Traton SE (8TRA) Earnings Call Transcript & Summary

Good afternoon from Södertälje. It's a great pleasure to have you all here this afternoon. I would also like to welcome those who follow our event via the website. Thank you all for joining us today. And to those who have been with us this morning, I hope that you really enjoy the interaction with our experts and the teachings and all the topics you learned a lot, hopefully. And ultimately, of course, the test drives and experiencing yourself how it feels to drive our trucks and our buses. Also for the afternoon, and you can see it here, we have put together an interesting program for you. Our Board members will present to you the TRATON GROUP, but also all our brands, Scania, MAN, VWCO and our newest member of the family, Navistar. Unfortunately, Mathias tested positive yesterday morning. So we have to be flexible, and we have to adjust and we will. I'm glad to say that Mathias is fine. So he will be able to take part virtually. You will see him in 50, 60 minutes. We will also have 2 Q&A sessions during the presentation time. There's one after the Navistar presentation, and there will be another one in the end, and we will come back to that later. In addition, we will have a break after the presentation of Alexander on MAN. But before we start, as always, let us have a look at disclaimer. You will probably be very glad to hear that I'm not going to read this all now. But let us take it to the records for the purpose of this event. And one last thing, if I may. Please turn off or mute your mobile phones, if you haven't done so already. And now I wish you an insightful afternoon with TRATON. Christian? The stage is yours. Thank you.

Great. Thanks, Lars, and also from my side, hi, everyone, again, and all the newcomers on line. So TRATON might be a rather young organization, but -- found in 2015, but quite a lot has actually happened since the establishment and also for me personally, by the way. But the question from someone was what was your career? Well, it was basically 27 years in Scania -- or 25 years in Scania, doing as everyone in Scania, and then I was thrown into this TRATON idea as COO and then came back as CEO of Scania last May and then since October, also as CEO of TRATON. So you're absolutely allowed to ask how the h*** that happen. I also don't really know. But it has happened. So I think I'm now the right guy to explain to you the background and the strategy going forward. So a lot happened during this first period of the company. We did the IPO because we needed some more leg room from Volkswagen. We did the acquisition of Navistar because we needed to address the North American profit pool. We had to do the squeeze out of the MAN double-layer holding. It cost us a lot of money, but it was necessary to create efficiency internally. And we created a joint venture with our fuses competitors in order to start to address the charging market and drive actually both politicians and the rest of this ecosystem forwards to get electric vehicles on the road. And we created, which is perhaps the most important synergy project so far, the common driveline, which I will talk more about. So looking back what -- when we set out to create a Global Champ Strategy -- the Global Champion Strategy, we put up a number of questions, and I think they were the right ones back then. The first one was, how do we develop, as a group and then an own entity, and I think the IPO with its first step, the 10% free float? What's the answer to that? We then talked about how can we achieve more scale, more synergies between the brands? Well, the answer was the creation of the FPP project, so the common driveline addressing 60% of the value of a heavy commercial vehicle with an ICE engine. And then we talked about where are the profit pools, and where are we not present? That we cover Europe, we cover Latin America very well. North America, that's #1. And that's why we started the alliance with Navistar, which ended up in the acquisition 1st of July last year. And then we asked, and that's pretty funny. Will electrification and autonomous play a role? What do you think? Today, that's rather obvious. And luckily, we came to the same conclusion. It will play a role, and we started to set out our product plans for the first battery electric vehicles and also the autonomous technologies. But, today, it's really about looking forward and trying to look more into the future and really see, can we have rather 8- or a 10-year perspective because that's where TRATON, as a group, should be. And then you will hear more from the brands, and that will be a little bit more short term, looking in what are we perhaps doing as from now until 5 years, but with a TRATON perspective, we should look further ahead. And 3 and -- the 3 most relevant questions for us right now would be the ones you see on the screen. So how can we ensure that everything we do is driven by sustainability and by the Paris Agreement. Secondly, how do we -- and I think perhaps the most important for this audience, how do we create more value? How are we more consistent and disciplined in creating value for the shareholders? And finally, how can we adapt to the new business landscape, with new business models, with autonomous electrified connected vehicles to cope also with the start-up scene that is challenging us here. So these are the 3 basic pillars of the TRATON strategy, and I will take you through them one by one. And then, as Lars said, we will open up with a Q&A session, where I love to have your questions and have a dialogue going on these pillars. So let me start with the first pillar, the responsible company putting sustainability as top priority to everything we do. For our industry, it's, of course, predominantly about decarbonization. That's where we have the biggest problem. We represent 5.2% of the world's CO2 emissions altogether. But beyond that, looking, as I said, 10 years ahead, there is something beyond zero tailpipe and that is circularity. So we will have to cover that, and I'm coming back to that as well. People and diversity, and Annette, you were joking this morning, and I think you made that point very well that we are working very hard to become a more diverse company and that comes through inclusion, where everyone counts. Let's start by looking a little bit deeper into our strategic approach then towards sustainability. As I said, we put it at the core of our strategy. It also means that we're, in a way, reusing the idea in Scania already from 2015, where we said that this will be the key to be profitable, attractive, getting financing, whatever you want in the future. And we do it not as a separate project or a side function in our companies. It's an integrated -- has to be an integrated part of what every collaborator does every day of the year. So that's the approach. So