Kia Corporation ($A000270)

Hello. This is Seong-guk Jeong, Head of Investor Relations at Kia. Let me begin the fiscal year 2026 Q1 earnings results, starting with the sales summary, followed by the consolidated income statement, earnings analysis and the consolidated balance sheet. First off, the global retail sales performance. As of Q1 2026, the global industry demand declined by 7.2% Y-o-Y due to the downside to NEV purchase tax exemption policy in China, which is the largest automotive market and the base effect following pre -- strong pre demand in the U.S. prior to the tariff impact in April 2025. Kia's Q1 global retail sales witnessed a 3.7% growth Y-o-Y, marking 780,000 units despite the decline in industry demand led by solid HEV, EV sales and launch of the new Telluride and Seltos recording 4.1% of the global market share, exceeding 4% level for the first time. By market, domestic sales skyrocketed by 5.3% Y-o-Y, reaching 142,000 units centered on EVs, including EV3, EV5, PV5, buttressed by reinforced EV subsidy. In the U.S. market, HEV-centered sales continued ranging from the new Telluride ICE model launched early this year to its HEV model launched in February on top of the Sportage and Carnival. As a result, our sales increased by 4.1% Y-o-Y, recording 5.6% market share. In the Western European market, underpinned by sales expansion of our volume model Sportage launched after EV2 and the net increase effect of EV4, EV5 released in the second half of 2025, the sales increased 1.2% Y-o-Y, marking 140,000 units. In the Indian market, the new Seltos launch effect and the Sonet benefiting from GST cut since late September last year boosted up the sales to 84,000 units, 11.6% increase Y-o-Y. In Chinese market, the sales increased 6.5% Y-o-Y, backed by K3, Seltos and other key models despite the NEV policy adjustments. While emerging markets such as Latin America and CIS realized 20% or higher growth, thanks to the increased supply from Chinese plants and SOP initiation in Qazaqstan from Q4 2025. On the other hand, due to the prolonged war in the Middle East since late February, major countries in MEA region have suffered from demand reduction and supply disruption for distributors, resulting in a 15.6% decrease Y-o-Y. Next is our electrified vehicle sales summary. In Q1 2026, electrified vehicle sales increased by 33.1% Y-o-Y to 232,000 units, driven by Kia's flexible powertrain strategies aligned with shifting demands in each market amid strong demand for HEVs in the U.S. and EVs in Western Europe. As a result, the mix of electrified vehicle in our global sales expanded by 6.6 percentage points from 23.1% in Q1 2025 to 29.7% in Q1 2026, while HEVs and EVs accounted for 17.6% and 11%, respectively. In the HEV segment, the strong sales momentum of Sportage and Carnival HEV added on the launch of Telluride HEV in the U.S. and Seltos HEV in Korea resulted in a 32.1% increase Y-o-Y, marking 138,000 units. Consequently, Kia's HEV market share in the U.S. expanded from 6% in 2025 on a full year basis to 7.5% in Q1 2026, consistently raising our standing in the market. Moving on to EV. In Korea and Western Europe, the net increase effect of EV4, EV5 and Kia's first PEV model, PV5, contributed to 86,000 unit sales, which is a 54.1% increase Y-o-Y. The EV market share in Korea and Western Europe grew significantly from 28.2% and 4.1% each in 2025 on a full year basis to 39.1% and 5.2% in Q1 2026 as a result. Following is the regional wholesale performance. In Q1 2026, Kia's wholesales increased 0.9% Y-o-Y to 780,000 units. By major region, NA saw 252,000 unit sales backed by the new Telluride launch and HEV-centered sales expansion achieving Q1 business plan, while the sales decreased Y-o-Y by 2.1% due to strong base effects following wholesales expansion prior to tariff impact in Q1 last year. In Europe, sales increased 3.8% Y-o-Y, recording 153,000 units owing to expanded sales of Sportage and Sonet PE, the EV2 launch with the start of production in Slovakia plant from February as well as the sales growth of EV4 and EV5. In India, based on the new Seltos launch and solid sales of Sonet benefiting from GST cut, as mentioned earlier, sales grew 11.6% Y-o-Y, marking 84,000 units. Finally, in the rest of the world, the conflict between the U.S. and Iran resulted in the blockade of Strait of Hormuz and supply disruption to distributors in the region, dropping the wholesale sales by 31.2% Y-o-Y in the MEA region. But in Latin America, countries with the strong demand such as Colombia and Ecuador raised the export volume from the domestic and Chinese plants, resulting in 34.6% growth Y-o-Y. Taken together, despite the sales disruption in MEA countries, Kia succeeded in achieving its quarterly business plan, hitting the record high Q1 sales of 780,000 units. Next, the income statement. Despite limited growth in consolidated sales volumes, revenue for Q1 2026 came in at KRW 29.502 trillion, up by 5.3% Y-o-Y, supported by higher ASP resulting