Stellantis N.V. (STLAM) Earnings Call Transcript & Summary

Hello, and welcome to the Groupe PSA 2020 Q3 Revenue Presentation. My name is Jess, and I'll be your coordinator for today's event. Please note, this conference is being recorded. [Operator Instructions] I will now hand you over to your host, Philippe de Rovira, CFO, to begin today's conference. Thank you.

Good morning, and thank you for joining the call. I'm very pleased to be with you today to present the third quarter 2020 revenue of Groupe PSA. First, I would like to give you some news, which has just been released about Stellantis. As you know, we are continuing to make very good progress towards the completion of the proposed combination. And we confirm we expect the merger to complete before the end of Q1 2021. Two points to highlight. The first one is that the respective boards of PSA and FCA signed the cross-border merger terms that will apply to the combination. This is an important step in the dynamics that will lead to closing. The second one is that both boards also agreed to commit Groupe PSA to sell up to approx 7% of Faurecia's outstanding share prior to the completion of the merger, and to take such other steps, excluding additional disposal of shares as may be necessary to ensure that Stellantis will not acquire control of Faurecia consistent with the terms of the original combination agreement. This is expected to facilitate the securing of the necessary regulatory approvals in relation to the merger. The cash proceeds from this contemplated disposal are expected to be distributed to Stellantis shareholders, along with the distribution in kind of the remaining stake in Faurecia as already announced on September 14, promptly after the completion of the merger, and subject, of course, to approval by the Stellantis Board and shareholders. Groupe PSA will continue to support Faurecia and its management, which impressively met all its annual financial targets since '14 -- 2014, and reconfirmed its ambitions for 2022, despite the uncertain environment. A few highlights now on Groupe PSA third quarter. The auto is back to growth in Q3. Order intake has been stable in Q3 2020 versus Q3 2019. And the order book at the end of September increased by 40% versus September 2019. Q3 production was only at 92% of Q3 2019, which led to very low inventories, and an increase of invoices versus Q3 '19 in spite of the good order intake. We've been ramping up production in September. And in Q4 2020, our level of production should be slightly up compared to Q4 '19. So let's now look at our results in more details in the next slides. On Slide #3, Q3 worldwide sales were down 12.7% compared to Q3 '19, reflecting tough markets in most regions mitigated or amplified by our own strengths or weaknesses. One exception worthy of mention was Middle East and Africa. In a region where the market is down 3.4%, the group sales are growing by 38.8%, thanks to good performances in Turkey and Morocco, attributable mainly to Opel Vauxhall and Citroën. In Europe, Q3 sales were down 12.9% in a market declining by 5.5%. The Groupe lost 1.4 points in market share essentially due to Opel Vauxhall and the last year's stop sale of 5 passenger car models for CO2 reasons, including Mokka, which was a key volume maker. The good news is that order books for the new Mokka were opened in September and deliveries will start in Q1 2021. No doubt this car, the design you can see on the cover page of this presentation, will allow Opel Vauxhall to rebound in market share as it's already been the case in light commercial vehicles, with the new combo on the new Vivaro with a market share increase from 5.1% to 5.6% in Q3 2020 versus Q3 '19. In