Stellantis N.V. Q1 FY2024 Earnings Call

Ladies and gentlemen, welcome to the Stellantis First Quarter 2024 Shipments and Revenues Call. I will now hand you over to your host, Mr. Ed Ditmire, Head of Investor Relations at Stellantis. Mr. Ditmire, please go ahead.

Thank you. Hello everyone, and thank you for joining us today as we review Stellantis Q1 2024 shipments and revenues. Earlier today, the presentation material for this call, along with the related press release, were posted under the investor section of the Stellantis Group website. Today, our call is hosted by Natalie Knight, the company's Chief Financial Officer. After a presentation, Ms. Knight 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 included on page two of today's presentation. As customary, the call will be governed by that language. Now I would like to hand over the call to Natalie Knight, CFO, Stellantis.

Good morning and thanks, Ed. I'm pleased to present our shipment and revenue figures for the first quarter of 2024. Year-over-year revenues and shipment comparisons lagged stable customer sales due to transitions in our product offering, inventory management actions, regional mix, and foreign exchange impacts. However, Q1 is also a period where we delivered improvements in key commercial dynamics. This is especially important as we move forward through 2024, where we're entering a phase that will be characterized by significant product portfolio updates and expansion, underpinning growth as the year progresses and right into 2025. During Q1, our global sales to customers remained steady at 1.5 million units driven by material increases in two regions, the Middle East and Africa, up 23%, and enlarged Europe up 6%. Despite the stable retail sales development, shipments decreased by 10% to 1.3 million units, and net revenues declined 12% to EUR41.7 billion due to destocking and manufacturing initiatives as we prepare for significant new product launches later this year, as well as a challenging comparison to Q1 2023, when we built inventory by 228,000 units after prolonged supply constraints. Excluding these temporary dynamics, both shipments and revenues would have increased. In Q1, we also delivered improvement on three key commercial KPIs, which are setting the stage for us to deliver increased momentum later this year, which is why we are confirming our financial guidance today. First, we've stabilized and improved our market share sequentially in North America and Europe. In Europe, market share improved 230 basis points sequentially to 19.2%, while in North America, market share was stable with the prior period at 8.4%, demonstrating resilience even amidst multiple plant shutdowns as we geared up for the launch of our new EV models. Second, we delivered strong results in our strategic areas: low-emission vehicles, third engine markets outside of North America and Europe, as well as commercial vehicles. And third, we've made important progress in preparing for a powerful new product rollout later this year. In 2024, Stellantis is launching 25 new or updated vehicles, including 18 BEV versions, with the majority still ahead of us. Consolidated shipments decreased by 10% year-over-year, impacted by destocking and manufacturing preparations we are making to position ourselves for the extensive product launches later this year. In North America, volumes were reduced by nearly 100,000 units due to changes in production related to this product evolution. This includes 50,000 vehicles at our Brampton Assembly Plant following the discontinuation of the Chrysler 300, the Dodge Charger, and the Dodge Challenger. We're now preparing to ramp up the next generation of the Charger in Q3. Similarly, we completed the transition at our Sterling Heights assembly plant for the updated Ram 1500 light-duty truck, which led to a decrease of almost 20,000 units year-over-year. We also had production downtime at our Stellantis van plant to prepare for capacity increases of our Ram ProMaster, which resulted in 12,000 fewer vehicles produced year-over-year. Finally, Q1 2023 included 12,000 units of the Jeep Cherokee in the Belvedere assembly plant, which has been idled since then as we prepare for other electrification initiatives. I'll speak more about inventory in a moment, but it's important to remember that our Q1 focus has been on selling down prior-generation products in preparation for the launches of next-generation products based on our new Stella platforms, which is expected to ramp up significantly in the second half of the year. Lower volumes were the primary driver of the 12% decline in revenue. The mix was also negative due to a lower proportion of high ASP North American products in the period. The rest of the decline comes from foreign exchange, which we were able to more than offset with solid relative net pricing spot on the revenue development in the first quarter. In North America, shipments declined 20%, largely due to the portfolio transitions I previously mentioned. The revenue decline was smaller at 15% due to positive nameplate mix, carryover actions, and lower incentive spend in the period. A special callout for Q1 is our strong performance in the PHEV segment, where sales increased nearly 80% and contributed strongly to global LEV growth of 13% during the period. This progress makes us a strong number two in LEVs in the U.S., behind Tesla. Moving to Europe, where the market has been tougher, shipments declined 6% due to timing of production, where we took special actions to avoid oversupplying the market, given our heavy slate of upcoming model launches. Revenues are down 20% due to higher buyback commitments related to our recent B2B deals with SYK and Avon, as well as a somewhat lower BEV mix now at about 13% of sales, despite an improving net position versus our peers in passenger cars and our continued number one position in the important BEV commercial vehicle segment, where we enjoy a 33% share. Looking forward, we believe we can improve BEV even further due to the white space BEV model introductions in the coming quarters, including the extremely affordable Citroën eC3 and several C segment BEVs such as the high-performance Peugeot E3008 with up to 700 kilometers of range. In the Middle East and Africa, we delivered the Group's highest growth rate with consolidated shipments up 42% year-over-year, putting Stellantis in a strong number two position. Fiat's business in Algeria was the biggest driver, where we multiplied our shipments seven-fold year-over-year. Overall, revenues in the Middle East and Africa grew 24%. Moving on to South America, where we are the undisputed market leader, revenues were stable