it's then building on that everyone needs to have the understanding, how do I, in my work, influence our journey forward when it comes to predominantly then the CO2. Footprint, and of course, that's CO2 footprint and that journey needs to be anchored in science. That's why we so much like the science-based targets initiative, but let me come back to that in a minute. And then we have learnt from many of you, by the way, that we need to improve when it comes to our transparency in all the ESG areas. So here, we have decided to take a bigger step and really become the benchmark when it comes to transparency and ESG data disclosure. And of course, we take in the social and governance area into the holistic sustainability approach. So, for today, let me focus on the E in the ESG because, again, I think the climate challenge and the global warming is our most urgent and imminent priority as an industry and as a group. We commit to the Paris Agreement, and I am actually proud to say that, not only do we have Scania as the first brand in the industry claiming the leadership and the drive towards sustainable transport systems, but now also MAN, who has both applied and been approved by the science-based initiatives. And on top of that, having both Volkswagen and Navistar decided to join in. Meaning that we will, within short, have the whole group on a scientific-based model following the Paris Agreement towards the 1.5 degree maximum. And that's super important because it forces all the parts of our value chain to actually start to measure. So it doesn't matter if you're a local workshop here in Södertälje serving a few customers, or if you're running an assembly line or a foundry, you're in here and you're being measured and we need to show everyday progress. So super powerful tool. And just a few numbers here. They are ambitious. If you take Scope 1 and 2, our own impact and our supply chain impact, we're talking on Scania, a 50%. We're talking on MAN, a 70%. Why are the different -- numbers different because we have different starting time. So I'll let -- [ Andreas ] if you start later, you also have to do more faster, right? So there is no magic. But we're following the same curve. That's the target. And if you think that is ambitious and then you look to Scope 3, that seems less but it's actually even more ambitious because that goes about the usage of our products. And the usage of our products is not really in our hands. It's within the hands of our customers. And to reduce 20% of the entire rolling fleet or 28% MAN is a huge task. And here is a picture that I like very much, trying to show some of the challenges facing us on the user side. So from where we are, basically today, you can see that the light blue and the big circle on the combustion engine side here is how the CO2 is toed from the total system is coming out through the user phase. Now if we would manage to get all customers over to BEV vehicles instead, that's the middle circle with the electricity mix of Europe a couple of years ago, but just to simplify. And then you can see, well, it's -- proportionally, it's smaller, meaning that we do decrease the CO2, but of course, not as much as we want because batteries produce CO2 emission in the production phase, but predominantly because the electricity mix contains just too much [ for sale ]. But if we are optimistic and look forward and say, Europe is going to deliver on the Fit for 55%. Europe is going to have a completely different energy mix by 2030. And this is actually what is predicted to happen not only from the political side, also from the energy suppliers, and we talk to a lot of them. Then you can see the size of that circle is very, very small, which is great news. But you can also see that the dark blow side, which is our own production footprint, suddenly becomes dominating again. And that's why we need to start to talk about circular and think about how do we source our battery, how do we produce our steel and make sure that, that also -- or else we will get stuck there. So just so you see which are the step on this long-term journey. We believe a lot in battery electric in the TRATON GROUP and that goes for all our brands. And this picture is trying to illustrate why we are so much in favor. I don't know if it's looking complicated, but the basic physical fact is that, starting with green energy, green electricity, which you [ use ] regardless if you're going to transition through hydrogen and a fuel cell or if you go into a battery and then go into an electric motor, it's the same. You will need 3x more green electricity to propel the very same vehicle with the very same charge. And if you assume that, that electricity will continue to cost something, I think it's going to be very hard for the customers to jump on to the hydrogen train. So why are then so many in our industry talking about hydrogen? Well, there are, of course, reasons. One is payload, 4, 5 tonnes less, of course, there are applications where that makes a difference. Faster fueling time or whatever you call it, charging versus filling up with gas. Of course, there's an advantage for the fuel cell vehicle. But for that to offset 3x higher cost for the energy, I think it takes a lot, and I think that's going to be a niche product. You can just imagine how much money and effort we put today into the [ question ] engine to save 1% of fuel, and what a tremendous advantage we get in the market when we manage to bring a technology that gives 1% fuel saving. And then you can just think that, well, 1%, what is that compared to 3x. So that's why we remain skeptical to the volume development of hydrogen, but it doesn't mean that we're not developing it. So we classify technologies from core technology, which we want to control in-house, meaning that we develop and we manufacture over to strategic, which means that we need to have good insight into it, good control over it, but it can be done by partners to basically commodities, which we always buy from someone else that manufactures it. And we have classified the fuel cell vehicles as strategic, meaning that we today work with a lot of partners. And we're learning a lot. We are with vehicles in the market, both in Norway and in Sweden. The first [ Scania's ] are rolling, and we are partnering up with a number of fuel cell suppliers to evaluate which is the best way forward here, but it's going to be a partnership approach. And I love to discuss. I know there will be questions on this in the Q&A. So I'll have to discuss more of it going forward. So the transition then over to what we believe will predominantly be battery electric, it's going to happen exactly like this. I'm just joking. But here is an illustrative way how we are transitioning towards 2040, which is rather soon, with an absolute majority of battery electric. But you can see that there is -- well, there is a yellow part that turns greenish. We're trying to illustrate that, that remaining part of combustion engines will be fueled with alternative fuels. We're talking biofuels, we talking biogas, we're talking HVO, we're talking synthetic fuels. Because there are simply -- just like with the hydrogen, there are simply use cases. There are simply geographies where this just fits better or where the preconditions for battery electric are not in place, which are these preconditions? Charging, of course, but more so the business case for our customers. And then there might, of course, be legislative things that steer this in different directions, and we don't really know. So this is an adoption curve that is, of course, very generic, but it also tells you that we believe, already 2030, already in 8 years, somewhere around half of our sales will have to be transitioned into battery electric vehicles, which is a huge change for all of us in this industry, and therefore, we also need to put more resources to this, and therefore, we are upping our R&D budget. And in the Volkswagen world, you work with the 5-year plan. And here is how our 5-year planning has evolved, moving from an increase from EUR 1 billion to EUR 1.6 billion and then another increase decided this year, and I think we communicated this at the Q1 release that we need to increase that even more. So we're going to put EUR 2.6 billion. Is this on top money? You can ask Annette. She will say no. It's not, of course, we need them to put less resources into the combustion engine world. And that combustion engine world, we gladly just launched a completely brand-new driveline that you hopefully -- at least those of you in the room have test driven here during the morning, the Scania Super, which will gradually come into to all our brands. Good. What is then coming out of this? Well, we already have, in all the brands, production and mainly serial production of electric -- full electric vehicles. Here's snapshots. So you see everything from the smaller distribution vehicle that we deliver that you could test drive from Roberto and his team in [indiscernible] Caminhões. Two, the heavy applications such as the MAN electric city bus, the Lion´s City E or the Scania P BEV, a distribution truck, 29 tons of payloads, 2 and 3 axles, but this is just the starting point. There is going to be an avalanche of new models coming out from all our brands into the market. But before going into that, let me address a few misconceptions that we believe exist in the market around electric and battery electric vehicles. So here's the first one. Battery electric vehicles do not fit high on heavy -- high loads and heavy applications. This beauty is going to be delivered to customers -- to a customer and it's one truck this week. So it's ready for the delivery, hence it's [indiscernible] going to Boliden. And as Boliden most of you know, but they are into mining and minerals. So we choose by purpose and application that is very heavy. It's off the road. You can see it's a gravel road. And it's arctic conditions, meaning we can operate here minus 10, minus 20, minus 25, northern parts of Sweden. And it's not one of the kind we've done with [ Youla Logistics ], we have done with LKAB in Northern Sweden, we announced a couple of weeks ago with [indiscernible] double semi-trailer, extra-long vehicle. So we're kind of, just with small series, testing the boundaries and showing both our customer base, but also ourselves that this is possible. So rather than rolling out hundreds of distribution vehicles, we're saying, for us, we need also to understand what are the limits. And I can tell you that we learn so much by putting these One vehicles on the road. So sometimes the questions from customers are not at all the ones that you were expecting. So super interesting way to approach. And I know you learnt about the modular system and here we use the modular approach to get these small series of vehicles quickly into the market. Another misconception is that BEV is not for Long Haulage. BEV is only for inner city or for really short distances. But when we look to the financial use case, actually, the Long Haulage vehicles are the ones best suited for battery electric vehicles. And you can ask why is that? Well, it's simply because these vehicles operate at very high loads, meaning very high energy consumption. So when you drive a car on the highway, you're using 5% to 10% of the available power of that vehicle. When you use -- when you drive a truck like that, you're using 80% of the available power and torque, meaning very high use of energy. But -- and therefore, we talked about charging here, but this can only work if there is a charging network available. So when we talk to customers and then discuss deliveries of vehicles, the first question is the business case. And the second question is, where can I charge? And in order to make this not a hen or the egg discussion, we contacted our fiercest competitor Volvo, Daimler, as I said in the beginning, and ask shouldn't we go together here and make sure that we get started, and therefore, we founded the joint venture last December, and we're just waiting now for the clearance from the antitrust authority in the European Union to say, okay, you're good to go. And then we will actually start to construct. And with EUR 500 million put together on the table, we estimate that we will be able to put up somewhere in the range of 1,500 to maybe 2,000 charging station. That will not do the job. I know that you all think that. That's also not the idea. The idea is that this will be inspirational, and this will drive others to join in. And I can tell you, we never had, and I think, Atif, your phone has been ringing constantly since we announced this. We never had so many from the old oil companies, from the energy suppliers, from the pension fund saying, "Hey, how can we join this initiative. This must be something great". So I think we have already achieved part of the purpose. But remember, battery electric vehicle, Long Haulage is perfect. Third misconception, we, as manufacturer, going to lose all our repair and maintenance base when customers shift to battery because that we heard from Tesla cars. So yes, we're going to lose certainly part of the maintenance because there are fewer moving parts and not bathing in oil anymore. But on the repair side, we see and we start to learn now with vehicles in the field and also operating other brands vehicles that there is a lot of repair work to be done, showing that we need to be there with an uptime focus, a professional network. The other thing is that when we now start to deliver the first vehicles, the thing that our customers are really worried about is the battery. Everyone has an iPhone. Everyone knows that after 3 years, you have to throw it away just because the battery