit and loss, see what they can find within the organization, see what we can find in terms of cross-functional work and process efficiency improvements, and have all those activity plans ready in Q3. We are following very much the timeline, as you can see in the bottom of the slides, when we're done looking at the quarter-by-quarter implementation, design and prepare implementation, adjust to follow up, and then looking at the activity plans and start to implement that from Q3 onwards. The reorganization, the new way of working, is following the plan.
It's a huge amount of activities, but we have now set the real cornerstones and the foundations with the new organization. Now we're looking for all these activity plans and actions that we need to do in order to utilize the full potential and address many issues, among those, for instance, our sensitivity to geographic and market mix going forward. With that, I would like to stop there and open up for questions from you if you have any.
Ladies and gentlemen, if you have a question for the speaker, please press 01 on your telephone keypad and you will have a queue. We have a question from Ms. Laura Lemke from Morgan Stanley. Please go ahead, madam.
Yeah, good afternoon. I actually just have two questions from this morning. The first one is regarding your outlook on Brazil, and apologies if I maybe missed part of the presentation here. You actually kept your absolute volume forecast unchanged versus Q4. Since then, of course, we had the extension of the Finame program. I'm just wondering if we should infer from that that the underlying market performance that you're seeing right now is actually worse than you had expected, or is it more that you do actually see upside to that number, but that it is maybe a little bit too early to say here? Secondly, I was wondering if you could give us an update on the level of regional capacity utilization, both in construction equipment and for the trucks, please. Thank you.
If I start with the capacity utilization, we don't normally give that. What I can say and what I said in the presentation is that we do feel that we have a good balanced output versus demand in the different regions and that we have a very high focus on that connected to the flexibility that we have in our production systems. When we talk about the capacity per se, it is, of course, very difficult to say because you have assembly capacity, you have shifts, and all of that. I think what we focus on very much right now is that we both on the Construction Equipment and on the truck side is that the output that we do is well balanced with the demand we see coming forward.
When it comes to Brazil, we are and we do see that we had the so-called messy quarter, and we also see that we do have some Euro 3 coming into the second quarter, and we think we need to get through the second quarter before all of these are done. In general, I'd say that we will then get this sorted out. Basically, if we add everything together that we see right now, both on the GDP growth during the year, which is then sequential coming into the year, the customer's profitability, the spare part, and all the other issues we're talking about, we come to that we are ± 200 and, sorry, the forecast that we do have.
Can I just ask a quick follow-up on this? Are you worried at all, or are you hearing from your customers about lack of availability of the required fuel quality in Brazil? I think you were one of the first to really introduce or start selling Euro 5 trucks. You mentioned earlier in the year that actually the prices you were getting on these trucks, the price realization was very good. I'm just wondering, how has that developed since all of the OEMs are basically now starting to offer Euro 5 trucks? How is the pricing here going forward?
If we start with the fuel and the fuel quality and also the urea, we said that we would have the first quarter going through there, and there would be. I must say, I'm looking, Chris, I haven't heard anything coming back from the market that that should be a major problem or anything that's limiting things. I don't know if you have any more updated information, Christian.
We actually expect the buildup of availability of low sulphur diesel to increase quite a lot in the next few months as the population of Euro 5 trucks is building up out in the market. When it comes to pricing, I would say that it's roughly stable. It was a bit more pressure in the beginning of this year as more competitors started selling Euro 5. I would say it's stabilizing.
Okay. Okay. Thank you.
Next question comes from Mr. Nico Diehl from JPMorgan. Please go ahead, sir.
Good afternoon, gentlemen. I'd like to ask three questions, please. The first question is around the production sequentially, both in Brazil as well as in the U.S., whether it's moving up, sideways, or down. The question is a little bit around the outlook statement that you put in on the front page of your press release this morning, where you highlight that Brazilian production will be adjusted in May and June. Given that January was already so low, wondering whether sequentially the production is moving up on a quarterly basis for the U.S. and Brazil or what direction we're moving there. The second question is around your ability to cut costs. I'd like to know which areas you're thinking about when you're thinking about cutting costs going forward in your reorganization plan, as well as the number of decision bodies that you highlighted will be reduced by about 60%.
I wonder where you are in that process. The last question is around the North American construction equipment increase of about 110%. Is the current absolute level sustainable here, or was there something that was perhaps slightly abnormal in the quarter?