despite lower shipments, thanks to strategic price increases and the growth of our parts and services business, where we benefited from the recent acquisitions of DPaschoal in Brazil and Nore Alto in Argentina. For our Small China IAP and Maserati segments, market tightening and strategic shifts have led to reduced shipments and revenues. China, IAP volumes were down 46% due to new emissions regulations, prompting inventory adjustments, while Maserati shipments declined over 50% reflecting the retirement of three key models: the Levante large SUV, the Ghibli, and the Quattroporte Sedans. Maserati is now focusing in the near term on a tighter mandate in terms of its portfolio, reinforcing its luxury positioning with high-end variants like the Folgore and the BE versions of the Grecale, Gran Turismo, and Gran Cabrio, and executing new cost reduction strategies appropriate for its near-term scale while preparing for exciting new products based on next-generation platforms. Although they're not part of these numbers, I'd also like to congratulate our partner lead motor whose Q1 sales grew by 218% and are now in the number three position amongst new energy vehicles brands in China, up from number four when we announced the partnership in October 2023. Now let's turn to inventories where we improved sequentially compared to the fourth quarter of 2024. This is the first time since Q3 2021 when we have sequentially reduced total inventories, reflecting the clear inventory discipline across all our segments. Between December 2023 and March 2024, we reduced stocks by 66,000 units driven by a decrease of 158,000 units of dealer stock, mainly in Europe, but with all regions contributing except for the Middle East and Africa, where inventory expanded to underpin the region's exceptional growth. Looking forward, inventory development will be aligned with the new launches and shipment evolution. I'd now like to provide some color on our outlook and financial guidance. With our full year 2023 results, we highlighted the approaching and exciting 2024 product wave that I'm happy to confirm is fully on track. This expanded and enhanced product portfolio fuels opportunity for a more positive year-over-year revenue comparison, as well as more positive AOI and industrial free cash flows as the year progresses, particularly in the second half, which is why we are pleased to confirm all of our full-year financial guidance today. Let's start with revenues, where despite unevenness in many markets, we believe the full-year macro environment remains positive for improving revenue dynamics, especially as we move into the second half when most of our new product initiatives come online. Therefore, we expect second-quarter revenues to improve sequentially with smaller year-over-year declines, and for the second half of the year to be well-positioned to deliver positive year-over-year top-line growth. With respect to profitability, we remain fully committed to our double-digit AOI guidance for 2024. For the first half, we now expect a range of between 10% and 11%, reflecting largely the softer first-half starting point on revenues, adverse regional mix, and an expectation of continued FX headwinds. As we think about the second half, we see opportunity to improve on that range driven in part by the upgraded product offer. Lastly, when it comes to industrial free cash flow, which is a hallmark for Stellantis and a topic that we put immense focus on, timing of CapEx, R&D, and JV spending in 2024 will be especially front-half weighted to support the pending product transition. So, expect first-half industrial free cash flow to be visibly below last year's level. Now, let's finish up by turning our attention to two topics that I'm personally very excited about. The first is a concrete example of some of these significant product portfolio upgrades featuring the fully renewed Ram line being put in place over the next 12 months. Our updated core 2025 Ram 1500 already hitting the market in the first half of 2024 features a new turbocharged inline six powertrain, the hurricane engine, which offers 25% more power and torque than the outgoing V8 while enhancing efficiency to comply with U.S. emission regulations. Later this year, we'll start producing the Ram Rev, a top-tier BEV version built on the new Stellantis frame platform, which is ready to provide new performance benchmarks, especially when it comes to range within the BEV truck segment. Following closely in 2025, the RAM Charger, a RAM extender electric vehicle with all the special performance characteristics of a BEV, plus a 700-mile range, addressing long-distance customer needs and eliminating the challenges of low charging density areas. With these innovations, we're set to lead the light-duty pickup segment, offering the most advanced ICE powertrain, a top-performing BEV, and the first range extender electric vehicle, ensuring strong market competitiveness and pricing power. I would like to take a moment to provide you with some details about our upcoming Stellantis Investor Day to be held here in Auburn Hills, Michigan with simultaneous virtual participation facilitated via webcast. Carlos, myself, and a group of our most prominent commercial and brand leaders will outline developments across our most important regions and functions. We want to help you better understand how we see the industry evolving, how we're leveraging standout technology, our leading operational discipline, and other competitive advantages that distinguish ourselves further, and how we're building a powerful and productive capital discipline that helps us maintain and maximize sustainable returns. For those of you who are able to attend in person, you'll get the chance to engage directly with many of our most senior leaders and experience many of our exciting new upcoming product portfolio launches before they hit the market. Before I open it up to Q&A, I'll just take a moment to recap what I've presented today. In Q1, we focused on managing the product cycle transition and inventory normalization. We're delivering an important stabilization and improvements in our key commercial dynamics, such as market share, pricing, and inventory levels, which put us in the best position to launch new products and expand the reach of our offering as we move forward in the year. And that product push itself is significant. It's being created on flexible platforms to be ready for different EV adoption scenarios with high agility to respond to a dynamic market, which will move us into a new phase of our story that will become even more clear in the second half of the year and beyond. Thanks for your attention.