Latin America, the existing tough context of unfavorable exchange rates was even worsened by the COVID-19 pandemic, inducing the market collapse of 25% in Q3. Our sales followed the same trend at minus 23.5%. Some signs of recovery could be seen in September, notably with the promising start of the new PEUGEOT 208 produced in Argentina. Let's have a look at the stock situation on Slide #4. Since the beginning of the crisis, we have reinforced our control of our inventories. Working with a low level of inventories is a well-considered decision to protect the company in this uncertain period. With the improving sales, the low point for inventories has reached end of September. In Q4, production will increase compared to Q3 and should be slightly up versus Q4 2019. Of course, all these comments are valid, except if we face a second major lockdown like in H1. On Slide #5, we now move on to group revenue, which shrank by 0.8% versus last year, reaching EUR 15.5 billion in Q3 2020. Of course, the highlight of this Q3 is that total revenue is back to growth with a 1.2% increase compared to 2019. The 2 reasons are, on one hand, the good progress of Peugeot's [ 200s ] revenue more than offsetting the expected decrease of Opel Vauxhall. And on the other hand, an excellent performance of the used car business, which confirmed a strong recovery by posting a 15% revenue growth in Q3. On Slide #6, we present the Automotive division revenue bridge. So on the left-hand side, 2 negative effects. ForEx remained negative at 2.1%, mainly due to Turkish lira and Argentinian peso. But a large proportion of it was offset in the pricing, thanks to the group's efficient pricing policy. The volumes and the country mix bucket stood at minus 6.8%, which is less negative than the volumes decrease previously commented, thanks to the mitigation of growing volumes of used cars sold in major urban markets, such as France, Spain, Italy and the U.K. The performance in used cars has been sustained by high activity in our label sales, also by PSA retail performance and also by Aramis. The business model of Aramis, which is based on selling the Internet has proved to be very resilient. And Aramis will end up 2020 with another year of profitable growth despite the lockdown in H1. On the right-hand side, positive effects. First, a strong product mix at 5.8%, which remained the major driver of the auto revenue growth in Q3. This is the recurring consequence of Groupe PSA core model strategy. The major contribution came from the renewal of the B segment with the new PEUGEOT 208 and the new Opel Corsa, all available both in ICE and full-electric version. To a lesser extent, Zafira Life and Combo Life also contributed positively. Second, the short-term rental downturn has a positive side effect by reducing by almost 40% of sales with buyback which translated into a positive impact of 2.7% in the bucket orders. Let's have in mind the revenue for a car sold with buyback is only considered in proportion to the actual duration of the contract. Last, as previously announced, sales to partner normalized close to 0 benefiting from the sales of the new PROACE CITY to Toyota, which compensated for the fact that the sales to GM nearly disappeared. On Slide #7, our only revision regarding the market outlook is for Russia from minus 30% to 20%. Our forecast for Europe remains at minus 25%, as I previously said in April and confirmed in July. We don't see that in the chart, but considering our growing volumes in Middle East and Africa, it makes sense to indicate that our market outlook for this region is also minus -- is at minus 15%. Our financial guidance remains unchanged, and I'm now ready to answer your questions.