doesn't take charge anymore, and therefore, customers want us to take over the responsibility of the battery, meaning giving a very long warranty -- guarantee on that battery, which we do gladly because we find out that, that is not at all the case. On the opposite, we find that the battery basically is -- with only 10% deterioration lasting the lifetime of the vehicle, super interesting learning. So we take that risk, but what is then our demand on the customer? Well, it's, of course, that we get 100% repair and maintenance responsibility for that vehicle. They are not allowed to touch. So the competition we have today, with non-OEMs, with repair shops at the corner is basically going to disappear. So we anticipate that we will have close to 100% R&M coverage on this vehicle. So that's actually adding approximately another -- well, it's basically half we have today. So it's doubling up our potential profit pool. And then there are new services, of course, coming with battery electric vehicle. And that's what we're trying to say here that services such as charging is something that a lot of customers ask for. But with electricity also comes out the challenges for customers. Where do I charge? How do I optimize my routing? What is the cost of energy at that charging point? I'm not saying that we're going to solve all these problems, so just painting the picture and saying, there will be other services that we, if we're good, can tap into and that can actually grow our services sales rather than diminish them. I mentioned on the sustainability theme also circular as something that is coming beyond zero emission tailpipe and decarbonization. We are, of course, already doing good things in the TRATON GROUP. All of our brands are working with remanufacturing. And I think Navistar has the most advanced program with more than 11,000 part numbers already in remanufacturing programs. With Scania, we're working with Northvolt, as you know, when we are committing to get the batteries back into their right now, Norwegian plant, where they reuse a big proportion of the raw material in the batteries. We are reusing metals. We have a quite advanced program in MAN. And of course, we do that in all brands. So we're doing a lot. But, to be honest, it's just scratching the surface compared to really talking about circularity. Because really talking about circularity implies that our products need to be designed for reuse from the start. We cannot mix material as we do. We cannot glue stuff as we do. We just have to assemble and develop them differently. And that, you imagine, with our product life cycle, is something for the long term. We also need to look into our business models. And there, I think we are closer because this is -- this, a completely circular business model, requires a subscription base or pay-as-you-go kind of business model. And there, with our operational leases, with our rental solutions, we are coming closer to Transport-as-a-Service, and I think that is a requirement. And finally, we would, of course, also need to look into our supply chain, and work in a completely different way, both upstream and downstream in order to manage end of life and also the exchange of material during the life cycle of the vehicle, much more like the airplane industry is working. But that was just to give you some long-term perspective. If I say 10 years, we are beyond the challenge of decarbonization, and then our true challenge will be circularity. We have already started. That's my main message. Okay. Let's change chapter or pillar and start talking about the value creation, and the value creation in TRATON, at least the big lines are about these 3 areas. So first of all, and this is a cultural thing. We are now rebuilding the TRATON GROUP into a group where the responsibility and the authority to produce profits is clearly with the brands. Every brand is responsible that they can refinance their own investments that they need to do. And I have a fantastic team with very high acceptance saying that, yes, this is our responsibility. We are not hiding behind someone else. The integration, or whatever you call it, of Navistar into our system, into our group is, of course, another fantastic profit pool and value creation opportunity that we will work very hard with, not just 1 year, but many years. This will be a journey, but this is certainly top 2 or top 1 on our value creation journey. And then, China, as I mentioned in the beginning, Asia and China are profit pools that are growing and that are growing quickly, not just in terms of number of vehicles, but actually in terms of service content and in terms of technology level, meaning more advanced vehicles. So -- but more about that later. And I think, yes, this is perhaps one slide that many of you in the room have been waiting for. So what are we committing to? What are our targets for the different brands? Annette will supply much more details why we're coming to these numbers. And of course, also as CEOs, we will talk about our brands. But just quickly to paint the picture. We're looking at the Scania that should be able to quickly come back to the 12% return on sales level. Based on the -- being the first on the sustainability journey, which will be more and more important from a business perspective, based on much more potential in the service model, and I will talk more about that when I talk in the Scania section, but also the growth opportunity we see with more capacity to the system and addressing Asia and China. MAN, Alexander and your team, the restructuring program, program #4, is -- program #1, under your leadership is the first one that is actually paying off and that is actually addressing the real fixed cost problems. Seeing really, really good progress, but not only also leveraging the zero emission vehicles, but predominantly the TD3, the new product -- the all new product generation launched from MAN. And Roberto, while you have already proven that you can be on 8%, with your team, but it's now about consistency, keeping the pricing power with your great product portfolio and to capture more and more of the service business. And finally, Navistar, Mathias and his team, they see a target -- a reasonable target on 9%, of course, with the use of European technology coming through the TRATON GROUP, but also with already a fantastic dealer network, introducing more of the European contract-based services that are so important to the profitability of our European brands. But, all right, more about that in a moment. We also should paint some kind of picture how does the future look like? Where do we see the markets going? And again, long term. But if we take the first column, we see that Europe has more to give. We don't see the peak. We see demand coming for more years. South America, we're probably closer to the peak, and we're having an