Our first question comes from George Galliers from Goldman Sachs. Please go ahead.

Thank you for taking my questions. I have three questions. The first one just relates to the volume evolution. Natalie, obviously, it looks like you've had a reset and some destocking during the course of Q1. How do you feel about the inventory levels in the U.S. and Europe at the start of Q2? Did you start to roll out the new products? Are they at the right level? Or will we need to see some further destock through the course of this quarter? The second question I had was really a clarification with respect to the higher buyback commitments in Europe on the rental car business. Can you just clarify, is this a higher buyback commitment? Or is it higher volumes with buyback commitments? Obviously, as this pertains to rental car business, generally, I think the market has a view that rental car business is less profitable and margin dilutive. Could you give any insights into how the profitability on that business compares to your broader AOI margins for enlarged Europe? Thank you.

Hi, George. Thanks very much for the questions. I think first when we look at your first question, which is around inventories and do we think we're at the right levels, what you'll see as we move through the course of this year is that not only are we continuing to make progress on inventories that are going to really follow our shipments, but also improving the shape of those inventories. I think that's one of the big focus areas we've looked at in the first quarter, ensuring we have the right product that supports us as we're bringing out the new products so that we're really able to maximize that opportunity. You are going to continue to see this as the course of the year goes on. In general, we expect our shipments in the second quarter to be above where they were in the first quarter, and that means inventories will follow the shipment. The second question that you had was about buybacks in Europe. There, we are having higher volumes with the buybacks. That's related directly to those two rental car deals that I mentioned in the prepared comments. I think that what's changed here, as we look at these and why we were excited and announced those in the first quarter is that they do have a different dynamic. You're right that, historically those deals were seen as volume deals, with an immediate trade-off in terms of margin. As we go forward, we view those as very much in line with other margins that we have in Europe. It's something that is, of course, when you win those opportunities, a direct market share trade between yourselves and your peers, so we are excited about it. From a revenue line, just because they are buybacks and there's a different treatment with the revenue recognition, you don't see it as quickly in your results.

We will now take our next question from Thomas Besson from Kepler Cheuvreux. Please go ahead.

Thank you very much. I have two questions as well please, Natalie. The first is on the powertrain flexibility of the new BEV launch, notably over H2. Can you tell us how rapidly you can eventually introduce ICE versions of BEV models, depending on the market's response to the product launches and whether this is fully integrated in your CapEx and R&D plans? That's the first question. The second, I think there's going to be a press conference on that, but I still want to ask about it because you mentioned it. Can you tell us a little bit more about Leapmotor and the international GV that's going to be ramping up progressively in the coming quarters? Is there anything you can mention for that in terms of where the vehicles may be built, and whether it has any direct impact on H2 or whether it's more a 2025, 2026 driver for you? Thank you.