[Operator Instructions] And the first question comes from the line of Thomas Besson from Kepler Cheuvreux.

It's Thomas Besson from Kepler Cheuvreux. I'll have 3 questions, please, Philippe. First, on Q4, barring, as you said, any unexpected lockdown, can you be slightly more specific on production levels and where you plan to have inventories at year-end to help us try to gauge the working capital dynamic for the free cash flow and is it reasonable to assume that Peugeot should have a positive free cash flow for the year, thanks to that dynamic? The second question. Can you come back on what you mentioned on the other automotive revenues? Give us an idea of the share of new cars sold versus the rest of the automotive revenues that Peugeot used to report in the past and that we don't have anymore. Is it safe to assume that it's roughly 70/30? And can you remind us exactly what you have in the other automotive revenues beyond the used car business in terms of maintenance, parts and so on? And lastly, a question just technically on Faurecia. Can you just remind us why you do this placing now? It seems that the AMF may have been kind of tolerant on the fact that Stellantis would have had a temporary control on the company as long as it was planned to dispose it. Can you explain why you take this decision to sell it now? Whether it was an advice from lawyers or whatever? And how it's going to be accounted for in Peugeot's 2020 account, please?

Okay. Thomas, thanks for the 3 questions. First, on the Q4, well, you -- with the hypothesis that you've taken which is except lockdown, so Q4 production should be slightly up compared to what we had last year, which means that in that case, the level of table should be probably comparable, which means that the working capital situation would be similar to the previous year. So if you consider that in the first half of the year, we've delivered cash excluding working capital, we can make a conclusion of what could be the free cash flow for the year. So to be positive in this scenario would sound logical. On your -- but as you rightly mentioned, this is except big lockdowns, which nobody knows at that stage. On your second question, that's right that we don't publish the ventilation between new vehicles and other activities. Other activities, we've got basically aftersales, we've got used cars, we've got sales to third parties. And we've got services, for example, a contract of maintenance and that kind of thing. To say that the new vehicle is around 70% is fairly reasonable. And you know that we are pushing hard to develop aftersales and the used cars on a multi-brand basis, which is something rather specific to PSA. Well, on the question of the timing of the decision related to Faurecia, we announced amendments of the terms of the merger of PSA in September, and we had subsequent discussions and interactions with different regulatory authorities regarding the approval process, and it goes up -- to take the decision that we've just mentioned this morning.

The next question comes from the line of George Galliers from Goldman Sachs.

Just with respect to used car sales and, obviously, the very strong performance there, can you remind us what the profitability of that business looks like? And perhaps you could just put it in the context of your 4.5% adjusted automotive operating margin target over the 2019 to 2021 period. And then secondly, I was wondering if you could just help us to kind of understand what 40% year-over-year improvement in order book means as we kind of think about sales volumes over the course of the next 2 to 3 months. Clearly, I don't think you're suggesting it means that you're going to see sales volume growth of anywhere near that kind of magnitude. But how should we think about kind of what the implications of that are for volume growth in the near future.

Okay. George, and thank you for your 2 questions. Well, I will not say that the -- we all know that the 4.5% of our guidance was not a target, but a floor that we had called an all-weather floor. And you perfectly know that we're leading the company in a way that we wanted to beat that by far and to improve our situation year after year. Of course, 2020 compared to '19 due to COVID, it will not be the case. But that's our permanent goal. To be specific on your question on used cars, we've been working a lot in the past years on this activity. And what I can tell you is the profitability in Q3 is comparable to the average of the company. So it will not -- the growth of the used car activity in Q3 is not dilutive to the margin of the company -- of the auto, I'm talking. On your second question on the order book increasing by 40%, part of the growth of the order book is due to the fact that we had orders similar to last year in the Q3, and production was below as it was only 92% of Q3 '19. So clearly, there was some potential to -- there would have been some commercial potential to deliver cars sooner in the Q3. And it means that if we're able to produce and deliver the -- and put these cars at the dealership quickly, we should have a good delivery trend in Q4. That's clearly the message. After that, we are in an industry, let's have in mind that normally, you've got approximately half of the sales that are done with the order book and half of the sales that are done on inventories. So -- and we are not in industry working with months and months of order book. Typically, when you've got 2 months of the order book, it's a good result.

The next question comes from the line of Horst Schneider from Bank of America.

I have got 2 to 3. The first one, it relates again to inventories. Could you maybe explain to us what is the ideal inventory for PSA? And to which extent you have to restock now in the fourth quarter? And in that context, since you commented on the large increase of used cars, could you maybe make a statement on the used car inventories as well and what is the potential impact of too low inventories on used car on new car sales? And likewise, could there be the chance that you have got positive gains from residual value write-ups or better used car prices at year-end? And the other question that I had that was more on CO2 because we have seen in the last few weeks, this potential rumor that Renault is pooling with Ford. I would be interested to know, I mean, since you are probably over achieving on CO2, would it be for you also may be a chance to pool with another car maker or you don't do that because you need the CO2 credits basically next year for FCA, so that FCA does not have to buy anymore from Tesla, the CO2 emission credits?