Yeah, if we take the production sequentials, you can say the U.S. is moving sideways in terms of the sequentiality. Brazil, as we said, then is moving down basically, and we have a few stops in order to make sure that we are not building anything in excess of what the market wants to have. That is from March, you can say. On the cost-cutting side, and I've said this before, the task that the management has and the activities that are now ongoing is to leave no stone unturned. That means they have to look into all kinds of costs, both short-term and long-term, both direct costs, indirect costs, but also looking into what activities we need in order to get smoother, faster working processes in place. That's a wide scope, and we are looking through each and every cost in the profit and loss.
Some of these are more obvious, straightforward. If you look at the double work and double functions and so on and so forth, others are more long-term, which we have to address over time. I don't want to speculate on where and how this will turn out. I have this management principle that the people who will deliver on this also need to have a good chance of actually coming up with the ideas themselves because they have to then deliver on this going forward. That's the principle I'm going to stick to. That means all this has to be ready during quarter three. The decision body, we have identified them. Some of those have been closed out already in the old structure, and we will take the next step now, basically starting from the beginning of May.
We will very soon be up and running with a 60% lower decision or fewer decision bodies than we had before. That's going to be a part of the much higher rhythm that we have in the company right now, where the weekly rhythm of management teams is now also supported with much fewer decision bodies. That's an efficiency improvement in decision-making and so on and so forth. On the VC, I said in my presentation, and that is the fact that we did have issues of actually supporting the fast growth of the U.S. market during the fourth quarter last year, lacking machines because, as you know, we import a lot of machines coming into the U.S. on the compact side and so on and so forth. Now we have sort of corrected that.
That means, of course, that our growth is, to a certain extent, a catch-up effect compared to the market in general.
Thank you.
Next question comes from Fredric Stahl from UBS. Please go ahead, sir.
Hi. Good afternoon. It's Fredric here again. I just want to come back to you, the trucks. I was wondering, I know it's difficult for you to comment on profitability, etc., but let's say I have a list of things that I think can boost group profitability in a meaningful way over the next few years. Is it still fair to keep the truck on that list? Is it still a source of potential improvement in profitability there? Secondly, if I can ask you, maybe you can give us some color on Volvo Rents. I think it's both construction equipment and trucks, maybe a bit on how big that business is now and where you want to take that. Thank you.
Okay. I have, as we understand internally, a list of different issues that we're going to address. On my list, the trucks is definitely there.
Very good.
When it comes to the Volvo Rents and having that as an outlet and also a good piece to supplement particularly the smaller machines in the U.S., we do have it under development. The development of that in the future, we will have to see. I mean, we take it case by case. We need to make sure that we are building a business that is sustainable, a business that we get profitability, and a business that makes really what we want to do. That is to combine the outlet of the Rents business in the U.S. together with the supply of, in particular, the smaller machines. I would say that one is developing, and I'm pleased with what I see so far. We are strengthening our positioning, and we are adding stores to the market.
We have basically now come to a size when we are having 125 stores, and that's also what I would consider being a critical mass in order to develop this business in a good way. We are cautious. We take this step by step and making sure that we don't sort of expand too fast and expand in markets we don't want to be. We will take it case by case and quarter by quarter to see how we develop that one. Rents in trucks, I'm not sure what you mean with that.
It's just that you see, at least here in Sweden, you see heat of Volvo and the heat from Volvo. You know, you have a rental business in Sweden and Europe, I think.
Okay, okay.
Is that part of the leasing business? I'm not sure.
No, it's not. It's a very small business we have.
Okay. Thank you.
Next question comes from Mr. Fredrik Ståhl. Sorry, from Mr. Sebastian Ryder from [Société Générale]. Please go ahead, sir.
Good afternoon, gentlemen. Two questions, if I may. The first one is on truck. Maybe you could help us understand the year-on-year margin decline and how much is driven by mix, how much is driven by lower production rates in Latin and Europe. The second question is on construction equipment. First, in the U.S. market, I'd just like to understand a bit more the performance. A follow-up to Nico's questions. If we look at your U.S. competitors, it shows also very strong performance in Q1, but also the data shows a doubling of the inventories at dealers. I would like to know if you experience the same trend in the U.S. In China, more or less the same question, whether there are any significant changes in your dealer inventories in Q1 versus Q4.
Yes.
Thank you.
Okay. I don't think I'm looking at Chris here, but I don't think we do any split up in terms of the mixed issue, how much is then geographical and how much is absorption of fixed cost. With you, I think we conclude that these two factors are playing a major role in explaining the decline and the lack of leverage that we have seen. When it comes to CE, I haven't got any reports, and I have got a lot of reports, but I haven't got anyone where it actually indicates that we would have any dealer thing. I think we are in a situation where we still are rebuilding up the rental fleets that you do have in our dealers and that we have seen for a while that those machines have grown in age and that need to be replaced. That is actually what is happening.
