Hello and welcome to the Stellantis First Quarter 2023 Revenues. My name is George and I will be your coordinator for today’s event. For your information today’s call is being recorded. I’d now like to turn the call over to our host, Mr. Ed Ditmire, Head of Investor Relations of Stellantis. Please go ahead, sir.

Thank you and welcome to everyone joining us today as we review Stellantis’ revenues for the first quarter of 2023. Earlier today, the presentation material we use during this call along with the related press release was posted under the Investor section of the Stellantis Group website. Today, our call is hosted by Richard Palmer, the company’s Chief Financial Officer. After his presentation Mr. Palmer will be available to answer questions from the analysts. Before we begin, I want to point out that any forward-looking statements we might make during today’s call are subject to the risks and uncertainties mentioned in the Safe Harbor statement including on Page 2 of today’s presentation. As customary, the call will be governed by that language. Now, I would like to hand the call over to Richard Palmer, CFO of Stellantis.

Thanks very much, Ed. Good day to everybody. Happy to be here today to discuss Stellantis shipments and revenues numbers for Q1 2023. So starting on Page 3, we present a summary of the operational financial highlights for the quarter. After delivering record results in our first two years at Stellantis, we entered year three with great momentum and focus on the execution of our long-term strategic plan, Dare Forward 2030. We posted strong Q1 net revenues of €47.2 billion, up 14% against the prior year, thanks to a 7% increase in consolidated shipments and continued pricing discipline with all segments posting year-over-year increases in net revenues and positive pricing. On a year-over-year basis, we saw our market share decline in North America and EU30 by 160 and 170 basis points respectively, but we improved versus Q4 2022 and expect the current level of inventory and commercial actions from our teams to support further progress in those markets. Our market share grew by 20 basis points in South America and by 230 basis points in the Middle East and Africa, highlighting the success of our strategy to expand our presence in growing markets and the competitiveness of our global brand portfolio. Our global LEV sales reached 137,000 units, up 25%, and within those our BEV sales grew 22% to 73,000 units. Our PHEV sales progressed by 29% to 64,000 units with a strong performance in North America, pushed by the continuous success of the Jeep Wrangler, which is the number one selling PHEV in the U.S. market. In addition to the progress on electrification, another illustration of our progress against our strategic objectives is our Third Engine, which is what we internally call the aggregate of South America, Middle East and Africa, and China and Asia – India and Asia Pacific segments, which are our global growth markets. It contributed €6.7 billion to net revenues, 26% more than the prior year and represented about 14% of our total net revenues for the period. With regards to capital allocation, we approved the distribution of €5.7 billion in aggregate to our shareholders in 2023, including tomorrow’s €4.2 billion dividend payment and the execution of our share buyback program of up to €1.5 billion with the first €500 million tranche expected to be completed in June 2023. And finally, we have confirmed our full-year 2023 guidance and affirmed our 2023 industry outlook. Moving to Page four, we present the shipments and net revenues for the group. As mentioned before, our consolidated shipments increased by 7% to 1.5 million units, and this was primarily the result of an improvement in the fulfillment of our semiconductor orders compared to Q1 last year. We continue to gradually reduce the level of production losses related to semiconductor shortages, and we expect supply to continue normalizing as we progress through the rest of the year. Importantly, net revenues grew twice as fast as shipments, being up 14% with further positive pricing impacts coming from carryover pricing. Moving to Page 5, we showed the net revenue growth from Q1 2022 to Q1 2023 and the €5.8 billion top-line improvement. At the segment level, North America accounted for 36% of that growth while Enlarged Europe contributed 26%. Our Third Engine brought a 24% share of the increase, of which 13% came from the Middle East and Africa, and 10% from South America. Looking at the various drivers at the group level, volume and mix contributed positively for €2.7 billion, of which €1.2 billion came from Enlarged Europe, driven by both higher shipments and mix improvements, while North America contributed €0.5 billion with the positive impact from higher volumes partially offset by a negative mix. Middle East and Africa and South America each brought in an additional €0.4 billion due to both volume and mix improvements. Vehicle net price was positive for €2.3 billion due to favorable carryover pricing in all segments and compensation for currency devaluation in Turkey. FX translation brought another €0.5 billion with about €1 billion positive impact from a stronger U.S. dollar and negative impact from the devaluation of the Turkish lira. Next on Page 6, we look at the segments individually starting with North America. The industry was up 9% year-over-year, and, as commented earlier, our market share was down 160 basis points to 10%. While our market share improved sequentially, Q1 was the strongest quarter of 2022 due to the availability of the prior version of the Jeep Grand Cherokee. The drop year-over-year was primarily driven by the discontinuation of this prior version as well as the lower Wrangler sales. Partially offsetting this was a 34% increase in Dodge brand sales. As a result, total sales decreased by 6.5% to 432,000 units. Consolidated shipments, on the other hand, increased by 6% to 509,000 units and consequently our dealer stock increased, remaining at around 69 days sales at the end of the quarter. Shipments growth was primarily driven by higher volumes for Dodge and Chrysler models, and for the Jeep Compass and Ram ProMaster, partially offset by fewer Jeep Grand Cherokee units. Revenues were up 10% to €22.8 billion, with main positive impacts coming from volume up 6%, pricing up around 3%, and positive FX translation, while mix was negative, mainly due to our higher share of fleets in the United States and significant increase in Jeep Compass volumes. Turning to Enlarged Europe, the market increased by 16% in EU30, mainly due to easing supply chain constraints and the particularly low base comparison period. Our sales in EU30 grew by 7% or 45,000 units. As a result, our market share was down 170 basis points to 19.3%. Nonetheless, it represented a sequential improvement of 190 basis points as we made progress reducing logistical issues around delivering vehicles to final customers. Our consolidated shipments, on the other hand, increased 6% to 657,000 units as we benefited from initial