emission step that always create effects with [ Kanuma P8 ] coming into the market. North America, more cyclicality is expected, and we're probably much closer to the peak than we are in Europe. China, well, we had the emission level, China 6 introduced into the market, and we have a very steep decrease in China right now, and part of that is, of course, but we don't know how much, related to the COVID and the lockdowns in the cities. But that China is going to come back, maybe not to the levels before, but to good levels, that's absolutely clear. And the rest of the world, well, that's, of course, very, very varied and difficult to talk about. When we look into electrification then, where will electrification happen first? Well, for us, it's very clear that the frontrunners are going to be Europe, U.S. and China. Proportion of hydrogen into the mix that I talked about was Europe, where we see 10-ish percent. U.S., we probably will see more because the simple fact that drive time is allowed to be longer and breaking time is allowed to be shorter, meaning that more energy needs to be put into the vehicle faster. When it comes to the services potential and the maturity, we also see different starting points in different geography. Of course, Europe is advanced, but we still see much more as I was into with battery electric where we can capture potential. South America, the market is maturing, but there is a long journey, and there's a lot of business to capture in the coming years. North America, same thing as Europe. Whereas China, we start to see a maturing, which is very positive to us, where customers are rather paying for uptime than for just a low product cost. So more on China then. Record year 2021, 1.4 million heavy commercial vehicles, biggest in the world, no doubt about it. That in itself is not very interesting. What is interesting is that we see the shift from the kind of the budget value, C-segment vehicles up to B or even B+ vehicles, where uptime operational cost efficiency starts to be important. And that is not A segment, not the imported segment yet. That is more or less flat and has been irritatingly flat for many, many years. But the B+ is certainly growing. And if we pair that with a really good news that Scania managed, as the first manufacturer, non-Chinese manufacturer to get the license to produce without a JV partner. I think we have a very interesting opportunity coming up. And the good news is that we have now managed to achieve all other permits and licenses you need and the groundbreaking ceremony will happen in the coming weeks. So in the beginning of June, we will start the construction in Rugao, which is outside Northwest of Shanghai, 150 kilometers and build our first factory based on that license. So super interesting to follow, and this is something we will talk more about in the coming years, of course. The more long-term future, we call this chapter TRATON Accelerated. It is about how to handle new business model. It is about going much more into partnerships and not controlling the whole value chain ourselves. And it is about embracing digital and embracing digital in the business, but of course, also embracing digital in the way we run our operations and so that we can do that in a much more efficient way. So what everyone thinks about in this future is these bots or these totally autonomous robots running around. Of course, they are connected. Of course, they are electrified, and they are visualized here as some kind of a small load carrier. So what do you need in order to be able to manage such a system? Well, of course, you need to be able to develop that vehicle. We believe that these vehicles are not going to be suddenly transformed into small bots that are carrying around pallets. But we believe that the container standard in the world is not going to change, and we believe that the pellet standard in the world is not going to change. Hence, the load carrier is going to be pretty much the same, meaning that big and heavy vehicles are going to be needed. And they are going to have to have maintenance and repair and uptime just as our vehicles today. The second thing you need is the brain. And here is the software, here is the entire stack with all the capabilities to understand where you are and what is happening around you and take the right decisions. Both of those things we are developing predominantly ourselves, whereas, of course, in the middle one, we are going into partnership for certain layers in the stack, but we also think of getting our own capabilities to do everything there. And then you need a control tower because in the end, in our business, it's about logistics. And that control tower is something we also learn through different initiatives in the group, how to do? But of course, here, we also partner up with companies that knows and has as their core profession, to run a fleet and tell which vehicle to go where and so on and so forth. But our vision here is that we really continue to build ecosystem that we are already very good at, but build it out based on the new technology. And some of these puzzle pieces we have, some we don't. So if you take transport management, handling then admin and transport planning, real-time tracking, parts of that we have in our fleet management offering, parts of that we are acquiring. We acquired Loom through our RIO branch a couple of months ago. So we're adding puzzle pieces to this system. The fleet management, we have already, and we are the champion in connected vehicle, as I think many of you know. So the puzzle pieces are in place. And then comes charging, and I mentioned that talking about battery electric. We believe that this will be very, very important going forward, and we get that feedback clearly from our customers. And we see that we will be -- there is a need for us to work as a so-called mobility service provider, meaning that we will have to help our customers how to handle the state of charge of the vehicles. Where to go, how to charge, what to pay and actually run that interface between them and the ones who actually operate the charging stations. We need to do that predominantly from the start in their depots. So where they actually charge right now. It's the 99% in the depot. Next is the destinations. And finally, the last step is to charge on road, and that's what we're trying to do then through our joint venture. In order to do this, any of this, I would say, in a professional way, we need to work more intensively with the financial services set up. And here is how it looks today. We have Scania with its own captive financial services operation. We have both MAN and Volkswagen that is enjoying the service of Volkswagen Financial Services. And then we have Navistar that has been provided up until now through the Bank of Montreal. The difference between the Scania setup and