On those two questions. The first one was about the new products that we have coming and the ability to take those powertrains from BEV vehicles also into ICE or other versions. I am really proud of the product launches that we have coming. As I mentioned in the comments, we have 25 new launches this year, 18 of which are going to have EV versions, and we actually have 21 of those to go. There’s still a big piece of that needs to get visibility externally. The majority of our products are either ICE vehicles or intended to utilize multi-energy platforms. Not every product will come immediately in those versions. For example, we'll be bringing out the Jeep Wagoneer S that's going to be an only version in terms of how we bring it to market. If I think about our e-C3 or the Peugeot E-3008, a BEV comes first, but you'll also see ICE versions come along in the first half. Our goal is to really put ourselves in a position where we can show the market that we are committed to the EV market while having the flexibility to grow where consumer demand is. Your second question was about Leap Motor International and the JV and how that's moving. You will see that the timing is things are moving quite rapidly. We've had very positive progress, and you will start to see the first sales and revenues coming in in the second half. I don't think it's going to be hugely material for us as a group, but you will hear us highlight that. We will ensure to showcase as those products come to market. First, in Europe, we see a lot of interest from both the Middle East and Africa and South America to get moving on these products because they are very cost-competitive in their markets.

We'll now take our next question from Michael Jacks from Bank of America. Please go ahead.

Good afternoon, Natalie. Thank you for the presentation. I have two questions. My first one is on the Ram 1500 model changeover. There still seem to be significant inventories of the older model with dealers. How should we think about the impact of incentives needed to clear the stock and make room for the new 1500, or was that already partly accommodated in the incentive provisions you booked in the second half of 2023? And my second question, I'm wondering if you're in a position at this stage to quantify the magnitude of raw materials and efficiency-driven cost savings expected for this year, and how we should think about the phasing of these savings between H1 and H2? Thank you.

Let me start with the raw materials question. We've actually already provided that outlook, which is we do think there's probably about EUR1 billion of savings that we're going to be able to show deliver this year versus last year. I think what you'll see in terms of the phasing on that is that we'll probably be about two-thirds in the first half and a third in the second half. In terms of how those things are moving? Don't forget when it comes to our AOI, that is one piece of the puzzle and there are a lot of other moving parts, but we've spoken very openly about this as one of the tailwinds in our development. When it comes to your first question about the RAM 1500 situation and what we feel is that we're in a much better position with our inventories in the U.S. versus where we were at the end of the fourth quarter. We've been thoughtful about how we approach that in a smart way. One of the things we've tried to do in North America is look at overall how do we make our pricing most appealing to consumers, but maintain that level. We did have modest price increases in the first quarter. What you see as an example is we looked at how to make our products much more attractive versus competitor products when we're seeing that the economy feels tougher, that people are looking for better pricing. We were able to take our MSRP down and simultaneously reduce our incentives, resulting in a very stable net pricing compared to where it had been. We know demand for the RAM 1500 remains very strong. The sell-down we’ve seen in the last 24 months is progressing nicely without overspending on incentives.

And if I may just follow-up on the first part of the question you answered there, might you be in a position to give any sort of framework or quantify the magnitude of efficiency-driven savings for this year?

I'm not going to give you one overall number for that, but I'll highlight where those efficiencies are coming from. In outbound logistics, we established an internal fleet to reduce volatility, and we expect a 25% reduction in those outbound logistic costs. This is a number I can quantify for you. We're optimizing our labor costs as well, something we've done consistently through the merger with more opportunities appearing. What I want to emphasize is the power of our converging multi-energy platforms. This gives us flexibility in terms of what we bring to the market and how we meet consumer demand while also having a significant scale effect. Going from many platforms historically to four or five moving forward is where we're already seeing advantages as we introduce products on shared platforms.

Our next question comes from Patrick Hummel from UBS. Please go ahead.

Yes. Thank you. Good afternoon, Natalie. Two questions also from my end. First one, and thanks for all the reassuring comments about the profitability of Europe F launches, thanks to the multi-energy platforms. I'm just wondering, if I take your first half guide for AOI margin between 10% and 11%, that means about EUR9 billion let's say, if I round it. AOI content for the full year is EUR22 billion suggesting EUR13 billion in the second half. Is that something you feel comfortable with in light of all the puts and takes you talked about?