demand for our newer models such as Alfa Romeo Tonale, Peugeot 408, which complemented higher volumes for key models like Fiat 500, Peugeot 308, and Opel Astra and Corsa. Our BEV shipments in the region reached 88,000 units with increases for the Fiat 500 and the e-208. We also remain the clear leader in the commercial BEV segment in the EU30 with more than 13,000 units sold, up 57% year-over-year, achieving a 43% market share. Net revenues increased 10% to €16.1 billion, driven by the higher shipments and favorable mix due to increased LEV mix and the combination of less AMB segment vehicles and more upper segment vehicles on the newly launched vehicles. Vehicle net price was strongly positive, up around 7%. Other impacts were mainly due to higher buyback revenues. With regards to Middle East and Africa, our sales increased 36% to 126,000 units, while the industry was up 12%. Our market share improved by 230 basis points to reach 13.4%. Being market leader in Turkey, we were able to capture a significant part of the 55% market growth, more than doubling our sales while improving our market share by almost ten percentage points to reach nearly 40% share in the country. The sales increase supported our consolidated shipments across most brands, particularly for Peugeot, Citroën, and Opel, bringing our total shipments in the region to 83,000 units, up 24% year-over-year. Net revenues reached €2.2 billion on higher volumes and favorable mix, as well as strong positive pricing. Now turning to Page 7, in South America, our 8.9% sales growth outpaced the 8.2% growth for the industry, leading to a 23.5% market share, up 20 basis points from the prior year. Our total sales stood at 201,000 units supported by a strong commercial performance from the Fiat brand. Consolidated shipments increased by 10% to 191,000 units with the all-new Fastback adding 10,000 units and higher volumes from the Fiat Argo, Citroën C3, and Peugeot 208. Net revenues increased by 20% to €3.5 billion due to volume and mix improvements. Vehicle net price was up 3%, and FX translation effects. Thinking of China and India and Asia Pacific, our consolidated shipments increased 4% with a good start for the Citroën C3, the first of our vehicles engineered on the smart car platform, which is designed for a more affordable offering and is also launching this year in South America. We also had higher Citroën Berlingo sales at around 1500 volumes offsetting a reduction in shipments for the Jeep Grand Cherokee and Compass. Net revenues for the segment reached the €1 billion mark, up 5%, mainly due to the increase in volumes and improved mix and pricing effects more than offsetting the negative impact from a weaker Japanese yen. We conclude our segment review with the very strong performance from Maserati, benefiting from shipments of the all-new Grecale and all-new Gran Turismo. Shipments for the brand in North America and in Enlarged Europe reached 3,800 units and 2,000 units respectively, more than doubling year-over-year, driving total shipments up 95%. Consequently, net revenues increased 65%. Despite the Grecale being sold at a significant premium against its key competition in the segment, the negative mix impact was due to its lower price range compared to the other models in the brand. On Page 8, we present the status of the aggregate of independent dealer and company-owned inventory, which rose to 1.3 million units at the end of March compared to 1.1 million at the end of last year. After the last two years of supply-constrained environment marked by the pandemic, unfulfilled semiconductor orders, and production disruptions, our inventory has now returned to a more normal level consistent with the current sales rate. In last year, we continued to experience outbound logistics challenges, which have caused an increase in our company-owned inventory. As we resolve these logistics issues in the next few months, we expect this inventory to flow through to dealer inventory and to higher sales. Moving to Page 9, and looking ahead, we are accelerating our electrification journey in North America, adding what we believe will be a powerful second dimension to our already strong European EV story. The Ram Promaster will be launched by the end of this year, and considering also imported vehicles, we will count a total of eight beds in the region by the end of 2024. Those will include the Jeep Recon and Wagoneer S, as well as our benchmark defining Ram 1500 REV, which will offer the best combination of range, payload, towing capacity, and charging time in this strategic segment. Turning to our final page, we review our full-year outlook and guidance. We have maintained our 2023 industry outlook for all regions as provided in our last call on February 22. We’re keeping a relatively stable approach to our full-year projections despite high single digit to low double digit growth in most regions in the first quarter of the year. We would expect strong year-over-year comparisons to continue in Q2, but we may remain prudent regarding the second half of the year, given the macro environment. Stellantis will continue to remain focused on maximizing margin performance and cash flow generation to position the company as profitable in all weathers. On the basis of a positive Q1 performance that we have just reviewed, we confirm our guidance for full year 2023, expecting double-digit adjusted operating income margin and positive industrial free cash flows. Last of all, let me address the recent announcement that I’ll be leaving the company at the end of June and that Natalie Knight, the current CFO of Ahold Delhaize is joining the company as our next CFO. While this is a dynamic industry and, as always, there is much more to do, at the same time, I think for the company and myself, we’re in as good a time as I need to execute a transition. In terms of the financial health of the company, last year, Stellantis delivered one of the highest adjusted automotive operating incomes in the industry with top three rankings in both revenue scale and margin percentage. The merger integration has progressed well and delivered to the point where we have a high level of confidence in our ability to maximize the combination’s potential with the necessary capital to execute it secured. As someone would say, it’s all about execution, and I wish Carlos and my colleagues at Stellantis all the best for the future. I’d also like to say that it’s been a privilege for me to have held this position and to have had the opportunity to discuss our unique company and the direction of the industry with you, the analysts on this call, our investors, and the broader investment community. From my side, the interactions have always been frank and constructive, and I have learned a lot from them. Many thanks to you all, I’ll be here for another couple of months and we will have opportunities to touch base. So now let’s talk about our performance in Q1 and what is most important to the results of Stellantis moving forward. Operator, we are now ready to take questions. Thank you.