Yes. So thank you for these 2 or 3 questions that may be more than that. On inventories, it's not that easy to say what is the ideal -- but I would say the ideal number, I would say it's not the same, depending on the context. When we are in a context that is very unstable as now, the ideal inventories is much lower compared to what we had normally. If you look at our presentations in the past, we had last year at the end of 2019, say, while that was the right size inventory or a similar wording. This year, we should -- if we don't have a major lockdown, we will finish probably -- well, we'll be much lower compared to where we were last year. It was around 600,000 cars. We are now -- well, we are not much lower than that, but we could be in an intermediate situation between end of September and end of December of last year. In an unstable world, what we've decided is to work with extremely low inventories. And end of September, I consider it's fine because basically, we want to be sure that if there is a second lockdown, we don't have cash that is trapped. And we don't want to be forced to make destocking in an unorderly manner, which is something that hurts your residual value. So the very big benefit of having these very tight inventories is you definitely protect your transaction prices, you protect the residual values, you work only with the best channels, which, on the medium term, is very helpful. Of course, on the short term, you can lose some market share. But when you look at PCD, basically on the quarter, PCD has -- was merely stable and OV has suffered from a decrease, but it was not due to inventories. Its primary reason is the fact that we stopped 5 cars last year. So the major inconvenience that you can have to work with this kind of very low inventories is you can lose some opportunities, but -- from a commercial point of view. But in that case, you select your channels and if you want to increase again your market share and channels like short term rental, like demo cars, like in the U.K. Motability, it's quite easy. Motability in the U.K. is a typical example. You just decide to put the right price and you sell the car. So it's not the market share that is difficult to gain, it's just a question of how much you want to put on the table. So my view is, in the current context, the level of inventory that we had at the end of September is a bit low, but it's logical. It will be a bit higher at the end of December, of course, depending on what we can deliver with sanitary conditions. But that's what I can answer to your first question. On your second question that was on CO2. You may have seen that we have decided to pool on the LCV. You remember that on the CO2, you've got the regulation for passenger car and the regulation for LCV. And we've decided to have an open pool with FCA on LCV. We are doing that at market price conditions because we are before the merger. So with a contract at arm length. And this is something that has been announced as the -- I think it was yesterday or Sunday or Monday or today, I don't remember the exact date but it was very recently. So yes, we're open to that. On your -- we've not decided to go on the pool on the passenger car. You remember that FCA has an agreement with Tesla for the years '19 to 2021, which means that in 2021, the CO2 of Stellantis will be made through the 2 levels. Well, PSA with -- is exactly the same way as in 2020 on FCA with a road map, including the Tesla agreement. And of course, we will be pooled in Stellantis next year, naturally. That's, of course, the case. I hope it answers your original questions.

Just the last one, used car or residual value write-ups?

Sorry, sorry, yes. Yes. Well, on used car, the inventory at the end of September was at the same level as September '19 with differences between brands. And in -- I have mentioned previously that on the quarter, the profitability of used cars was similar to the global profitability of the company, which was an improvement compared to past years. Part of the reason is that -- well, the market has been pushing quite well. We have started the quarter with much higher inventories in used cars than the previous year, and we've reached the same level as the previous year, which means the dynamics have been very high in terms of sales, and the pricing was very good. I think it comes from 2 things. First, the fact that the demand in the market was very high during December. And second, it's a result of all the actions that we are doing on the used cars to work on the pricing power of the used car. So I will not explain in detail all that we've been doing because I consider it's an advantage of PSA, this know-how that we've developed, that we've done a lot on the pricing for used cars with the same kind of reasoning as what we've done with the new vehicles in all the past years. And sorry, last word about that. We are deploying Distrigo Opel Vauxhall. And part of the progress, a very significant part compared to the previous year in terms of profitability comes from Opel Vauxhall, as we were losing money in the past, and until '19 in -- with used cars in Opel Vauxhall. And in 2020, we are making money on Opel Vauxhall, there's still a lot of progress to be done, but the trend is definitely very good.

The next question comes from the line of Stephen Reitman from Societe Generale.

Philippe, a question about the product mix.

Stephen, can you speak a bit louder, please? Because I hardly hear you.

Okay. A question about the product mix. Clearly, the 5.8% improvement there. What impact is electrification having? I understand you’ve lifted the cap you'd originally set of 6% on new energy vehicles because of the very high demand you're seeing for 208, e-208, 2008, and the e-Corsa. What impact are the government subsidies having in terms of the returns you're making on this -- on these vehicles?