I'm not sure about the absolute number, but I would say, if we look at the second half in terms of AOI, I see more potential there. We expect to see an improving trend based on the upcoming product launches, improving comparables without strike impacts in North America from the prior year. We are optimistic about improving the profitability of our BEVs as we go into the second half.

Thank you. My next one is just in terms of the next few years and the ICE product plan. Obviously, the EV transition happens a little bit slower than expected. Are you revisiting ICE versions of models that you previously considered to be BEV only on the new platforms? Are you thinking about just expanding the ICE hybrid offering on these new Stellantis architectures? Thank you.

What I would say is we're very open to addressing consumer needs. The number I talked about for this year isn’t just about expanding BEV-only products. We have planned for various products this year such as our ProMasters coming out in Q2 and heavy-duty pickups in Q4. We consider this holistically, watching consumer demand closely and if opportunities arise, we can look at extending life periods for existing models.

Jose Asumendi from JP Morgan. Please go ahead.

A couple of questions please. I just want to come back to this, to the margin guidance for the first half. Does this imply that basically pricing does not offset currency headwinds? Are you going to see a more significant negative impact of volumes? And are cost savings going to offset fixed cost? I'm just trying to think a little bit about the buckets to get the margin in the first half. And the second question as a follow-up, this implies Europe below 10% margin. So, has there been maybe a pricing deterioration in the European market that we're not aware of? Perhaps you could comment on those angles. Thank you.

When we look at the second quarter, you can expect incremental or sequential improvements versus Q1. Volumes in Q2 are expected to be above Q1. Pricing will definitely continue to fully compensate if not overcompensate for forex as we look at the second quarter. I think it's fair to say that the European marketplace remains tough. Success involves having the right mix of profitability and market share. In terms of net pricing, while we have strong relative net pricing in Europe, the market has been under some pressure.

The next question comes from Bruno Dossena from Wolfe Research. Please go ahead.

Thanks for taking my question. We know that Stellantis has a large number of prospective launches this year in the second half. Could you help us think about the impact of these launches on market share and relative pricing as we move through the year, and then longer term, as we've seen this general downward trend in market share, especially in North America? I recognize that a large part of that is intentional due to your evolving product mix, but how should we think about an appropriate trend in market share in North America and in other key regions as you balance utilization and price and mix? Thanks.

When we talk about the launches in terms of their impact on market share and pricing, that's indirectly a question on our market share outlook. It's about how we achieve the best financial performance for the business, and finding that balance is key. New products are essential. They allow us to reset in terms of different pricing. We're moving heavily into LEDs and BEVs where we have opportunities in terms of market share and pricing. I am proud of our ability to hold stable market share in North America. When we look at the first quarter, maintaining stable market share was an accomplishment for us amid a market shift. The focus on smaller and less expensive vehicles is strong. We’re optimistic about achieving a target of 10% market share in the future. We also see volatility in the European market, but we successfully increased our position by 230 basis points from Q4 to Q1. Our vision is to achieve the 20% threshold and to do so in a profitable way.

Thank you. Just a quick follow-up. Can you remind us how you're thinking about the net impact of pricing relative to the change in pricing net of currency relative to change in variable cost? Do you expect contribution margins to be trending up or down this year?

Pricing varies by region and model, but our goal is to improve TPC, our costs in terms of the product. We expect that number to continue to decline this year and help us offset any potential price reductions.

We will now move to our next question from Henning Cosman from Barclays. Please go ahead.

Hi. Good afternoon. Thank you very much. Hi, Natalie. Henning speaking. Thank you for all the color on the margin side. I wanted to clarify what you said on free cash flow. Did I hear you correctly that you said first-half free cash flow will clearly be down? Perhaps I can also bring up the consensus figure. I believe the consensus stands at around EUR11 billion and EUR11.5 billion. Would you be prepared to put that in context or tell us if you are comfortable with that figure to get reassurance on that side? Secondly, I think we've tried to touch on it from a few angles, especially on the U.S. inventory. Thanks for the comment that you said it would be trending in line with shipments. Does that mean you are happy with the absolute inventory level in the U.S., and we shouldn't expect any destocking going forward? In that context, if I can just ask you again about how that reconciles with the 10% to 11% margin in the first half. If there's no U.S. destocking, volume shouldn't be that bad, and then pricing is up. You have raw material savings, logistics savings, and synergies. It doesn't quite reconcile for me with a margin level at least at the bottom end of the range. Maybe you can help us with what we're all missing to get to that bottom end.