Thank you very much. Today’s first question is from Mr. George Galliers from Goldman Sachs. Please go ahead, your line is open.

Thank you. And look, Richard, I would like to start by saying a big thank you to you. I believe I speak on behalf of the entire investment community when I say that you will be hugely missed once you leave Stellantis. Over the last two decades, you’ve overseen several cycles, a global financial crisis, spinoffs, M&A, and I think most importantly, more recently, unprecedented industry margins in both North America and Europe for a mainstream volume automaker. Throughout the years, I believe there has been a very high level of mutual respect between the financial markets and yourself and your factual, transparent, and patient approach as well as your willingness to always engage in discussion and debate have been hugely appreciated by the market. So a big thank you and we wish you the very best. Turning to questions, maybe we could just start with inventory. Obviously, this is a big focus for investors at this point. Can you just give us an indication of where your inventory in North America and Europe sits today relative to what you view as a desirable level and also relative to pre-2020 levels? And then the second question was with regards to North America margins; obviously compared to the first half of last year, we are expecting higher industrial costs, but at the same time, price mix in Q1 was a large positive driver. And you mentioned you expect strong year-over-year evolution in Q2. So with this in mind, will the strong price mix effectively net against the industrial cost, creating scope for similar North America margins in 1H to last year or do you expect the cost to outweigh the price mix on balance? Thank you.

Thank you, George. Thank you for the kind words. Appreciate it. Talking about the quarter and your questions, on inventory I think for North America we have about 69 days of inventory, which I think is fine in terms of absolute level. Our market share has been slowly improving from the low levels we hit in Q4 of last year for various reasons. So I think that’s very positive and also clearly we have a pretty strong overall market as well. So I think in terms of the absolute level, it’s okay. And comparable to, I suppose, pre-2020 levels, although we were actually higher than that for a period of time. So I don’t think it’s high compared to – well, actually it’s still low compared to pre-2020 levels. So, I think it’s very healthy. There are some issues in terms of the mix still. We had some competitive issues on the lower price range areas of Grand Cherokee and light-duty Ram. I think those are now being addressed so that we can offer a more balanced product range to the customers in the dealerships. And secondly, we also had a couple of stop sales on the heavy-duty truck in the last three months or so, which clearly hurt us from a sales performance point of view. And I think those are now behind us, so we should see some improvement in our short-term share performance. So I think North America is okay. And we’re going into the seasonally high spring selling season. We saw April was pretty strong and so I think it’s fine. On the European side, the real issue continues to be outbound logistics and our ability to fulfill order backlog. We have still a pretty strong portfolio of orders and our challenges continue to be fulfilling those orders. It’s improving, but obviously the market’s moving quite fast as well. So we’ve moved slower than the market in fulfilling our orders compared to our competition. And I think that’s hurting our share. And so you saw our production is improving and so the company inventory was up and that’s mainly in Europe. And so we need to continue to improve our outbound logistics performance to transfer that company inventory into dealer inventory and then into sales and market share. So that’s still top of our list of things to resolve. It is improving, as I said, but it’s still creating some delays in our sales process. So I think that’s where we are on stock. In absolute terms, I think we’re fine with those two caveats that I just explained. And then margin in North America, I think the progress on the top line shows you that pricing is relatively stable coming off the end of last year. And so for North America, I think that’s very important that we maintain our price positions. Our products and our brands in our view are extremely competitive. We want to maintain the price positions that we’ve earned over the last two years or so, and actually longer. So I think that’s fine. I think at the moment, like I say, our sales performance is also trending up month-over-month. And so the big challenge clearly is to continue to reduce our cost positions from also the high levels they finished up at the end of last year. We’re making progress on our product costs and our transformation cost. The production environment is more stable, and that’s helping us to be more efficient. And so as we go through H1, as we’ve talked about also with the CEO, the first priority is to be disciplined on pricing and at the same time, work on our cost position on the product and bring that down. The mix was a bit negative in Q1 on North America. We had more fleet and more Jeep Compass. Jeep Compass is improving performance, it’s giving us a bit more volume, but it’s from a revenue per unit point of view, it’s negative on the mix.