Well, the -- it's clear that the fact that in the product mix, it's for BEV and PHEV. We could say that approximately half of the effect is due to the launch of the LEVs because, of course, the selling price is higher compared to the ICE cars. And the rest is coming from what I'm -- from the car lines that I've mentioned, new Corsa, new 208, new 2008, and Zafira Life and Combo. In terms of profitability, this year, the LEV has been a bit dilutive, but not that much, which is, frankly, a surprise to me compared to what we had in the plans before. And of course, it's been helped by the incentives that the governments have put in the system, which were much higher compared to what we had in the plans. In the time, we were very conservative, not taking into account the full incentives that were already announced, I mean 2020, well, many things have been announced, which have helped. After that, we all know that on the middle term, incentives for the sales of LEV will disappear. So the big stake is to -- well, to win the race between the cost of the LEVs on one side and that have to decrease and the fact that the incentives will decrease in the coming years and disappear because all the states will not be able -- well, the states will not be able to maintain that kind of level of incentives for -- provide in the future, that's sure. I hope it helps.

Yes. If then could you also maybe comment on the proportion of the LEVs you're selling that are actually -- you’re financing yourself or rather that people are buying outright? Has it followed the pattern you were hoping that most of these vehicles you would actually be financing, and therefore, keep ownership yourself?

Well, the vast majority is financed. But to be fair, we had extremely ambitious targets and to be much higher in terms of financing of LEV compared to ICE. And the difference is not as high as we were hoping.

The next question comes from the line of José Asumendi from JPMorgan.

José, JPMorgan. A few items, please. I’ll keep them fairly straightforward. Can you talk about the capacity you have installed at the Kénitra plant? How far have you got so far this year? That's question one. Question two. Can you talk a little bit around the collaboration you have on small cars with FCA? This is one of the existing collaboration projects that you signed before the merger. And so maybe you can give us an update how far have you been progressing on this topic. Third, China. Where do we stand? And have you changed anything in the last 6 months? Or is it maybe a little bit on hold? And then following up on Stephen's question on EVs. Can you just give us a bit more details behind maybe year-to-date pure BEVs sold, order backlog there, the same for PFs as well? Can you give us some absolute numbers in terms of the -- how many cars have been sold? And how big is the order book?

Okay. Maybe I'll start with the last one. Up to now, our weight of LEV indices are 6%. Within the 6%, a bit more of -- we are like 60% BEV and 40% PHEV to make it simple. The order book is at a very significant level because it covers more than what we need by the end of the year. So -- and the dynamic is good on the BEV and PHEV. You remember that maybe our -- sorry to repeat myself maybe for some of you, but in the past, we had said that we could go to the decision to limit ourselves on LEV at the end of the year for profitability reasons. But as I've just mentioned, the dilutive effect is much lower compared to what was expected. So we are not limiting anything, and we will let the things flow naturally as the customer are asking for cars. In terms of -- well, for China, that was your third question. In the last 6 months, the big item was the sale of the Wuhan plant, Wuhan 1 plant. So it means that we have made a significant progress in the reduction of capacities. You remember that in DPCA, we started -- well in China, we started with 5 plants. We've sold the Changan 1. We've closed the Wuhan 2 in DPCA, and we sold the Wuhan 1 which is something that was a very significant cash-in that allowed to reduce the debt of DPCA, which was an important thing. After that, we've got 2 plants left, and we've been working on the reduction of fixed costs. But it's also fair to say that we've worked a lot on the planification of what will be Stellantis in China because it's probably not reasonable to think that we will continue with so many brands, so many platforms, so many car lines in Stellantis given the volumes that the combined entity is doing. On the FCA, well, there is no -- I'm sorry, on the [ ON ] deal with FCA, there is no big news compared to what we had said in the past, where the projects are progressing normally. It's the same principle as we’ve used in the past to make some top hats from existing platforms and car lines, which is, of course, very efficient in terms of cost. But also very efficient in terms of time line, which is -- and time is of essence with the CO2 regulation. So nothing more to say other than the fact that the work is progressing normally. Your first question was about Kénitra. Well, the order of magnitude of the Kénitra volume, frankly, is around 60 -- yes, okay, Andre, gives me the number, which is 66,000 exactly cars this year. So it remains a low volume. But of course, the plant is designed to go to 200,000. For the moment, Kénitra is by far the best plant in the group in terms of manufacturing cost. In the future, we also have India with an extremely competitive cost. So it's part of the work that we are doing to improve the manufacturing cost of the company by changing progressively the footprint but without generating some social drama, I would say.