Let me start. There were several questions in there, so if I don't get to each of the individual points, remind me. Starting with free cash flow. As I mentioned in my comments, free cash flow is something very important to us at Stellantis. You can be confident that we are very focused on maximizing free cash flow, especially as we look at the full-year number. I'm not going to give you a specific full-year number; we don't provide that. We’ve given guidance that it's going to be positive. When we look at the first half, I want to be clear with people that there are two things happening. One is you've seen what's happened in terms of shipment and revenue development in Q1, and that will have an impact on profitability and play into free cash flow. The other one is very strictly a timing impact in terms of how we look at our R&D, CapEx, and especially our investments in joint ventures. Many investments are around batteries and things in the electrification space. Over the last two years, you may have seen a split that was 60% to 65% in the second half, but this year that flips around due to product launches skewed to the third and fourth quarters. The second topic you asked was inventories, specifically in North America. Are we satisfied with the absolute level? I believe we are in a healthy range, although it is on the high end of where I would prefer to see it as a CFO. As we look at our inventory, it's crucial to keep our pricing power, grow market share, and proceed sensibly in a noisy market. As I mentioned earlier, for us, it's about maintaining a healthy inventory mix and aligning with consumer demands while bringing the right products to market. Those are my comments.

Please go ahead. Your line is open.

I would have two follow-ups. The first one would be on the revenues. How should we think about the revenue trend in 2024? Should we think about revenues being broadly flat for Stellantis with H2 revenues offsetting the softness of the first half? It would be my first question. And the second one is in H2, what would be the biggest earnings driver? Thank you.

On revenue trends, I'll give a similar comment to what I did on free cash flow, which is we’re not providing full-year guidance. In terms of revenue, we expect improving macro conditions throughout the year. We see sequential improvements in the second quarter, meaning higher revenues than those delivered year to date. Regarding your question about earnings, the biggest drivers in the second half of 2024 will include our product launches. This is essential because they create consumer excitement. Additionally, the third engine is developing positively, and there is significant growth potential in the Middle East and Africa. We also see strengthening in the South American market as we move forward. Cost reductions are also important, and you’ll see lower R&D, CapEx, and joint ventures spending in the second half.

Thank you for your questions. And we have time for one last question today from Harald Hendrikse from Citi. Please go ahead.

Thank you. Can you hear me okay?

Yes. Thank you.

Thanks so much, Natalie. Great conference call. I don't think I can remember a call where we got quite so much color, and yet I have the cheap chat for more. On the margin guide specifically for the first half and maybe a bit for the second half, I just wanted to give you a chance to talk about regions a little bit more. The inventory correction seems to be bigger in the U.S. than in the other regions. Should we expect that after what was an incredible first half of 2023, is that where the biggest part of margin normalization comes? Secondly, just on the macro, you've mentioned a few times and other companies have mentioned that the second half of the year is going to be better. Unfortunately, I've been an analyst for 25 years, and whenever I've heard that, I've always been a little cautious of those statements. Can you explain where that macro improvement is expected to come from and why you're thinking that way? I would have thought you guys would really manage costs ahead of any macro assumption.

On the macro factors moving, we've seen the timing on interest rate adjustments being pushed back. For our logistics improvements projected, we anticipate that will accelerate into the second half. While there are many market dynamics connected to political factors, we believe the industry could see an uplift in consumer sentiment throughout the second half due to strong product portfolios. Regarding the margin guide and inventory, the biggest reduction in inventory in Q1 came from Europe. That was the area where we saw a necessity for improvement given the upcoming new products. While we achieved improvements in all regions except the Middle East and Africa, I agree that North America had important gains. Our cautiousness in margin guidance comes from observed developments in each region and aiming to avoid excessive optimism.

Yes. Fantastic color. Thank you so much.

Good, then I'll take that as a last question and it gives me the opportunity to wrap things up a bit from my side. It's important to remember we're in this transition period as we prepare to showcase Stellantis with new products where we benefit from multi-energy opportunities. While we would have enjoyed seeing better results in Q1, we're proud of our progress in market share and inventory management. We are committed to our financial guidance and excited about future opportunities, looking forward to speaking more with you in 2024. The next opportunity is our Investor Day on June 13th. Thank you very much.