from positive price effect and favorable exchange rates. As for operating profit, due to the impact of the U.S. tariffs, increased incentives, mainly in overseas markets and the impact of FX valuation on warranty provisions resulting from a sharp rise in the quarter-end won-dollar exchange rate, the figure decreased by 26.7% Y-o-Y to KRW 2.205 trillion. Accordingly, the operating profit margin declined by 3.2 percentage points Y-o-Y to 7.5%. Pretax profit and net profit also fell by 18.8% and 23.5% Y-o-Y, respectively, to KRW 2.635 trillion and KRW 1.8 trillion. Next, operating profit analysis. Let me walk you through each factor behind the changes. First of all, the impact of the U.S. tariffs was fully reflected over the 3 months since the beginning of Q1 2026, leading to a profit decrease of KRW 755 billion Y-o-Y. In addition, intensified competition in North America and Europe pushed up total incentives by KRW 215 billion Y-o-Y, reducing earnings. And the sharp rise in quarter-end exchange rates resulted in an additional cost increase of KRW 75 billion, mainly due to FX valuation on warranty provisions. Regarding volume effect, although consolidated sales volume increased by 0.4% Y-o-Y, a slight deterioration in the regional mix due to sales declines in regions such as the Middle East and Africa led to a KRW 44 billion Y-o-Y drop in earnings. Even amid the challenging business environment, Kia generated KRW 49 billion in positive price effects through enhanced product value added with the launch of the new Telluride and Seltos. And by expanding sales of high-margin models such as the Telluride and Carnival in the U.S., it delivered KRW 143 billion in mix effect. Furthermore, favorable won-dollar and won-euro exchange rates contributed to an additional KRW 93 billion increase in earnings, leading to KRW 2.205 trillion of operating profit for Q1 2026, down by KRW 804 billion Y-o-Y. Next, revenue analysis. First, the regional sales data on the left shows that consolidated revenue increased by 5.3% Y-o-Y. Despite ASP increases centered on HEV and SUV model, the share of North America declined by 0.2 percentage points from 42.5% in Q1 2025 to 42.3% in Q1 2026 due to lower wholesale volume. The share of domestic revenue came in at 17.6%, the same level as in Q1 2025, supported in part by a 4.1% increase in ASP. In Europe, we witnessed improved sales led by new EV models, a relatively high EV sales mix and favorable won-euro exchange rates, which increased the share of Europe by 1.4 percentage points Y-o-Y to 24.4%. The share of India remained at around 5%. Moving on to the ASP changes on the right, supported by expanded sales of HEVs and EVs centered around advanced markets, including the U.S. and Europe and favorable foreign exchange effects, global ASP increased by 4.9% Y-o-Y to KRW 39.9 million in Q1 2026. Domestic ASP also rose by 4.1% Y-o-Y to KRW 35.9 million, maintaining its growth momentum. Next, cost of sales and SG&A. Revenue expansion, supported by higher ASP and favorable foreign exchange effect, was offset by the U.S. tariff impact mentioned earlier, driving up the cost of sales ratio by 2 percentage points Y-o-Y to 80.3%. For your reference, excluding tariff impacts, the cost of sales ratio in Q1 2026 was 77.8%. The SG&A ratio for Q1 2026 went up by 1.2 percentage points Y-o-Y to 12.2%. One of the main drivers was the significantly bigger impact of asset valuation on warranty provisions with the quarter end $1 exchange rate reaching KRW 1,513, leading to a 1.4 percentage point increase in the sales warranty expense ratio. Next, nonoperating income. First, equity method gains declined by KRW 47 billion Y-o-Y to KRW 128 billion due to weaker earnings from affiliates. Financial and other nonoperating income rose by KRW 243 billion Y-o-Y to KRW 302 billion, mainly due to an improvement in foreign exchange translation gains and losses. As a result, nonoperating income for Q1 2026 recorded KRW 430 billion, up by KRW 195 billion Y-o-Y. Next, the balance sheet. As of the end of Q1 2026, the total value of assets stood at KRW 105.36 trillion, up by KRW 6.381 trillion from the end of 2025. The main drivers include higher liquidity, increased accounts receivable, expanded inventory assets and higher equity in affiliates. Total liabilities at the end of Q1 2026 went up by KRW 5.933 trillion from the end of 2025 to KRW 43.722 trillion. Despite a KRW 96 billion reduction in borrowings, the figure increased from the end of 2025 due to higher accounts payable, expanded sales warranty provisions and the reflection of over KRW 2.6 trillion of accrued dividends. Total equity increased by KRW 448 billion from the end of 2025 to KRW 61.638 trillion. Although the debt ratio rose by 9.1 percentage points from that of the end of 2025 to 70.9% due to the impact of accrued dividend, it dropped by 1 percentage point when compared to the figure at the end of Q1 2025. This concludes the presentation on Kia's Q1 2026 earnings results. Thank you.