Great. Thank you.

Thank you very much, sir. We’ll now move to Thomas Besson calling from Kepler Cheuvreux. Please go ahead, sir. Mr. Besson, your line is open. Sir, can you just check your line is unmuted on your end?

Apologies. Hi, it’s Thomas. Richard, I would first like to extend a thank you message and thank you Ed well. I think it has been a privilege for us to work with you, and for you to work with us. You’ve always been very transparent and brought your own clear view on Fiat Chrysler and Stellantis. It’s been very useful for all of us. If I move to my questions, I’ll have three, please. Firstly, I’d like you to come back on the third engine dynamic. I mean the evolution of ASP and probably margins is the best in the group it seems. Can you remind us of the key drivers of that and maybe the relative share of electrification in that engine versus Europe and NAFTA? Second, you’ve mentioned the fact that your order bank is still super high. Could you give us any number on the evolution of that global order intake or European order intake and its evolution in Q1? And lastly, if we come back to inventory, is it fair to say that the fact that you have higher group inventories suggests more that you still have a few ongoing issues as you were saying about outgoing logistics more than any erratic development on that field? Thank you.

Thank you, Thomas. So on the third engine, I think there’s obviously a lot going on there because it’s an aggregation of four regions of our business. But I mean, on South America, I think it’s very obvious that FCA had a very strong position in Brazil historically with the Fiat brand and more laterally also with the Jeep brand. And I think PSA had a stronger position in Argentina actually and then in different segments of the market as well, in terms of the product portfolio. So putting the two together, I think we’ve sort of rounded out a complete product portfolio for the business. We’ve got two major markets, not one and we’ve also got a lot more opportunity in the rest of South America with a more complete product portfolio. We have a very strong team, very strong brand equity in South America. And I think we’ve seen improving share, improving margins, improving customer satisfaction, and product quality. So everything has been going in the right direction in South America. And I think we’ll continue to have good momentum because we have strong positions in parts of the market that are very relevant to that geography with the Jeep SUVs, pickup trucks on various brands, and now also bringing in the Ram brand at the top end on the pickup. So I think it’s a very strong mix of factors that continue to show us opportunities there. Middle East Africa doesn’t have the industrial base that South America has and that’s been – that’s now a big priority for us as we’ve been talking about getting more dedicated capacity into Middle East Africa because we do have very good positions from ex-PSA in some of the North Africa countries, from FCA in Turkey and also from PSA in Turkey. And I think the team has done a great job in bringing a lot more focus onto the region and onto the Gulf area as well, and bringing to bear some of our product portfolio, again, which is very complete for the region and includes also the U.S. sourced product, which can be very profitable in parts of the market as well. So I think, with Turkey position, the Morocco position, growth opportunities in Algeria and other countries in North Africa and the Gulf States, our product portfolio is great. The team’s doing a great job and we’re seeing some really good results, and we’re making further investments, because clearly Middle East Africa has a very strong cost base. It’s relatively close to some of our other markets and there are a lot of synergies there that we can take advantage of. And I think India & Asia Pacific and China – India & Asia Pacific has also had a lot of positive growth in the last two years. We are now making more investments on the industrial side outside of India. In India, we have a good position. We just launched a specific SmartCockpit platform, which is going to be an important platform both for the third engine countries, and also I think medium term for European competitiveness on the low end of the price range. So also, good potential. So I think the third engine really is where Stellantis can continue to drive growth. As we talked about, we don’t want to rest on our laurels and just look at price and margin maximization in the mature markets, but we want to grow globally. So I think this is a really good story, which is going to continue. In terms of the order bank, I’m not going to give you a precise number, but I think we have a strong order bank going through beyond the end of Q2 for Europe. We have seen some sort of some relative slowdown in order intake a little bit, but we still have a very solid order bank, and more than absolute order intake we’ve also seen a bit of a change in the mix where we’ve had B2C mix slowing down a bit, but more B2B still relatively strong. So we’re keeping a very close eye on the trend in terms of the order intake. But at the moment, the real focus and issue for us continues to be fulfilling the portfolio orders that we had as I mentioned earlier. And I think there is, to some extent, the growth in the European market is also a function of a number of the OEMs having a strong portfolio of orders. Those orders are now being fulfilled quicker because production is improving. And unfortunately, with our outbound transportation challenges, maybe we’re fulfilling them slower than others, so that’s hurting a little bit our share performance. But I think that the attractiveness of the relative portfolios is still very strong, and we’re seeing a good level of order intake and the portfolio is good. So it’s really – for the full year, the big item is to see how I think sales performing in the second quarter and through September. Because I think the order book settles through sort of Q2 timeframe. Outbound transportation is also creating a bit of a cost headwind because there is inflation there because we’re not the only ones suffering on logistics. And so pricing is also showing a lot of inflation on the pricing. It’s starting to mitigate a little bit, but it’s not just a Stellantis challenge, I think it’s an industry challenge. Okay. Thanks very much, Thomas.

