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

Great. It gives me enormous pleasure to kick off the automotive part of this industrials week with the Stellantis CEO, Carlos Tavares; and CFO, Natalie Knight. I think everyone in this room can appreciate the outstanding performance of Stellantis since the creation of the entity. And as a result, it gives me great pleasure and a great honor to have you here with us today.

We're going to start with a few questions from myself, and then we will open the session to a Q&A from the floor. Obviously, we will need to be mindful of time, so I apologize in advance if not everyone gets to ask a question. Carlos, I really want to start off with a question, which I think a lot of investors in this room have. You are leading the industry in terms of the margins. You are achieving margins which there's no historical precedent for and which your competitors also seem unable to achieve not just in North America and Europe but in other parts of the world. What are the key things which Stellantis, in your view, do differently to other automotive companies?

Well, that's a $1 million question, indeed. Let me try to give you some hints about that. I think one of the reasons is that we never stopped working on the breakeven point of the company. They are not good moments and bad moments. We continuously work on the breakeven point reduction, which has created a culture inside of the company of wise and demanding use of capital. The company is now trained to use your money in the most efficient way because that's what we have been doing for the last 10 years. And now it's part of the culture, the fact that we don't waste the money and we always look at using our money as if it was ours and it's not as yours. So that's one. I think there is a culture of reducing the breakeven point, which is now there for a while. Now it has ingrained -- is ingrained in the organization. The second thing I would mention is that we are a very diverse company, much more diverse than our peers. We have 170 different nationalities. And we have a 3-dimensional matrix organization. We have the brands, the functions and the regions. And these 3-dimensional matters organization creates positive tension at the connecting points where we always have to think cross-functionally how to beat the competition instead of maximizing the KPI of a given silo. You can maximize the KPI of manufacturing or the KPI of sales and marketing and yet you don't beat the competition. So it's good that we use the 3-dimensional metrics organization as find out in a cross-functional way how we beat the competition. And this is also something that we are using as a management tool for a while. It's not rocket science, other car companies are using the same organization, but of course, the beauty is in way you [indiscernible] to create the positive team spirit and the racing spirit that is the core of the core of the core of Stellantis. That's the second thing that makes a lot of difference. And the third one is that within the 3-dimensional markers organization, there is a lot of breathing space. There is nothing free in terms of strategy. The strategy is driven from the core and the top of the company. But in terms of operations, we give a lot of breathing space to the regions, a lot of breathing space to their brands and to the functions as long as they agree on the right formula to beat the competition, we let them do that. And you have seen through the numbers that being Latin America or -- after Middle East, we have a very nice profitable growth stories. And I think that those very nice profitable growth stories come from the breathing space that we are giving them through the 3-dimensional matrix organization, which is, at the end of the day, a combination of a very strong lead on strategy and some breathing space on the operations for each region, each brand to operate in the most efficient way. Those are 3 reasons I could have mentioned to you. One fourth one, which will make you smile is that we are very unpopular. We are very unpopular. We are very demanding. From time to time, we make decisions that people don't like. At least they don't like those decisions now. They will appreciate those decisions 2 or 3 years down the road, but we don't seek to be popular every time we make a decision, we seek to make the right decisions for the company. That's my answer to your question.

And just to be clear, that's not popular with your customers or the investment community that's with some of your stakeholders?

Absolutely, absolutely.

I think one thing which the investment community believes today is that we're in this incredibly strong environment with still very healthy pricing given the semiconductor shortage and that as a result, auto companies are over earning. I think actually, if you look at the last 12 months and you look at the companies with higher margins than what they achieved in 2017, Stellantis is the standout. And a lot of other companies' margins aren't actually higher than they were in the past. But how would you characterize 2023 as a year? I know at the first half results, you mentioned there were things operationally, you could have done better and could have been improved on for this year.