Next, CFO, SVP, Seung-Jun Kim, will deliver a review on Kia's earnings for Q1 2026 and business outlook for Q2.

Hello. This is CFO, SVP, Seung-Jun Kim of Kia. The Q1 earnings will be divided into the sales and the profitability. As mentioned earlier by Mr. Jeong, I think the overall explanation is well delivered. When it comes to Q1 sales, we have reached the global market share of 4.6%. During the COVID-19 era, there has been a short-term impact due to the shortage of the semiconductor. Therefore, we have surpassed the level of 4% for 2x. However, this year, the global brands are fast advancing into the global markets. So the sales growth were not concentrated in the specific regions. However, we had a very balanced growth, reaching the 4.6% of the market share in the global market. I believe that this was one of the great transitional points when it comes to our sales growth. So to add on some explanation on the profitability as well. Compared to Q1 last year, we have been under the full impact of the tariffs and the OP has decreased about KRW 800 billion, and about KRW 750 billion is due to the tariff impact. So excluding the tariff impact, I believe the numbers are quite similar to that of Q1 last year. Compared to Q3, OP has increased. OP was 3.1%. And this Q1, it has been upgraded to 7.1% once again. So last Q3 was the lowest point, and now, we are continuously increasing after Q3 throughout the Q1 of 2026. I believe that you are wondering the annual sales of 2026, especially the Q2. When it comes to NA region, Seltos will be launched as of April 1 as well as the hybrid model. And when it comes to Telluride, we will sell the Telluride model for Q2 in the full swing. When it comes to Europe, ranging from EV2 to EV5 to EV6, we have established the mass market EV lineup. We are currently expanding the EV lineup in the European region as well. And when it comes to emerging markets, including India, we're trying to expand the sales of the region-specific models. Last year, we have suffered a lot in the European region. And partially, it was due to the transitional points from the ICE to the EVs. And there has been some discontinuation of the existing models last year. However, since March and April this year, we believe that our European market sales are once again increasing, overcoming the uncertainties and difficulties of the past. And since Q2 2026, as we have announced in the recent CID, we believe that we can maintain the business plan for this year as it is. I think some of you are wondering the external risks of the 2026 as well. The raw material price increase and the war in the MEA region would be the prime examples. When it comes to raw material price increase, not only the oil price, but aluminum, nickel, rhodium and palladium could be the great examples. It has been impacting our revenue since March. And when it comes to the oil price, even though the war comes to an end this year, I believe that the oil price will be maintained on the level of $100, bringing about the additional cost increase risks. And we are currently selling about 260,000 units of our models due to MEA region. However, we believe that there is a room for our recovery in other regions such as India in order to cover up the losses in the MEA region, where there is a war still going on. Of course, there could be some shortage in the MEA region this year. However, we'll make -- we'll try very hard to offset the losses in the other regions such as India. That is our current take. When it comes to the raw material price increase, I believe that you're wondering about a specific number. So of an OP of KRW 10.2 trillion of the revenue this year expected, I believe that the raw material price increase will impact about 5%. And when it comes to the war impact, it will be around 2% to 3%. However, we believe that we need to fully respond to the price competitiveness, cost competitiveness responding to the fast rise of the Chinese brands. And this is the part that we have been working very hard from the past. And I am very confident that we have spared no effort to increase the price competitiveness from the past up until this quarter. At the moment, at CID, we presented an annual OP of KRW 10.2 trillion, and I believe we are going to stick toward the number. This concludes the presentation on Q1 2026. Thank you.