Thank you.

And thank you very much, sir. Our next question is coming from Mr. Philippe Houchois calling from Jefferies. Please go ahead, sir.

Well, thank you. Again, thank you very much Richard and all the best in your next project. My question is on we had forward results yesterday and they posted some very strong improvement in their commercial business across the U.S., talking about very strong pricing and also kind of a catch-up in equipment sales for some of the contractors who couldn’t get trucks for a while. Are you seeing the same situation, and are you still in a situation where your commercial customers are above group average margins at this stage? Thank you.

Yes. Thanks, Philippe. Yes, I think our commercial vehicle business is extremely strong and we’re in a relatively similar position to Ford and fighting it out with them for global leadership of LCV. Obviously, the strengths that we have and they have are slightly different. They have a very big position in pickups in North America. Ours is smaller, but obviously we’ve been improving that over the last decade, so getting closer to them. And I think our new products will continue to help us to be very competitive in that area. And obviously in Europe and in South America, we have very strong positions on LCV leadership positions. So our profitability on LCV as a whole is above average compared to the portfolio, that’s for sure, including obviously pickups and vans in that. So I think it’s an area where we need to continue to focus a lot of effort both in terms of execution, dedicated resource internally, and also capital. So, I think you’ll see great things from our LCV business going forward and potentially, over time we need to continue to give you more visibility of it because I think sometimes people forget how important it is to Stellantis performance.

Thank you.

Thank you for the…

Thank you very much, sir. Sorry to interrupt you, sir. Our next question is coming from Stephen Reitman calling from Societe Generale. Please go ahead, sir.

Thank you very much. And again, thank you Richard for all your help and all you’ve done for communication with investors and with analysts. Looking at the U.S., again, you’ve said in the past that the U.S. dealers haven’t been asking for more incentives, they’ve actually been asking for more vehicles. Where would you say we are now on that access as we look into the second quarter? And could you update us on the progress you’re doing in terms of the in-house Finco development versus you are working with Santander? Thank you.

Thanks, Stephen. So on U.S. dealers, I don’t want to exaggerate. I mean, obviously I think most business people, if you could give them an incentive, they would ask for it. So that’s part of the normal discussion with any partner in a transaction. But I think it’s still true that our biggest challenge at the moment is to get the right complete mix of product into our dealerships. So we’ve talked about it in the last couple of calls that Grand Cherokee and light-duty truck needed to be rounded out at the lower end of the mix. And that’s in progress. I think we made a lot of progress. You’ve seen our market share edging up in the last few months. We’ve also had other product challenges like the heavy-duty truck. So, I think the main focus for us is to have the best product in the marketplace at the right place, and the right mix, and that’s getting there. And as I said earlier on, in terms of the pricing positions, I think overall, there are always some debates on individual vehicles and individual parts of the market. But I think overall, we think our price positions are appropriate for the quality and the offering that we make under our main brands. And we’ve seen some of our brands further improving their performance, notwithstanding, that we’ve made some price improvements because of the equity of the brand and the quality of the product. So I don’t think so far it’s the discipline is abating. We need to maintain discipline on price and we need to work on the cost of the vehicles because we’ve had a lot of inefficiencies, we’ve talked about because of semiconductors and other supply chain challenges. And that’s a big focus for us. So that if pricing becomes tougher in H2, which is a possibility, then we need to be ready for, not that we are expecting that to happen. It’s certainly not going to be at the start focusing on price reductions. But I think we need to make sure that our cost positions are extremely competitive. That’s a huge focus. And I think it’s something that the Stellantis organization has proven itself to be quite good at. On the Finco, yes, we’re building the portfolio as we talked about it. So I think this year we expect to build up to around €5 billion of portfolio in the Finco in North America. And that will be an important start to the next four or five years of building a portfolio that is at a level, which makes sense for the size of our business in the U.S. And we continue to work together with our other financing partners because it is important for us to offer our customers and dealers options. Our captive Finco is still being ramped up. But we have the products, we have the team in place, and now we’re starting to finance a lot of sales and we’ll start to see an improvement in the portfolio through this year. So we’ll keep you updated on how that’s progressing.

Thank you very much.

Thank you, Stephen.

Thank you very much, sir. We’ll now take questions from Mr. Tom Narayan calling from RBC. Please go ahead, sir.

Hi, thanks. Thanks, Ed and Richard. Yes, Tom Narayan, RBC. Yes, thanks again, Richard for everything. A question – a follow-up probably on Philippe’s question from the forward results last night. The thing that was really called out for North America net pricing was incentives coming up considerably. And one thing that they noted was there would be a sizable downshift in 2023 because of the way that incentive accrual happens, like between wholesale and retails. So basically, because incentives are going up by the time it’s a retail sale in let’s say 2024, it gets accrued beforehand. So there’s this kind of downshift that happens on net pricing. Just curious if that’s something that could happen for you guys as well. And then the other question, they talked a lot about Ford Pro and how it has this 30% attached rate like software services and I think aftermarket. Just curious if you could share some similar metrics that you guys have for your U.S. professional on the pickup truck side. Thanks.