2023 is first a year where if we are honest with ourselves, we would say that we are very far from operational excellence. It's quite clear that we have been operating with a certain number of flaws in terms of outbound logistics, in terms of sales and marketing, in terms of pure supply. It's -- when you look at it from inside and looking at what excellent operations mean, we have been not so good. That is quite obvious when we look at it from inside. But of course, as we know, this is not an absolute game. This is a competitive game. This is how good are we against the other guys and how good are we at managing our own limitations. But on the pure sports perspective, I would say, looking at it from inside, it's not a good year. I think we should have done much better in terms of running a certain number of operations. It is how it is. We see -- when we compare ourselves to the other guys that, obviously, the other guys also have their own flaws, and they are also struggling in some cases to fix them. But it has been a year of a fight. But it has been also the year where we are not talking about the Darwinian period. We are in the Darwinian period. So ladies and gentlemen, it has started now. It's not about, watch out, there is a storm coming, watch out, you need to change, watch out, watch out. Now it's over. Now we are in. And that is something we love because we are, as you know, racers, and we are in a competitive game. And if the environment becomes more difficult, then it's going to give us more opportunities to make a difference. And we like to make a difference from that racing mindset perspective. So to answer your question, 2023 is by far not a perfect year in terms of pure operational excellence by far. But this is also a year where we have made some good things like we gave EUR 6.6 billion of return to you, which I think is a good thing. We fixed some of the limitations we had in China with a strategic Leapmotors deal. So I think we have done a certain number of things. I think we are on a good trend to execute properly the first leg, the first 3 years leg of the FY 2030 plan. So we are on that good track. We have created new businesses in software-based businesses. We have created new businesses in circular economy business. We have very nice profitable growth stories with the overseas club. So that's good from a strategic standpoint. We'll see the results in the next couple of years.

And you've used this phrase, Darwinian period many times in the past. And obviously, that does imply survival of the fittest and that certain companies will fail. How long do you see this lasting? And how soon could certain companies fail? I think, obviously, when we look at car companies making purely battery electric vehicles, very few of them are profitable. There are also some of your traditional ICE competitors who maybe also aren't making that cost of capital today. So what is the sort of time frame for this period enduring?

That's a great question, and I would like to answer stepping back a little bit with you on the following. Next year, we are going to have 2 very important elections, the U.S. Presidential election and the European Parliament election. The result of those elections is going to be meaningful to either the acceleration of the EV ramp-up or some kind of slowdown of that EV ramp-up. But depending on does it go on the populous side, on the progressive side. So it is very meaningful to be able to manage what could happen from those 2 scenarios. What we believe is that the guys who are using what we would call as a shortcut, the legacy business to fund the future are going to be the guys who are going to be in the best position to accommodate to those different scenarios because basically, we are doing very good money with the legacy business, already significant money with the EV business. But there is still a lot of uncertainty out there. And those 2 elections are going to be meaningful in North America and in Europe for the speed at which this ramp-up is going to materialize, which means that if we start from there, this Darwinian period can last for a significant period of time because you may not have a linear growth of EVs, you can have some kind of bumps on the road. I think it will grow, but it's going to be eventually bumpy. So it's bumpy, then the Darwinian period will be larger. If it's not bumpy and it continues in a linear way, the guys who are not able to make money with EVs are going to be in trouble very, very soon because if it's purely linear, with the amount of capital that you need to fund for products which structurally are less profitable than the ICEs, they're going to put themselves in trouble quite quickly. And that is, in that case, a shorter period of time for [ Darwinian ]. So I would say, if it's linear, you'll see it in the next I would say, 2 to 3 years. If it's non linear, if you see some kind of slowdown, then you will see it in the next 5 years, 5, 6 years. That's my estimation.

And you bring up a very important subject, BEV profitability. We've seen certain car companies break that out. And to be frank, the margins, obviously, are not particularly attractive and in many cases, are deep in the red. Can you talk a little bit about the BEV profitability at Stellantis today, how that maybe compares by region? And what you're doing to get that to the very high ICE margins you're already making?