Now we are going to take questions. So please follow the instructions from the operator.

[Foreign Language] [Operator Instructions] [Foreign Language] The first question will be provided by Eun Young Yim from Samsung Securities.

[Foreign Language] This is Eun Young Yim from Samsung Securities. I have 2 questions in total. First is on the raw material increase and the negative impact of the MEA region's exports as SVP, Seung-Jun Kim, has just mentioned. And I believe when it comes to the negative impact, it can be offset by the positive impact, which is the high FX rate. However, at the moment, if the total sales are going down, we believe that high FX rate is not enough to offset the negative impact. So I would like to understand what is the OP sensitivity of Kia if KRW 10 of differences occur between the FX rate of KRW and dollar. And I believe that the vehicles that are being produced in the U.S. are continuously increasing. So I would like to understand the specific number in the Q2 based on the expectation. And my second question is on the operating profit ups and downs. You have mentioned that there has been an increase of the incentive of about KRW 200 billion. And I believe when it comes to the U.S. numbers, it is very similar to that of last year. Then, is the increase from the European region? I would like to understand the updates going forward. And I wonder whether there could be any possibility of increased incentive going down this year.

[Foreign Language] So to answer your first question, when it comes to the FX changes between won and dollars, I would like to mention the won revenue first. So based on won, our revenue is about KRW 120 trillion. And I believe based on the revenue-based revenue of won, you'll be able to calculate that of the dollars as well. So I think it's not appropriate at the moment to mention the changes of the dollar-based revenue whenever there is KRW 10 differences between the dollars and won. However, it is true that there would be some changes when it comes to the material costs that we have to pay in dollars. And based on my explanation, I believe that you'll be able to understand the changes that is coming from the won and dollar changes or differences. And earlier, I have not mentioned the FX rates. And I want to tell you that Kia is not the company that is benefiting from the slight changes of FX rate. So whenever we set a pricing or the incentive for the new model, we take a very conservative approach and set our standards for the pricing and profitability. So if the FX rate goes up down the road, it is very true that our profitability will go up. So I believe these kind of calculations was one of our drivers that made the Kia of today. [Foreign Language] So regarding your second question on the production disruption, I think you have mentioned about the production when it comes to the safety, and there has been a disruption accounting for 220,000 units, including [indiscernible] and [indiscernible]. However, based on our engine verification, we were able to have a transition towards the EV. So we are able to offset the losses up to half. And I believe from May this year, there won't be any additional production disruptions. [Foreign Language] And regarding your second question, which is the second part about the incentive impact, I think you have better understanding when it comes to incentive trends than us. So when it comes to the U.S. region, the incentive level is very similar to that of last year. However, it is true that the incentive for the U.S. region has increased due to the fast increase of the Chinese brands in the European market. So we thought that we need to slightly increase the incentives in order to respond to the fast penetration of the Chinese brands in the region. However, we believe that we cannot revise the incentive level downwards in the short term. So throughout Q1, the current incentive level will be maintained.

[Foreign Language] The following question will be presented by Yong-Kwan Moon from Shinyoung Securities.

[Foreign Language] This is Moon, Yong-Kwan from Shinyoung Securities. I have 2 questions. First is on the warranty provisions. Because of quarter end exchange rate fluctuations, the warranty provisions have increased by KRW 200 billion. But even we exclude the impact of KRW 1 trillion impact, it's still very high compared to 3.7% towards revenue ratio. So I'd like to ask that previously, you mentioned about your quality risk sensing organization and you're going to rigorously sense any risks related to quality issues. And you previously said that 2% -- mid-2% range was maintained. But this was the first time we see this high increase of warranty provisions compared to previous quarters. So even excluding the quarter-end exchange fluctuations, as we increase EV sales volume overseas, provisions on EVs are going to increase, I believe. So should we expect that it is going to increase by 3% to 4% range? And my second question is about exports from domestic markets. And for Q1, the volume of domestically produced vehicles was around the same as previous quarters. But compared to 6 years ago, it has slightly decreased by about 10%. So in European market, EV local production is projected to be expanded. And in North America, hybrid volumes will increase as well. And as we are not -- as we don't have to send a lot of EVs to the U.S., I'd like to talk about the situation in the Middle East first. Are we going to have a second half impact on domestically produced vehicles volume? And should we expect that 2020 -- compared to 2025, the volume will change slightly to this year?