Yes. Thanks, Tom. So, well, in terms of the mechanics of incentives it’s just a mechanical process, right? If you have – if you accrue incentives at shipment and then you alter the incentive on your vehicles in the market, then the vehicles that are in dealer stock at that time on which you’ve accrued a certain incentive, if you decide you’re going to spend more, then you have a stock adjustment, right? That’s just a mechanical, that’s just, I assume that’s what they’re talking about. I didn’t listen to Ford’s call, but I assume that’s what they’re talking about. So, I think just a mechanical, that’s just a mechanical process. I mean, like I said, I mean, we expect to be very disciplined on our pricing. And so far, I think you’ve seen that that’s our approach. Our margins are clearly very strong in North America. Last year they were very strong and we’ve a good position and a great team who are very focused on maintaining the profitability. So, I’m not predicting any changes in our pricing positions. Like I said earlier, the key for us to continue to work on the cost equation of the product and on all of the synergy opportunities that we have to maintain our competitiveness. So that if there is any sort of price erosion in the marketplace, then we’re in good shape to manage it and not have significant impacts on our margin performance. In terms of Ford Professional, we obviously compete with them very directly in all our markets. I don’t have specifics on the tech rates. We can get you those offline. But I think we’re very competitive with Ford Pro on all aspects of the customer offering, both the product and the services. It’s clearly something that LCV team is very used to managing. We are their main competitor in lots of ways, in lots of jurisdictions. So, I think we’re very competitive, but I don’t have precise numbers to compare to the 30% you mentioned. So we’ll get back to you on it.

Okay. Thank you.

Thank you.

Thank you very much, sir. We’ll now move to Jose Asumendi calling from JPMorgan. Please go ahead. Your line is open, sir.

Thank you. It’s Jose from JPMorgan. Hi, Richard. Also, on my behalf, thank you very much for the excellent dialogue over the past years. I look back, you’ve been extremely helpful during the Peugeot, Fiat merger, instrumental in the overall Stellantis journey, as well as all the various other projects you had during the Fiat times. So thank you for all that. On questions, can you comment on inventories in Europe and the U.S.? Where do you stand? And it just looks like we go back to the U.S. level of inventories. They do seem to be higher than peers. You might sense some doubts with regards to incentives and pricing power in the region. So are you overall comfortable with the level of inventories you have in the U.S. and is this a solid level to continue to protect pricing power going forward? That’ll be the first question. Second on the revenue bridge; substantial revenue contribution on pricing is at largely going to be offset by incremental costs, or can we expect maybe some net tailwind between costs and that very strong pricing momentum in the first quarter? And then finally, I was listening to your final remarks there. I believe you mentioned the company is very well positioned to manage the transition. So with this in mind, I think one of your U.S. peers is showing substantial losses in battery electrified vehicles (BEVs). How do you think about this transition in the next 12-24 months? Should we expect Stellantis also to show substantial losses in BEVs? Is this how you think about it? Or should we think more in line with how you have been running the European business where you have ramped electric vehicles and we haven’t seen much of a margin dilution from electric cars? Thank you.

Thanks, Jose. So on inventories in North America. Like I said earlier, I’m not concerned about the absolute level of the inventory. I think we’ve had some concerns on mix and that’s hurt us a bit in certain segments of the market in terms of sales performance. That’s being resolved. So not concerned. We’re going into the summer selling season, it’s normal to have a slight inventory build. Then we have shut down at the end of the summer. So, I think it's fine. On pricing and cost, yes, you’re right. In Q1 on the revenue bridge, you can see a reasonably substantial impact from carryover repricing, which is around 6%. So we talked about the fact that last year we had inflation impacts of about €9.5 billion. So that was about 5%, 5.5% of our revenue. And we do expect the cost inflation effects this year to be substantially lower. So, in the first half of the year, I think the carryover pricing should offset any inflation impacts that we have. Obviously, the carryover pricing in the second half will have less of an effect than it does in the first, because at the moment, our pricing is relatively stable, but we’re not having the same level of breaches that we had through the whole of last year. So, and then in the second half, we need to make sure that our cost actions are helping to continue to offset any inflationary impacts that we get. And the price equation will be probably a lower impact. So, I think in the first half we have a good balance between price and cost and price should be offsetting cost. Now we have – we also have some negative mix here. Like I said, we have negative mix on fleet in the U.S. and on Compass. And so there are some other offsets, but I think the overall balance is quite good between pricing and cost in H1. Then we need to work on the cost equation so that we are more competitive going into H2 or cost, definitely something that we execute. On BEV transition, yes, I was looking at Ford numbers as well. Obviously, we were all intrigued. So it was interesting to see. As you say, our European business has a substantial mix of LEV, PHEV vehicles, and we are still running a nearly double-digit margin. So I think we are clearly focused on running the transition and maintaining our double-digit margins as we’ve talked about since our strategy for 2030. You’re seeing a much higher level of penetration of electrification in Europe than Ford is running at the moment. And we’re still at a higher margin level. So I think we need to continue to execute on having a very disciplined approach on pricing, having vehicles that are distinctive and competitive, and making sure that on the industrial side, we drive and avoid excessive complexity and diversity. And with our four electrified platforms being used globally, we leverage the scale that we have, which obviously was one of the key reasons why we formed Stellantis two years ago. So we aren’t expecting to be running negative contribution margins on BEVs, which as I understand from yesterday’s comments is where Ford is at the moment. Obviously, they’re at the beginning of a journey, but we are clearly very focused on making money on the best results. Thank you, Jose, so much.