The fact that we try continuously to levelize the margins between BEVs and ICEs, it's not new. We have been working on that for several years now. And I would say that we are achieving results. The first thing is that we are in the black, both in the U.S. and in Europe. Our margins on electrified vehicles are in the black. That's a good thing. We are closing the gap against ICE faster in Europe than in U.S. because we started sooner. But we are achieving results. And we see that all of this is going to be exciting. Why? Because we see that the offensive on BEVs can be Tesla in the U.S., can be the Chinese in Europe, is going to put a lot of pressure on pricing on MSRPs. So if you want to have good margins in terms of EVs, you have to be super sharp on costs. Because if you want to attract the middle classes, you need to have pricing at the core of the market that makes you profitable. So how to get profitable pricing at the core of the market is an equation that you can only solve if you reduce cost. And this is what we are reasonably good at. So you see that if the BEV comes to the core of the market, it needs to come to the core of the market because if not, we are going to lose the middle-class customers, and that's a big chunk of the market. So we cannot afford to lose the middle class as a customer base. So if we don't want to lose the middle class, we need to be at the pricing that they can pay for. And in a very simplistic way, it's EUR 25,000 or $25,000. If you don't make money, on that price point, you are in trouble, and you will be in trouble quite quickly. As you know, we have 2 ways to achieve that profitably. One we already presented, which is the e-C3 Citroen at EUR 23,300 that will be introduced next year, and this is a profitable car, fully LCC sourced but profitable car, done on the basis of the SmartCar platform, which is a low-cost platform that we have been working on for the last 5 years. That's one axis. And the other axis is with the Leapmotors deal, we are -- we are consolidating the Leapmotors business outside of China, which is starting with a sourcing point, which is 30% more cost competitive than anything you can figure out in the Western world. You start with a minus 30% and through an export company outside of China that we control and we consolidate, we are going to bring those Chinese cars to European markets in a profitable manner. So we have the Leapmotors Chinese brand to bring that minus 30% ex works cost competitive edge to Europe, and we have the SmartCar platform, which is a low-cost platform to bring products like the Citroen e-C3 that you have seen a few weeks ago. So this is going to be the big battle. The big battle is to be profitable at the core of the market because if you are not the core of the market, you lose your middle-class customers and you have to shrink your company. If you don't want to shrink our company, you have to be profitable at the core, and you have to be profitable at the core, the only way to go is to reduce your total production cost. So again, it's going to be a cost reduction story. That's what it means. And at that, I think Stellantis in a reasonably good position, if not a leading position.

You mentioned the Citroen coming to the market shortly. What are the other big battery electric vehicle products that Stellantis will launch over the 2024, 2025 period? And I think one thing which investors are always asking is how from the outside, should they be looking to benchmark the different competitive offerings? What are the -- we obviously don't get transparency on the profitability, but what would be the KPIs that you would be advocating people look at?

Well, that's a difficult question. In terms of product, we are blessed with a very, very strong product plan. As you know, we are absolutely passionate about cars. You can decide if it is a weakness or strength, it's up to you to decide. You can see through the third-party accolades that being passionate about cars helps the pricing power because it creates a lot of appeal, because you can only create appeal if you create emotion and emotion comes from the passion that we put in creating the automobiles. So passion supports pricing power. We have a very strong product plan coming. 75 BEVs within the time window of the plan. By the end of next year, 2024, we'll be at 48 [ EVs ] in the marketplace. We'll have many of them coming in the U.S. because we are just starting the U.S. offensive on EVs, whereas in Europe, we are already fighting head on with Tesla on the sales. This is what you can see today. So in the U.S., you start this year with a ProMaster EV that we are going to sell to Amazon as a first big customer. We continue with the seller large-based products, and you have Dodge products, you have Jeep products. You have Chrysler products coming. You have the RAM-1500 pure BEV and the Range Extender version, which is going to bring us a perfect coverage of the U.S. market. The pure BEV for the coastal areas and the Range Extender for the deep countryside states. So we are going to cover both kinds of sensitivities. And in Europe, it's the same thing. We'll continue to launch many smart car-based cars, which are going to bring BEV at a very competitive price point. And we start this year with the Peugeot 3008, pure BEV, 700 kilometers of range, one of the big cash cows of former PSA, and then all the other variants that come with the Opel version, the Citroen version and so forth. So the product plan in our company is what we love the most. I used to say, and it's very sincere, that the only problem I don't have is product. I may have tons of problems to solve, but there is one problem I don't have. I have 14, now 15 passionate brands. Each of them has a 10-year product plan and product strategy using all the technology that is on the shelf of Stellantis. And the brand CEOs, they pick what they need and they make their own vision. And we try to keep the brands at the core of their DNA so that they are difficult to challenge because they are at the core of the DNA. And then using that positioning at the core of their DNA, we try to cover the market in the most profitable manner looking at the profit pool of the market.

I think also I'd add because you said, how do you measure it? And I think that's always something people are interested in because it is qualitative on a lot of these things at the moment. And the first one is you see us executing in terms of the launch dates that we've talked about. We have some big wins coming in 2024 that are critical for success. I think the next one is you hear us continue to talk about, get excited about, quantify what's coming from our 4 common platforms. So one of the things we have that's different than other folks is the multi-energy platform. So it allows us to scale up, scale down if we need to, depending on how things develop. But one of the things that's critical is that you see us continue to roll out products on that. And then obviously, if you look at Europe, market share is pretty key because that's a spot where we're #2. We've overtaken Tesla, you should continue to see us strengthen the position.