the other setups is that the Scania is tailor made to the specific needs of commercial vehicle industry, meaning that we can offer tailor-made solution to basically each and every customer, including or not including different services, insurance, buybacks, all the way up to rental solutions. And we think that is going to be necessary in the future, and therefore -- for all our brands, not least to take on the electrification challenge, and therefore, we're now working to create a common financial services for TRATON. And I think I saw Johan Haeggman here, somewhere in the room, Johan is up there, have a chat with Johan. Some of you know him as previous CFO, Scania. He has taken on the challenge to build this up. So in very good discussion with Volkswagen, we're finding a way forward for MAN and for Volkswagen Caminhões e Ônibus. And we have actually canceled the contract with Bank of Montreal for Navistar, which has a 2-year notice period. So by the beginning of 2023, we can start to supply our own financial services for the Navistar and international customers, I should say. And based on -- and here is where the scale effect is coming in. Based on a common backbone, based on what we already have, systems knowledge, people in the Scania financial services system. That, of course, needs to be reinforced, but we can reuse a lot and then build front offices branded by the brands in every market where there is sufficient potential to implement it. So that was a quick run-through of the main 3 pillars of our strategy that we started to talk about already last year. But I personally also felt there was something missing. So when I stepped into this job and accepted to be the CEO, also of TRATON, I said there's one chapter missing, there's one pillar missing, and that is how to get things done. We've had fantastic ideas in many areas, but we never managed to get it through, and therefore, we decided to add a chapter that we call Strategy Execution & Governance. And just to address that rather quickly, you have heard about Modular System when you walked through the tech booths. And we need to decide if we should ever get scale, real scale, smart scale out of this group, we need to decide for one product system. And therefore, we are going to build up a TRATON Modular System based on the same principle as we built the Scania Modular System upon, which is that we create standardized interfaces, but not only in one brand, but throughout the group, that we work with the principle same need identical solution. And finally, and perhaps the most difficult, to have well-balanced performance steps. And performance steps, we're also going to use in order to differentiate because we don't want our products to be identical, at least not in markets where we are with several brands present. So this -- and you heard in the station again, you heard that this is the question that the automotive industry has been asking itself since Henry Ford. How can you both customize to -- actually to allow the customer -- to get the customer to pay more and at the same time, gain scale. So tailor-making or mass customization, the Modular System is addressing and actually has proven to be working, and therefore, that is the way we're going. We need to accelerate. We have, of course, managed to gain synergies through purchasing and here illustrated by the most simple thing we have in our industry. You think, tires, it's not that simple. We have more than 1,000 different tires. But yes, bundling tires, you can gain something in terms of purchasing power, but not much. When you move into the more R&D-intensive parts that we do in-house, you can gain more, and therefore, the FPP is so important to us. But what we learned with the FPP, even if the components are basically the same, we have to kind of -- we have -- we will lose part of the synergies when we do the integration work of these components because we do them then under different caps into different chassis, meaning that all the interfaces, whether that is water, electricity, physical interface just fixing the stuff to the frame, different, which means that we have to do variance, variance are driving complexity, the part numbers are not identical. We do not reach the same need identical solution principle. And therefore, we need to continue to move up, and you see there's a time axle, meaning we cannot do this like that. But it's something that needs to be now step by step, components series by components series, taking into account that we move and we will invest into driving this into a common Modular System. And then we can get rid of integration costs. And then we can get rid of a lot of double work, double validation. I don't -- I'm not sure if Klaus talked about software, but this principle applies perfectly also to software. I think many of you know that 70% or more of the cost in developing software is in testing. So if we need only to test software on one platform, we can save enormously or we can get much more resources, pick your choice. This requires, of course, also that we align our IT infrastructure, and that is another thing, which will take investments going forward, but that will pay off rather quickly. So change is needed. So is then the structure and the organization and the governance, and therefore, I'm super happy that I managed to get also the Supervisory Board of TRATON to say, yes, we're going this way because it means we're setting up a new way to run development and product management in our group. And that has -- the group product management has already been communicated, and we have Catharina Modahl Nilsson here with us who is leading that function, working then not for a brand, but working for all brands under the TRATON umbrella, meaning that Catharina needs to make sure that we develop the right performance steps and bring the right value to customer for all brands throughout these technology areas. And the technology areas that we are grouping are, of course, around the new technology such as e-mobility, autonomous, software and E/E, but also what we need to master the traditional technologies, meaning ICE powertrain basic chassis and cab and bus solutions. And in each of these technology areas, there will be one head. And that one head will be responsible on a TRATON level. So it's a matrix organization. They will still be ahead of R&D in all the brands, and there will still be unique R&D work done in every brand, especially in the beginning as we have a lot of legacy that we need to handle. But over time, that part will shrink and more and more will then become one. And by that, the scale effects will grow. We have also appointed for being then responsible for the so-called group solution development. Anders Williamsson will start first of June to build this organization up and again, on a TRATON level and working them very close to