That’s great. Thank you.

Thank you very much, sir. We will now move to Horst Schneider calling from Bank of America. Please go ahead, sir.

Yes, good afternoon, Richard, and thanks for taking also my questions and also for my side. All the best for you, of course. Some of my questions have been asked already. So therefore maybe two more add-on questions on details. So first of all, on mix, since you don’t report it anymore as a separate item in the bridge, maybe I’ve missed that, but can you maybe say how much now mix was positive or negative in the first quarter? You gave these indications by regions, but a total number would be helpful. Then on your guidance for Europe's market guidance, you say plus 5%, and then you hint also to the logistical shortages that you have. So your guidance basically implies that maybe in H2 the growth rates in Europe will turn negative. So in that context then, if that happens, you expect to outperform the market because you just catch up on these shortages, and what you expect to happen in that moment on pricing if that happens. And then the other question again, on electric vehicles just an add-on to the one from Jose, your EVs, especially 208, they are also towards a €40,000 price range already. And now Tesla has cut the price to close to €40,000 with the Tesla Model 3; do you think that it’s impacting your price position, and do you see maybe the need that you need to lower the EV prices in Europe or not? Thank you.

Thank you, Horst. So on the mix, I think it’s about one point. So it’s about 0.5 billion of negative impact on the mix. It’s not that significant in the walk. On the European market forecast, I think we’re being a bit prudent on the market. After one quarter, we don’t feel one quarter warrants changing the full-year outlook. The full European number was up, I think about 11% overall. Obviously, you said it was up more than that. I think, so far we’ve seen a stronger market than we expected. And once we get through the first half, then we’ll re-look at our second half forecast. At the moment, we are focused on executing our H1 performance, having a good view on H2, and then we’ll upgrade the forecast on the outlook. But I wouldn’t read too much into us thinking that H2 is going to be negative also because we’ve only got one quarter so far, right? So it’s just the start of the year. In terms of OBT, I think we’re going to improve our outbound transportation over the next few months. So I don’t expect us to have significant impact versus the trend in the market. Unfortunately, in the last few months, clearly the market has grown more than we have, and that’s hurt our share. And that’s really been a fulfillment issue on the deliveries. So I’m sure that will be resolved over the next few months, and it will help us to regain share and therefore put us more in line with the market trend. At the moment, we’re a little bit behind the market trend because of that issue. On BEV pricing in Europe, as we’ve talked about in the past, we are holding our price positions so that we make money on the vehicles we’re selling. And our focus is to target parity of margins – gross margin level in terms of euro per car. And that’s something that internally we look at very closely. We’re not there across the portfolio today. But it’s clearly something that we focus very strongly on. And so far we haven’t made any moves as a result of the competitive moves. I think our products are very competitive in the segments they operate in. We’re not directly competing with Tesla that much today in the segments we’re in. So we’re holding our price positions and focusing on managing our profitability across the portfolio.

In the past, Richard, you have been always more negative on Europe than on North America, if I remember right, taking that together, better volume outlook versus maybe worse price outlook. What’s now the combination of that? Have you turned a little bit more bullish on Europe than before or not? I know, difficult question.

I think it’s, yes, you and I could have a beer and talk about that, but I think, yes, the market, the economics, the macro, the geo, the regulatory, there’s clearly a lot of volatility in the external factors that are acting on the industry, on demand and on consumer confidence. So I think – I think being prudent about volume and focusing very much on controlling our costs, maintaining the most competitive breakeven point in the industry, and working on a very efficient machine is clearly the number one focus for us. And then if there’s more volume out there, clearly we have the – we have the machine that we can speed it up and we can make more cars. But I don’t think we want to build our plans based on overly optimistic market forecast given the volatility that we have today.

Alright. That’s great. Thank you. And again, all the best.

Same to you. Take care.

Thank you very much, sir. We now go to Mr. Martino De Ambroggi from Equita. Please go ahead.

Thank you. And first of all, I joined all participants in thanking you for many working with us and all the best, Richard. My first question is on prices again. Someone else, one of your competitors guided for a flat pricing full year after recording plus 5% – plus 4% in Q1. Are you – have you a similar projection for your prices or are you confident to stay with a positive balance at your end? And the second is on inflation; I understand that you commented the substantially lower this year compared to last year. In the previous call, you guided for less than half of the €9.5 billion. Is it probably even better after one-quarter and the current visibility? And my last question is on BEV. First of all, I noticed the Avenger disappeared from your presentation. I don’t know if you could update on pre-orders or orders how they are performing and for the full year the BEV deliveries could be close to 400,000 units or much lower? Thank you.