[Foreign Language] So let me address your first question. You mentioned warranty provisions first. And you were right on the mark when you said that we have KRW 1.2 trillion of total warranty provisions. And compared to Q1 2025, the figure has increased by KRW 440 billion. And among the figure, KRW 250 billion was because of FX valuation on warranty provisions. And I believe you are well aware of this, but we are experiencing a high increase in the EV share. And this has an impact on per unit warranty provision scale. And in the first initial phases of the new model launch, about [ 104 ] years have no choice but to see an increase in warranty provisions. But over time, the figure is bound to decrease. But this year, we had a lot of EV launches. So that's why we have a high increase in warranty provisions because ICE parts have lower part prices than EVs. EVs parts are more expensive. And this is because a lot of new launches are in their first year of the model cycle. But down the road, about 2 to 3 and 4 years down the road, we're going to decrease the warranty provision. So I believe you don't have to worry about that, that much. [Foreign Language] So regarding the production volume decrease, even if we have Middle East situations prolonged, we're not going to have that many disruptions on our volume. And our business plans included a 6% growth Y-o-Y of volume. So even if the situations in the Middle East intensify further, exports from domestic plants will remain similar or even increase. And our business target was a 5% increase in volume. So even if there are some difficulties in our businesses in the Middle East, there will be more requirements from Central and South America rather. So we believe there is not much impact on domestic volume.

[Foreign Language] I'd like to add something on his explanation. When it comes to the total demand from emerging markets, the demand environment we have today is very favorable. And in markets, including India, Central and South America and Asia Pacific regions, we have experienced a higher than 10% growth in Q2. So this shows that we have a lot of growth in demand, and plants that address the demand from emerging markets include domestic plants and Chinese plants. And both plants are increasing their volume. In particular, we're expanding exports from Chinese companies. So the figure for domestic markets is 5%, and the figure for Chinese markets is more than 10%.

[Foreign Language] The following question will be presented by Kyung Jae Hwang from Merrill Lynch.

[Foreign Language] This is Hwang, Kyung Jae from Merrill Lynch Securities. I have a question on the material cost that you have mentioned. So you have said that you are expecting an increase of the material cost of 5% per the revenue. So based on the last year's business report, we believe that material cost payments have been about KRW 80 trillion. So based on the revenue, it accounts for 70%. Then you have said that if there will be an increase of 5%, then can we understand it as 7% increase based on the revenue this year. And you have mentioned the materials, including the aluminum and others. However, this morning, there have been some mentions regarding the semiconductor and electronic components. And I believe that there is no -- the OEMs are not directly managing the material cost when it comes to semiconductor and electronic component material cost increases. Is this right?

[Foreign Language] So to answer your first question on the material cost, if the level of the March is maintained throughout the year, I believe that the material cost increase would account for 5% per operating profit. And on the type of the raw materials that I've mentioned, the reason why I have first mentioned the aluminum is because the use of the aluminum is one of the highest out of all raw materials. And when it comes to semiconductor, of course, there will be an impact on our side as well. However, compared to oil price increase or aluminum cost increase, the increase of the semiconductor would slightly be lower than others. That's the reason why I have not mentioned it earlier. So on the OEM side, there will be some impact due to the semiconductor price increase as well.

[Foreign Language] The following question will be presented by [indiscernible] from Macquarie Securities.

[Foreign Language] This is [indiscernible] from Macquarie Securities. I have 2 questions. The first one is on India. In Q1, you showed an exponential growth trend, although that was slightly falling short of industry demand. In India, growth potential is huge, and due to the GST cut, you have a lot of potential there, but there are also some concerns about cost increase and the downside risks on margins. And as for the HMG subsidiary, the prices of steel are expected to increase by 1%. So how are you going to respond to price increases? And in the second half of the year, there will be tax increases for gasoline. So what are your response strategies in order to respond to this tough situation? And how are you going to execute your growth strategies in a market where the battery EV mix is very low? And could you elaborate on your strategies on growth in India again? And second of all, in Western Europe, the EV mix is continuously increasing. And last year, you mentioned that this will decrease total incentives. Then, how would you expect the profitability in the Western European market would be in total? And could you provide some specific numbers on profitability trends? And new models launches, there will be some impact on margins? Or did you set some directions? Could you please provide some specifics so that we can estimate figures down the road?