You mentioned all the brands, and I also am a bit car enthusiasts, which again, maybe is not a good thing as an autos analyst, but I'm delighted to see brands like Alfa Romeo and Maserati continue. But I think a lot of investors do ask why do you need so many brands. And I think if we look at General Motors, maybe 20, 30 years ago, if we look at Volkswagen today, a lot of people are questioning whether this doesn't just bring complexity, which is very difficult to manage. How do you view, you touched on this in the last question, but why do you view all these brands as an asset? And how are you managing this complexity?

First, I agree that, that creates some complexity, and that creates also some opportunities. So I would like to share with you why I think there are opportunities there. The brand is very difficult to challenge when you position the brand at the core of its own DNA. If I talk about Jeep and I say Jeep is about freedom, and it's about outdoor living adventure. If I put my Jeep products at the core of this DNA, I'm very difficult, it's very difficult for our competitor to challenge me at this core DNA positioning. Of course, this is assuming that I'm doing the right job in positioning the brands where their DNA is and I sharpen the communication for people to understand it. So I could talk about Adventure and Freedom and outdoor living for Jeep. I could talk about build-to-serve for the Ram pick-up trucks. I could talk about the easy to use and the comfortable and friendly car for Citroen, et cetera. If I was able to position each brand at their DNA they would be so sharp on that positioning that they would be very difficult to challenge when they are positioning at their DNA. And then using the 14 brands, I can cover the profit pool in the most efficient way. And I'm going to be difficult to challenge because on its positioning, if I talk about the Italian [ Sportiva ] from Alfa Romeo, and I say it's an extended Sportiva because I bring more information and more data to the driver, then I will be difficult to challenge in that positioning. So that's the idea. The idea is put each brand at the core DNA, be sharp on that positioning, communicate in an efficient manner and be difficult to challenge on that positioning and then cover the profit pool with the number of brands you need to use, and that's up to the head of the regions to decide how many of the 15 brands they want to use in their region to cover the profit pool. For instance, we saw the other day, as you know, that we are growing profitably at a very fast pace right now in Africa and Middle East. I mean there are amazing numbers that I can share with you, 40% market share in Turkey, 20% in Morocco, 85% in Algeria. And then suddenly, in Africa, Middle East, I go to Middle East making a business review and what do I discover? I discovered that my market share is 1%. Then I go to South Africa and say, my market share is 2%. So imagine if we were able to make a proper job leveraging the power of our brands, how much business, profitable business can we create in GCC with Ram and Jeep. Huge, huge. How much additional business can we create in South Africa with Peugeot, with Ram and Jeep, huge. So the opportunities are immense, but I'm going to GCC not with Citroen. I'm not going to GCC with Peugeot. I prefer to go to GCC with Jeep and Ram, that's obvious, right? You just have to go there. Same on South Africa. So in that case, it's much easier to bring some of your brands that fit easily to the local market expectations than try to convince the market that Peugeot is the perfect brand for Saudi Arabia, which may not be, right, may not be. So in that case, you see that if you want to be a global player, the number of brands is not necessarily a penalty. Reversely, this is not dogmatic. Our position has been, as we create Stellantis, everybody has a chance. If they don't perform, if they don't deliver, then we will take the necessary decisions even that they are unpopular. But so far, our management style is to give a chance to the people that want to demonstrate that they are skilled in what they do.

Before we open it to the floor, maybe a few quick questions on the financials. Obviously, the guidance for this year, I think, is not in question. But Natalie, maybe you could just talk about how the underlying performance of the business has been in terms of profitability and cash flow in 2H relative to 1H, obviously, we've had the UAW negotiations and there are costs associated with that.

Yes. So I think this isn't a surprise to anybody. This is sort of the cyclicality of our business, which is H2 is always weaker than H1 in terms of absolute profitability and free cash flow. That's going to be the same, although we are tracking very well, as you saw in the third quarter. What I do think is important to note is if you look at cash flow, don't forget with the UAW. I mean that's something where we had -- I think we said in Q3, it was $750 million impact. We have the ratification bonus still coming. Those are things that obviously will also play through in the free cash flow. But otherwise, we continue to be very optimistic in terms of the position in terms of what we're doing from a profitability and free cash flow perspective.