Thank you, Martino. So on pricing, as I said earlier, I think the first half pricing because the carryover pricing is going to be in terms of comparatives, stronger than the second half just because of the math of the increases we took last year through the year and this year being much flatter and holding our price positions. So I think low-single digits, year-over-year improvement is potentially where we’ll be. And that will be covering the level of inflation that we’re expecting. As I said – as you said, which is true, I said inflation we expected it to be around half or better than the €9.5 billion we had last year. I would stick to that number for the moment. Although we have seen some improvements on energy, we’re also seeing some challenges on outbound transportation. We have a lot of labor discussions this year and cost actions that we need to manage across structural costs. So I think that number is still a good number, and therefore that would be around a similar number, lower-single digit number for the year. So that the two should hopefully offset or better, so that’s the target for us is to manage our cost structure and avoid any negativity on our margins from any pricing pressures we get in H2. On the Avenger update, I don’t have – I don’t have the numbers available frankly, but the vehicle obviously won a lot of prizes as it was launched in Europe. And we have got some great feedback from the initial commercial interactions with dealers and customers. So no bad news on Avenger, and we’ll keep you updated on the next – on the next call as to how our performance is. But I think it’s a great start for the vehicle and it’s a clearly really important car for Jeep in Europe because it’s putting us into the heart of the market with a very competitive BEV vehicle. On BEV deliveries, I’m not going to give you a target number for BEV deliveries. We’re clearly focused on continuing to grow year-over-year. We have a lot of products in the marketplace. We’re launching nine more this year to add to those that we already have. We start with the Promaster BEV in the U.S. in the second half of the year. And then obviously next year we start with a number of BEV launches in the U.S. and North America. So, I think a lot of very interesting product as well quite differentiated BEV offering because, in the end, it is about the product. It’s not just whether it’s a BEV or an internal combustion engine driving the product, but we need to focus on our brands being very competitive and giving customers products that they want to buy. And I think we have some really great products coming in the next two years on BEV. Thank you very much, Martino.

Thank you. All the best, Richard.

Thank you, sir. Ladies and gentlemen, we have time for only one more question. That question will be coming from Mr. Patrick Hummel calling from UBS. Please go ahead, sir.

Yes, thank you. And Richard also many thanks for the great partnership and all the best for your new role. I think your financial results clearly speak for your performance. The only task left for your successor is now to work on the PE. The last question I would have Richard regarding the EV profitability trajectory I’d like to follow-up a little bit more big picture. The first generation of EVs in Europe was kind of multi-energy platform, little CapEx and, now you’re spending for the next generation platforms that are currently being capitalized, I assume for the most part. But there will be a significantly higher share of those new EV platforms in your mix 2024, 2025. And in light of what is obviously becoming a price war across the industry, how do you think about the competitiveness of the platforms? Are you reconsidering some strategic decisions when it comes to cost targets, when it comes to how you engineer these platforms, how you partner with suppliers? What kind of contracts you can accept with suppliers and whatnot? If you can just share a little bit more color on how you can safeguard that EV margin parity targets in such an extremely competitive environment with much more investment involved on your end. Thank you.

Thanks, Patrick. And I absolutely agree with you that I will be cheering for an improvement in the PE; anyone who can make that happen will be well, very popular with me too. On EV profitability and our strategy, I think our strategy for 2030 clearly laid out that we have four platforms. Those four platforms are engineered for BEV. And we believe that there’s a lot of commonality between those platforms. We are very focused and the CEO and the team are extremely good at managing diversity complexity. We clearly need to use this transition to further concentrate our portfolio and have industrial solutions that drive commonality and allow us to leverage our global volumes to be very competitive on the cost of these vehicles. I don’t think the sort of the recent coverage on the pricing of BEVs is changing our approach at all. I think we’ve also been very clear about looking for partnerships with suppliers and with best-in-class subject matter experts on the electrification components. And we have a number of those in Europe and in North America. So, I think our approach is a good one. I don’t think we’re trying to do too much verticalization, do everything in-house and be exposed to, overextending our capital and our human resources involved in this transition. I think we need to be very thoughtful. I think so far we have been, and nothing that’s happening in the marketplace is changing that. We are very focused on being extremely efficient based on capital and on cost, and the global nature of our business and the reason why we merge to leverage the cost positions, I think gives us a lot of advantages compared to less global companies. And we need to make sure that we use those to the best advantage.

Thank you, Richard. And again, all the best.

Same to you. Take care.

Thank you much, sir. As we have no further questions, I’ll turn the call back over to Mr. Palmer for any additional or closing remarks. Thank you.

No more remarks from me. I think we covered everything. I think the Q1 numbers were a very good start to the year, and we’re confident that we’ll continue to execute on all of the challenges ahead. So thank you very much to everybody. Bye-Bye.

Thank you very much, Mr. Palmer. Ladies and gentlemen, that will conclude today’s conference. Thank you for your attendance. You may now disconnect. Have a good day and goodbye.