[Foreign Language] First, on price increases in the India market, we don't have any plans to proactively increase the prices. If there is inflation and other external variables and naturally prices go up, then we're going to align our plans accordingly. But we don't have any plans to proactively increase the prices. And second of all, on incentives in Western Europe, early in 2025, we mentioned that we are going to decrease incentives with increasing EV new models, but we couldn't keep the promises we made. That's because Chinese players have attacked our profitability with low-priced EVs. And in some European countries, the [indiscernible] of Chinese players has gone up too rapidly compared to our expectations. And the price gap between us and theirs is about 25%. So we couldn't have choice, but just increase incentives, that was inevitable. But that was -- but there have been some benefits from the won-euro exchange rate, but our profitability ratio is about in the high single-digit range.

[Foreign Language] Due to time constraints, let me take the last question.

[Foreign Language] The last question will be presented by Joon Sung Kim from Meritz Securities.

[Foreign Language] This is Kim, Joon Sung from Meritz Securities. I have 2 questions in total. In addition to your answer regarding the question from Macquarie Securities, you have mentioned that the incentive increase was due to the price competitiveness of the Chinese brands. And I would like to ask a question regarding the volume growth. And considering the rise of the Chinese brands, the sales of the models of Chinese brands has increased about 50% Y-o-Y. And currently, they are selling about 2.23 million units worldwide. And I believe that it will increase to [ 100 ] million this year. And considering the production in Hungarian plant and other European plants, our production capacity at the moment amounts to 500,000 units, and there is a rumor that Zeekr and Xpeng will advance into Korean market as well. So considering the situation, both in Korea and the European market, do you think that we can keep the guidance when it comes to the sales and the volume growth? And I would like to understand whether the incentive increase rate will be maintained throughout Q3, Q2 and Q4 as well? And I also have one more question regarding the recent CID. As you well know, our stock price is very high at the moment. So it is a bit lower than our record high price. And I believe this is one of the highest valuation when it comes to our stock price in our history. And CEO also mentioned about the advancements into the Robotics America as well. And I believe that this is the timing to start the operation when it comes to the assets. And I would like to learn about the specific timing for the Robotics America plan. And CEO has also mentioned about our smart car project in collaboration with NVIDIA. And I would like to also understand when would be the timing where we can experience the demo for the smart car.

[Foreign Language] So to answer your first question on the sales volume and the incentives, in the early of this year, we have mentioned that our wholesale sales target is about 3.35 million units. And as of Q1 performances, we have already exceeded our target. And this is not a result from the single region. Though there has been some negative impact from the MEA region, we were able to recover the shortages of the MEA region in all other regions in a balanced manner. We were able to achieve the target when it comes to the sales volume, and we have already exceeded it based on our business plan. So at the moment, I can confidently say that we can keep the promises for the sales volume. And when it comes to the incentive level in the Western European region, currently, the Q1 incentive level is same to the level of Q4 level last year. So for the remaining period throughout this year, I believe that there won't be any additional changes, but Q1 level will be maintained. But then some of you might wonder whether there is any possibility for the incentive rate to go down. However, at the moment, we do not have a plan to do so. Rather, we will maintain the level of Q1 in order to increase the market share. And currently, we are preparing for a countermeasure to it. [Foreign Language] So to answer your second question on the Robotics America contributions and the smart car and face car plans, when it comes to the production subsidiary, our CEO has mentioned the overall direction. So whether it's in Korea or the U.S., when it comes to the production subsidiary, it is certainly that Kia will take part -- will be participating in the project. And when it comes to the specific scale or the measures of the contribution, it will be determined in the second half. And regarding the question with the collaboration of NVIDIA of SDV and the face car, the face car will be launched within the 2026, and I believe that the development will be complete as of 2027, and the official release will be made around 2028. And then, we will work on our projects to launch the L2++ model, the mass market model of SDV. And I believe that the schedule for our smart car and the face car collaboration will be similar to that we have mentioned earlier. And to be specific, when it comes to the face car, it will be released in the second half or at the end of the year. And when it comes to the test drive or the demonstration, the schedule is yet to be confirmed, and we have not yet confirmed how to release it to the public yet. So once the schedule and the measures to release our face car is finalized in the second half, we will get back to you with the correct information. Thank you.

[Foreign Language] This concludes the fiscal year 2026 first quarter earnings results by Kia. If you have any further questions, please contact the Kia IR team directly. Thank you for your time and participation. [Statements in English on this transcript were spoken by an interpreter present on the live call.]