Philippe, one question -- well, a follow-up, please. On Opel, do you expect an inflow from an asset sale real estate by the end of the year, a meaningful one, maybe 0.5 billion or so?

The U.S. -- sorry, on Opel, if we are expecting a positive inflow of what?

Of as an asset sale, real estate asset sale possibly.

No, we don't expect anything significant in terms of asset selling of Opel Vauxhall.

The next question comes from the line of Charles Coldicott from Redburn.

I've just got a couple, please. So the first, on the combination agreement that was amended in September, I think you said then that you would consider a potential dividend before the closing of the deal in light of performance and outlook for both companies. Given the sort of good results today, and we'll see what FCA say, are you any closer to feeling that performance justifies that distribution? Or maybe, in other words, sort of what in your mind would be the justification for it? And my second question, there have been reports in the press this week suggesting that the antitrust approval is getting close now. I know you've said today that you expect the deal still to close before the end of Q1. But I'm just wondering, is there any viable prospect that the deal could close before the end of 2020?

Well, we've not commented on the antitrust. And it's fair to say that we have a -- we just confirmed that by the end of Q1 2021, we will have closed. And there we only can say that we've got a very high confidence in the fact that it will happen. At that, let's -- well, we are not the master of the clock for all these regulatory approvals. We can -- what we -- what is in our hands is to be extremely fast and to take the necessary decisions to answer the regulatory authorities to provide them the -- sorry, the information they ask us, but -- so that is not in our hands. So I can just -- sorry, give the same answer before the end of Q1 2021. You've probably seen that the limit for the answer by the European Commission on the antitrust is early February. That's the ultimate deadline set by regulation, they can -- they have to respect. On the EUR 1 billion dividend that was indicated as a possible in September, well, when I see the development of PSA in Q3, of course, it's a very positive one. September has been a very good month. We've got a very high order book. So all that is very positive. We will see this afternoon what are the results from the FCA. And with that, the other factor is, of course, the development of the COVID situation. What we have said is we would see in the Stellantis situation what -- where is its financial position. So let's see the development in the coming weeks. I think it's very early given the external context to say anything more now. Sorry for that, but we are working in such an uncertain external context that I cannot give you a real sense on that. The only thing that is a fact is Q3 was very good.

The next question comes from the line of Demian Flowers from Commerzbank.

It's on SG&A actually. So in particular, you cut your SG&A a lot in the first half of the year for obvious reasons. And I wondered how much of that lower level of SG&A is sustainable into the second half of the year? That's the first part. And then maybe on fixed costs overall, and given your encouraging comments that you made earlier on the Q4 production, could you comment on whether the second half 2019 profit level, margin level would be a good guide to the second half margin level this year?

Well, on SG&A on the first half, we had the continuous improvement that we're doing in particular with the synergies with -- between PC and OV that continue to give improvements. You have -- I've stated various times that one of the factors that allows synergies to kick in is IT because months after months, we continue to transfer IT systems from the GM legacy to PSA IT systems. And of course, it helps a lot. But it's also fair to say that in the first half, we had in SG&A, 2 factors. First, in March and April, we nearly completely stopped fixed marketing expenses. It was -- we adapted to the level of statement review, which were extremely low. So this, you could consider that during nearly 2 months, the level of [ SME ] may be like minus 80% compared to what it is normally. And after that, we had the impact of short work in major countries for us like Germany, France and Spain and the U.K. So -- but mostly Germany and France. So this is not repeated. And this part is not repeated in H2. After that, for the profitability of -- I would say, in the fixed cost, 2020, if you remove the exceptional factors that I've mentioned, the fixed cost would still be reduced compared to '19. And it's a permanent fight against the fixed cost. And the absolute value without the benefit of the exceptional things would be inferior in 2020 compared to '19. So basically, in the second half, we are trying to come back to the model that we had before the crisis. And that we are currently working on.