Catharina. Catharina's organization is responsible to make sure we work on the right demands and the right strategies, and Anders' organization responsible for actually bringing these components, these performance steps than through the industrial system and to the market -- back to the brands, I should say, the brands bring it to the market. So that's a new thing, and that's a very important puzzle piece. There are many more to it, but important puzzle piece to make things happening and get things done. So trying to summarize on a very high level then. What are we doing? Well, as a group, we can deliver more value to customers. That's what this business is all about. It's about bringing a little bit better, a little bit faster, a little bit more to the customers in all of our brands. And we do that through more performance steps, as we call it, in the Modular System. And we do it to all brands. We gain time to market because we don't need to develop in parallel, and we don't need to integrate and validate. We call it here as super simplified. We call it plug-and-play. Of course, it's not, but it's much more like plug-and-play for the brands. As a consequence, we gain scale, meaning that we can have longer series of the same components, which, as you know, double the volume, half the cost. Well, that's more or less right, actually, in the automotive industry. So we gain that. But we also gain a lower system cost because there's less complexity in handling all the different variants that we have today in the different brands. And finally, we do liberate resources. Talking to the R&D colleagues, they are talking about 20%, 30% of waste today in coordination, friction, double work because we didn't get this right. If we can liberate that and instead focus on delivering more of the new technologies to our customers, I think that is a game changer for the TRATON GROUP, so we can afford necessary technology investments, working the right way. So I will stop there and just say that, from my perspective, I think we have a very solid strategy. I really look forward to getting this into action together with quite a new team, which, by the way, is a fantastic team, with super experienced people that really are ready to take on this challenge and drive this to a TRATON with a lot of success. And with that, I say thank you for this first strategy part. And I will hand over now to Mathias Carlbaum and here he comes. And Mathias, one could wonder you were 20 kilometers away. You made it from Chicago to here, but why are you not here?

Yes, that's the irony of the situation. As you said, flying over the states and be sitting in the summerhouse here connected on Teams. But anyway, tested positive. I thought that was over, that stuff, but it's still around us anyway. But I'm good to go. So...

That's great. So welcome, Mathias.

Okay. Well, again, I wish I would be there with you. I'm not, but I will really take these coming 25, 30 minutes to share with you why I'm convinced that Navistar's future potential is actually the biggest opportunity that we have in the heavy and medium commercial vehicles in the world. How our brands, international and IC Bus, with its unique customer relations and the legacy and the history have, together now with the joint forces, the commitment and the culture and the know-how from TRATON, will really turn us into like very frequently used in the United States as a winner. We have now a clear vision, I see ahead of us, ahead of you there in front of you, is to accelerate our impact on sustainable mobility. We have just launched all of this to [ gauge ] our network, to our internal teams, et cetera, and we're getting a very strong buy-in and commitment to our way forward. But again, this is what I'm going to share you, breaking it down now to how we have built up the strategy and our roll forward now in the coming years. So I will have to say next because I don't have a clicker here. So next. This is just to level set a little bit all around you. Some of it, much more familiar with Navistar than others, but just a placeholder here to level set before we start. Again, the core business, Class 6-8 trucks and buses in U.S. and Canada and Mexico. We have the largest dealer and service network in the United States, a very important reason for going in here, of course. 2/5th of the, call it, the [ legendary ], the typical school bus that you can see on pictures and movies and those who've been there and study whatever, the yellow school buses, we have 2/5th of those rolling in the rolling part in the U.S. are ours, IC Bus school buses. On the truck side, about 20% of the rolling population are our vehicles. We are, today, the second brand in Class 6 and 7 and the fourth brand in Class 8, huge potential ahead of us to recover positions that we've had in the past. Based just outside Chicago, in Lisle, Illinois, total sales last year, about 71,000 units, turnover revenue size this year heading around close to $12 billion and the number of employees, 14,500, again, not having any captive dealership and very much an integrating company of components, it's quite slim, let's say, in staffing and structure. Next, please. Let me see a little bit some accomplishments since we started the merge. Acquisition, as you know, started in -- happened, well, first date was 1st of July. So we are about 10 to 11 months into that. Clearly, very much getting Navistar into TRATON's operation, product road map, processes, governance, a lot of that, that is now in place. We are starting to build up and broaden the management team, both promoting internal competence in the first place, but also bringing people from different brand companies. We have, for example, a new Service -- Sales and Service Director; [indiscernible] from MAN, had previously headed this operation for another player in the United States. We have for Michael [indiscernible] , who came from TRATON, who's now our Operating Vice President; and our CFO, also comes from TRATON. So we're putting together a lot of strength and resource from the group. Myself, I have 20-plus years at Scania in our commercial operations in different positions around the world. And now when we look forward now, we are actively, let's say, broadening the base with local talents, but also bringing along more and more people, primarily starting on the R&D side from group companies, primarily from Scania so far, but building up, blending in this competence into our organization. We've also leveraged our balance sheet, refinancing lows with substantially lower costs. And very important, starting to set the foundation for the next generation of vehicles and technology. So we're working with here now, but of course, very much also forward leaning to projects and products 5-plus years away in time. Much more to come, and that's what I'm going to walk you through now in the coming 