And I think one question, which is obviously particularly pertinent in light of the General Motors announcement last week is around the balance sheet. Not really asking you to tell us today. But I think if we go back to last year, you had a Capital Markets Day and you laid out the strategy for the balance sheet. When can investors expect some kind of update in terms of what you see as the right level of net cash and gross liquidity for Stellantis? When can we get an update in terms of sort of the capital allocation framework? And how you think about it, particularly given you're new to the company and the company has already done many steps with respect to the working capital, the investment in Leapmotors, some of the strategic priorities that were outlined last year?

So I think what you'll see from us is a bit of a more information as we go through up to our Investor Day next year, which is, obviously, we're going to -- we're ending this year, and we've done, I think, big moves in terms of opening up what we see as potential in capital allocation and shareholder remuneration. You've seen the $6.6 billion between what we've done on dividend, what we've done on the share buyback, what we've done on Dongfeng, when that became an opportunity. When we look at going forward, we've got the doors are open in terms of what is the potential. We think there is definitely more shareholder remuneration and continued strength in that approach. However, don't expect from us that you're going to see a big whim, here comes something all at one time. Our approach is really we want to do it in a much more consistent approach as to how do we deliver, I think, optimal returns on a medium- and long-term basis for the business. The other part that you allude to, which I love, is it's not just what are we going to pay out, but it's how is -- what's the structure and how are we doing it? And I think what we are -- we continue to be very, very focused on is how do we get this efficient balance sheet where we're focused on having working capital that is, I think, more competitive with our peers, where you see that we are prepared for opportunities if they open themselves up in terms of the marketplace. That's always something that's a good one, but also that we really have the ability to make sure that we're, I think, looking at a consistent approach, whether it's dividend, share buybacks in terms of really focusing on the shareholder remuneration as well.

Great. Well, with shareholder remuneration as a topic, we'll open it to the floor to hear from some shareholders. So if you have a question, please go ahead and raise the hand. Julian. Mic or if you can speak loudly, whichever you prefer.

I'll try to speak loudly. Thank you very much for the presentation. Just wanted to go back to your comments earlier about it being a Darwinian period. And some of the comments around the sort of electrification. And you mentioned there are 2 key events next year, the Presidential elections and European elections. And it just strikes me that, that must be a nightmare to plan for because there's 2 -- there's a BEV ramp, which can just vary depending on public opinion and how that drives politicians and the outcome of that. So how do you possibly plan for something which is so uncertain and can move around. And obviously, if it moves faster or slow, it has big implications for returns, as you mentioned?

Well, surprisingly, it's not so difficult, surprisingly, and I will try to explain why. First, because we make the assumption that what could [ variate ] is the ramp-up, not the fact -- not the destination. The destination is not -- we are not assuming that the destination is going to change. We think electrification will go on. Yesterday, I was in the inauguration of our plant for fuel cells in the Symbio joint venture. We just consider that there may be now a second step, which is much more competitive on technology than what it has been so far. You may have the battery EVs. You may have the fuel cell EVs. You may have hydrogen injection in the combustion chamber, you may have in fuels. So we still have competition on technology coming. So we are thinking, hopefully, right, that the destination of electrification has not changed. So we are moving there. which means those events you mentioned could create a bump on the ramp-up, but a bump. So far, using your money, we have been quite cautious by covering up to '27, '28. We are ready for a very steep ramp-up up to '27, '28. And we know that if the ramp-up is linear because the elections go on the progressive side, then we have to put additional investments for after '28 to catch up to the full -- with the full sales. But at this stage, we are ready to accommodate if there was a bump on the road and Natalie mentioned that, which is also important, we have multi-energy platforms. which means we are not throwing us on the cliff. We have multi-energy platforms, which means that we have highly competitive electrification tools as we are competing with Tesla, not only but mainly with Tesla. So we have demonstrated the competitiveness of our technology. We have the multi-energy platforms, and we have invested in capacity to '27, '28. So we are able to accommodate because the key question is the destination changing or not? And at this stage, we did not plan on a destination change on the electrification path. We are just accommodating on what kind of bump could we have on the road and how do we make sure that we don't put cash in capacity that we don't use. That's what we are trying to do. So it's not so difficult at the end of the day.

I think I was going to say, I think I'd add also that one of the things as sort of a new person of the business that I see that I just really think is part of the DNA of this business is we benchmark relentlessly. We focus on cost relentlessly. We have an approach which is everything that we can control, we are going to control. And that means when bumps in the road come, we're ready and when opportunities are there, that's the upside. So that's the piece where when we look at 2024, I think we're probably taking a more conservative, more concerned, more ready-for-fire approach than some of our peers because that's what we see and what we want to be ready for. And that means anything that comes as more positive than that is an opportunity.