The next question comes from the line of Tom Narayan from RBC.

Yes. Tom Narayan, RBC. I'm sorry if I missed this in the prepared commentary. What was behind the delta on Slide 6 with the volume country mix down 6.8% and the sales volumes down 12.7% in Slide 3? And then the next question I have is, if you're selling 60% BEV and 40% PHEV year-to-date, clearly, there's a strong demand for BEVs. One European competitor is aggressively pursuing a full BEV approach. I think 37% of homes in Western Europe are single-family, noncity, where charging can happen at the home. You only need 6% EV penetration now and it gradually creeps up. Why not pursue a full-electric BEV strategy? Those are my 2 questions.

Yes. Well, on the second one, we -- the market for the moment is around 2/3 BEV and 1/3 PHEV. You've -- so we are a bit more PHEV than the market. You may have seen that in last July, we announced the eVMP, which is a new platform that is completely dedicated to best performance. It's designed to be a state of the art performance. So we consider that we need to, of course, to be with state of the art performance in BEV because there is no doubt that the future is in electrification. After that, what is the exact allocation between PHEV and BEV, it's very difficult to say because we all know what are the pros and cons of the PHEV. So we -- in our plants, we will have something that is a rather similar compared to the market in terms of weight of BEV and PHEV. And well, let's observe that in 2020, when we started the year, our offering BEV was very significant compared to the competitors. And that's what's helped us to be compliant from the first month. And I don't think that any other competitor has claimed to be compliant since the first month of the year, et cetera. So definitely, the move towards the BEV we are accelerating on top of the new platform. I can remind that we've decided in the past months, vertical integration on the battery sales with the joint venture with Total/Saft. We've made a move on the e-motors. We've made a move on e-gearboxes. All that in a joint venture mode. So definitely, we've taken a stronger direction towards the vertical integration. But even the competitors that you mentioned, they've got offer in PHEV too. So except Tesla, that is a full BEV, most car makers have a mix between the different technologies. And of course, the percentage can vary a little bit. But I don't think anybody knows exactly what is the perfect mix. Sorry, on your first question, yes, it was on the revenue bridge and the fact, if I remember well, that our volume on country mix is only down by minus 8% when the new vehicles volumes are down 12%. Is it correct? That's your question?

Yes. Yes.

So basically, you've got the impact of the used cars business, which has grown by more than 15%, and that helps to compensate the fact that the new vehicle were down in -- very significantly. And the performance on the used cars were -- by our different entities, and in particular, Aramis, which is our Internet subsidiary, PSA Retail, which is our own network plus the normal activity on the works of used cars.

The next question comes from the line of Henning Cosman from HSBC.

It's Henning from HSBC. Just 2 follow-ups left for me. Thank you for discussing the revenue dynamics of the LEVs and also the pricing to some extent. I was hoping we could talk a bit more about how that materialized in the EBIT bridge as well. So with the better pricing now, and I think you suggested that the discounts, thanks to the incentives, were maybe a bit lower than you may have budgeted earlier. So do you think between these 2 things, the price and that enrichment bucket together, just qualitatively, can then turn positive in the second half? Or is that not really -- is the LEV effect not materializing in that bucket? Is that inside the mix bucket? If you could just discuss that qualitatively a little? That's my first question. And then the second question is just to come back to the merger again. Can you just say if there's anything stopping you from pursuing the merger or executing the further technicalities of the merger after the European Commission approval? So would you, in any case, have a lot of other things to do that make you only really conclude it in Q1? Or can it, in theory, be brought forward once the approval happens?