If you look at the larger machines, we then did have a shortage, as I said, and we have been catching up. Inventory, it's on good levels. We haven't seen any issues there. The same goes with CE in China. We are very, very observant, as you can understand, in China and the dealer side to make sure that we don't sort of oversupply the machines into the market because that's the worst thing you can do in this kind of market. You really have to live on your successes on actually getting the machines out from the dealers to the customer. That's what we're doing. So far, so good, both in terms of inventory level in the U.S. and also in China.
Thank you. Very clear.
Next question comes from Mr. Ravi Freya from Exane. Please go ahead, sir.
Yes. Hello. Thank you for taking my question. We heard some comments from one of your competitors regarding a tough pricing environment in Q1 in Europe. I was wondering if you could give some color in that, and if you could also share your view about what the current pricing situation is and how you see it developing in the coming quarters. Thank you.
I think, Christian, do you have the latest update on that?
I assume you're referring to trucks?
Exactly. Trucks.
You can say, I would say prices are stable. We saw a positive price realization up through the third quarter of last year. Since then, I would say it's been stabilized on those levels.
In the coming quarters, what's your view on pricing? Do you see it's getting stable or any room for improvement?
I think we still have to wait and see. My understanding is that all manufacturers have taken the appropriate actions to balance production with demand. We will have to see.
Next question comes from Mr. Ben Maston from Merrill Lynch. Please go ahead, sir.
Good afternoon, everybody. Just one question, please, on the Chinese construction equipment market. You don't really infer much pickup in year-on-year terms in your new guidance. You've done a very good job on market share and pricing so far this year. In your experience, can you talk a little bit about how you expect the competitive environment to develop if volumes remain fairly depressed and there is new capacity coming into the industry in terms of pricing or use of financing, what you would expect going forward? Secondly, kind of related to that, how do you plan to maintain the level of outperformance that you've shown so far? Thank you.
Okay. First of all, I think you have to split the market into two, and that is on the wheel loader side and on the excavator side. As you know, we are a major player in both of these segments. On the wheel loader side, we have a different market development in total, which has held up better. Last year, for instance, it was actually flattish, where the big drop was on the excavator side. Coming back to your point, there are two things there. One, of course, is that the Chinese market has been very competitive also during this extreme buildup phase that we have seen. We shouldn't forget that if you look at the number of players, the ambitions the players have had over the last couple of years has, of course, created a very competitive market, which I think we have handled very well.
I foresee that also in the future, it will be very competitive. I think we have a good model where we have a dealer network that is dealing with our customers in a good way and making sure that we are progressing in that. You can also say when it comes to extra capacity, this might be a little bit of a cooling-off effect for the plans. What you have talked about and what we have, not you, but what the market has talked about, and if you look at the announcements we have seen, is a lot of plans to put new capacities, particularly on the excavator side. This development that we see now makes those bits, and there might be a cooling-off effect for a lot of people to actually enter into that market or do it on a lower level.
Finally, I just want to also stress that the numbers that we see in the different releases, at least what I can read out of them, are the maximum assembly capacity that we do see. To that, you need also to connect the components. How and where should we get the component from? There we have a good position, of course, with our worldwide global network of component supply, hydraulics, and others. It is, and I don't want to play it down. It is something we follow very carefully. I just want to give a little bit of a flavor to it. When it comes to how we're going to proceed into the future, I think the first quarter showed that we do have a good model. We do have the dual brand strategy. We do have the investments in our dealer network.
I also believe that we do have the right product price and features to the right level. For me, it's very much to keep on continuing what we're doing, making sure that the confidence that this first quarter gave us is going on into the next quarters to come as well, but also being humble that this is a tough market. I could also add to that when it comes to the financing side of the house in China, that is also developing well and is stable when it comes to how we do the financing and how we do set up the down payment and the length of the financing that we do have. All in all, I must say that I think that the Chinese team and the CE team has done a great job in balancing this very difficult situation.
Very clear. Thank you very much.
I remind you that if you want to ask a question, you have to press zero one on your telephone keypad.
Okay. If there were no other questions, operator?
There are no further questions at this time. Please go ahead.
Okay. I would like to thank you very much for participating in this conference call. We will be back again presenting the second quarter in a few months' time. Thank you very much and have a good day.