That's where the Darwinian period is so exciting. Because you have 2 kinds of guys. You have the guys who cannot make EVs profitable. And you have the guys that broke down their company and they need to fund big investments on electrification. They just forgot that you need to fund the future with the existing profit. And you need to accommodate the transition. The transition, as I answered, 3 to 5 years, up to 10, that's where we are. I mean you have to survive 10 years with a good profitability and funding for your future. That's what we are trying to do.

Great. Should I get [indiscernible], and then I'll try and squeeze in [ Harsh ] quickly before the end.

You have been investing in pricing over the last 5 years. How can you make sure that your independent dealers are disciplined on pricing with inventory rising? What's the secret VCP for that?

First, I think we need to recognize that we are not so good at pricing. I think we are not bad at having a good understanding where the market is in terms of transaction price value adjusted KPIs. But there is a big difference between the MSRP and the transaction price value adjusted KPI. So we need to continue to be more precise on that. We need to bring the leasing on the pricing power tools, which currently is not. So -- because the market is going more on the leasing side, we need to be more sophisticated in the tools we use, and we are working on that. So once we include the leasing, and we have a dual look at MSRP and transaction price value adjusted then perhaps we'll be reasonably okay. While the dealers is not such a difficult thing is it depends how much money you give them because they will be eager to give away their own margin and end up in the red. And at the end of the day, they will ask you money to get rid of the metal, right? So it's about controlling their own profitability through the volume bonus and the quality bonus and the dealer margin that you give them. And we are adjusting at each new car launch, we are adjusting in the direction of being more variable in function of quality and in function of volume to make sure that they stay honest on that front. So far, it has been working. We are going only in Europe to change the distribution model in a very significant manner with the new retailer model. This is going to give us the opportunity to be in total interface with the customer. We are going to go up to the delivery to the customer. We have made all the necessary decisions to be totally in control of the outbound logistics. We will control our outbound logistics. We have learned this the hard way a few months ago. And we have already made a decision. So we are now going to create a company that is already created that is going to be the foundation for that control of the outbound logistics, and then we'll hand over the cars directly to the customers, and we'll pay the service to the [ leaders ]. That is going to be also an excellent way to control the pricing because you are in charge of the pricing and you keep the control of the pricing. That's what we have decided for Europe. We did not decide that for the rest of the world. We'll let that decision be discussed and made at the level of the region. It's not a corporate strategy. It's a tactical move. I believe that what is going to be done in Europe is a game changer because of the quality of the customer journey. We stopped using the customer as a ping pong ball between the dealer and the OEM. We only focus on the customer. We try to make that journey physical or digital at the best possible experience.

So it's fair to say that inventories won't go back -- independent dealer inventories won't go back to pre-COVID levels. I think we are still 15% below this level. We are back to a normal level. I think as we said, Q3 was stable compared to Q2. But what you view, I mean, I guess you -- based on your aspiration dealers, independent dealers, it will go down, not up from here?

We all know that having too much inventory at dealer level is not a good thing, we all know that. What I see is that we need to do a better job at delivering the cars. I think the delivery lead time is not very good. I was talking to you about the fact that I believe we are not excellent in terms of operations. One of the things that we have is that the lead time between the moment where the car reaches the yard of the dealer and the moment where you hand over to the customer, that lead time is much too long, much too long. But several times too long. So that's where there is a big, big improvement to be done, which is to increase the delivery capacity of our dealers to move the cars. I'm not talking about selling them. I'm talking about the cars that reach the yard with a customer label and they have to be delivered. So I'm not talking about the cars without customers. I'm talking about the cars that you already sold. You just have to take the car and deliver the car. And when you look at the numbers, the lead time in number of days, it's unbelievable how much potential there is there. And if I can accelerate the pipe at the delivery step, delivery gates, then everything else can flow in a more efficient way because as you know, a dealer is looking at the yard and say, how many cars we have, I have too many cars, they have to move, right? And then if they -- doesn't move the cars then you cannot bring more at the end of the day. It's very basic. But when you make the measurement, it's very, very stunning.

I think in the interest of time, unfortunately, we're going to have to call an end to it here. But Natalie, Carlos, thank you so much for joining us and for attending this session. And thank you very much to everyone for attending the conference today. I hope you find it a productive use of time. Thank you.

Thank you.