Yes. Maybe I'll start with your second question. There are many technical things to do, it's a -- this process is extremely -- well, needs so many people, it's very difficult from an administrative point of view, but it's not questions that we've got doubt that it will come to an end and a positive issue. It's just long because it's a lot, a lot, a lot of filings. But once the European Commission has given its final outcome, there is nothing that could make us derail the merger. So it's a question of being the fastest as we can from an administrative point of view, but there is nothing that makes me worried about the fact that this merger will realize.

But in your mind, it's basically just whatever number of weeks, starting from the approval that it will take you after the approval has come through. It's just basically that's what's stopping you from starting just to go through the motions on what remains.

But in fact, you've got different -- what makes the timing is not only the European authorities. You've got all the regulatory approvals from antitrust perspective in all the jurisdictions, and we still wait for all their approvals. After that, you've got all the filings, with SEC in the U.S. with AFM in the Netherlands. Well, I just mentioned this, but a lot of other things to done that are administrative. So we definitely confirm the time line by the end of Q1 2021. But there are several processes, administrative processes running in parallel. And I'm not able to say which one will be the leading one in terms of timing. So that's the day when we convene the AGM, you've got a good idea when it comes to, of course. Sorry, your first question was on EBIT?

Just about how the -- yes. Yes. And how that materializes in the EBIT bridge, if that's in the price enrichment bucket? Or if you see that in the mix bucket and how the level of incentives compare to your original budgeting about how much discount you would have had to give? How that may affect that either bucket in the second half as compared to the first?

Well, in the -- when we will present the full year 2020, we will see the impact of the LEV in the product mix bucket. On the price bucket, we put the evolution of the price of existing cars. So for example, in 2022, we will see the evolution between -- sorry, in 2021, we'll see, for example, the evolution between '21 and '22 of the pricing of 208 electric cars, for example, that will be in the price. But at the end of 2020, the impact of introducing the LEV will be in the project mix bucket. And after that, if you launch a new car with a margin that are not too different from what are an ICE, well, it comes positively in the product mix.

And the enrichment part of the LEVs is also inside the mix bucket itself, the netting of enrichment?

In fact, we don't consider it a net enrichment, we consider it's a launch of a new car. And it's the launch of a new car, the BEV. So it fully goes into product mix.

[Operator Instructions] And the next question comes from the line of Pierre Quemener from MainFirst.

Pierre-Yves Quemener, MainFirst speaking. Actually 2 questions. I need to come back to the 7% stake in Faurecia that you might dispose ahead of Stellantis creation. Two questions -- 2 parts, I guess. Would Stellantis have needed to launch a full takeover process if the 46% stake into Faurecia would have been transferred from PSA into Stellantis? So that's the formal part of the question, I guess. And second part could have a hint of how would you be keen to get rid of that 7%? Would it be -- could it be a distribution? Could it be a block sale? What do you have in mind for the up to 7% stake reduction in Faurecia?

Well, all options are open underway to dispose the 7%. And relating to the takeover -- well, if Stellantis takes control of Faurecia, normally you have a takeover process and you got -- while it's a bit technical that, but let's say that with what we're doing, we are comfortable that we'll have a waiver from the AMF to avoid the necessity to have a take home.

So you need to be below 40% at the time of the [ discretion ], right?

Well, you're just focusing on one thing, which is the takeover with the AMF. But in fact, the question is related to all -- well, to many authorities and it's also a question with the antitrust in particular. So it helps on various trends.

There are no further questions in the queue, so I'll hand back over to your host for closing remarks.

Okay. Yes, it's 9:27. Well, thank you for attending this call. I think the main message is to -- for us, the 2 takeaways, I would say, is we are fully focused on 2 things: delivering a robust financial quarter in Q4 based on the high portfolio of orders and the continuous improvements on fixed and variable costs, which remain a high focus. And second one is, of course, preparing the closing of the proposed merger to give birth to Stellantis and that before the end of Q1 2021. So with these 2 takeaways, thank you very much for all your questions, and I will be happy to share more in the future. Goodbye.

Thank you for joining today's call. You may now disconnect your lines.