25 minutes. I start with something as [indiscernible] not that present, but I think this is essential in any company and even more when -- if a merge should be successful or not. How we're able to, let's say, unify, take the strengths from the current Navistar organization and build in the very strong strength we have in the group companies at TRATON. How we create solutions that drive us towards a sustainable future. I'll come back to that. They're exciting moment in North America today. That is really, as I thought, when coming there, being slightly behind, I would say, where Europe is today, but in a good North American way catching up and very fast. So how do we create our solutions to embrace and take a leadership position in that? Also, of course, all this is a nice future, et cetera, but on short term, we're really determined to improve our profitability. And that is something working every day, and I'll come back to our aspirations and what's happening on short term to really put us on, let's say, a level, on which we can grow further in top line and profitability. And also very important, Christian mentioned several times how we can leverage from the group technology of vehicle, but also on the business model around services, digital and all of that, that comes in today's business model already that we can expand, but also the foundation for when we move over into electrified and autonomous. So these 4 to the right are the ones I'll try to take you through now again in the coming 20, 25 minutes. Please next. The cornerstones of our strategy, starting with the country leadership, going counterclockwise, sustainability impact, profitability performance, short, midterm and the foundation we set for future as it. I will start shortly now again around the culture and leadership. So next, please. This is just an illustrative way of, of course, the strength comes of joining counters. I would say that TRATON is now very much led and directed to adopt a lot of the, let's say, the very strong Scania culture that we -- that myself also have been trained within. So if I look to, on the left side, what strengths did we have or have very clearly at Navistar? Well, one of them, again, I always feel a bit strange to talk about because it is very American, but really the strong side to win actually to come back, to be what Navistar was in the past and beyond. Navistar, before the acquisition, had a difficult decade, led by problems on the engine side with the EGR and also, let's say, call it, the ownership structure and the perspective of, let's say, time and investment. So a little bit falling behind, but this is a very strong will within the company, everywhere, dealerships, employees inside and also in our customer base to really come back international and IC. Collaborative. Well, it's a buzzword today, that we have to do partnerships and collaborative. That's the whole way Navistar's built. It's, again, an integrating company with relations on today's suppliers and also, let's say, into new technologies built very much in partnership, and that will take us forward in this collaboration that we have now within the TRATON GROUP. Looking just to the right side, some things that, I mean, we put out 4 there, but just talk about leadership, leadership model. How do we work? What is the behaviors and non-behaviors? What are the values that we have within Scania and TRATON? Those -- bringing those in Navistar, you have Navistar people, there are, in the room and around you. You will notice how well accepted this is, very employee-centric delegating responsibilities the owner of your destiny and take charge being also accountable for that is something we're building in strongly now at Navistar. And last, but not least, the future orientation, something not very present before and now more than ever, the future looks bright around technology, around investments we have been doing and are doing, let's say, our way to return and beyond that in North America. So this is a little bit about country value. Again, very important cornerstone always and even more to make a successful merger. When coming over to the states, where very few of us coming over. This is not a question of a takeover on the contrary. We're just 2, 3 leaders coming over in the beginning, and now we start building in, blending, sending people from Navistar to other group companies and bringing group companies over to bring this culture together by showing acting as we should and who we want to be. So next, please, sustainability. Sustainability. Our president, has this been in U.S.? Well, I can assure you it's coming very fast. Those are not -- those of you not familiar with it, last week, it was the ACT show, the Advanced Clean Tech, at Long Beach in California. Actually Navistar, for the first time ever, were invited to be keynote speakers in that event, a recognition and something that we gladly accepted of course. Thing is moving very fast. This is the place to be the fair for the future where everything boils down to who are the players today, the future players to get to this moment here of, let's say, drive sustainability. Primarily, I would say it's an investor decision coming. I mean investors are putting pressure on the big operators, on the big companies. So it's not as much in Europe, let's say, call it, from consumer up, it's more from the investor side. And we see huge players, for example, like Walmart, establishing just recently their science-based targets, which are putting reprocusions. And our operators, many of our big customers are now coming to ask we are about to set our science-based targets. How can you help us to reach what? So we have clear targets of 50% zero emissions by 2030 and 100% by 2040. We are slightly more forward leading than the market in general. We strongly believe in the technology of battery electric coming in and how that will be relevant for us. Also remember that we are quite heavy into Class 6 and 7 as school buses, where that happens first. Science-based targets we're working on it until the end of the year, we have our determined as well. And the circular business model around. We, today, have more than 10,000 parts that are recycled and reused, but we're talking again, as mentioned, around the battery model and also how we can get more, let's say, raw materials and components into our production. Again, not tomorrow, but in the long run to really get down the CO2 impact on the Scope 1, 2, 3. The bottom parts, I will not comment on that much, but it's somewhere that Navistar has a very strong history legacy, and I would say [indiscernible] as an American company, but quite far ahead than we are, I would say, generally speaking in Europe, both on the social impact about your community, education and environment and also about diversity, equity inclusion. Both the KPIs and how that has lived in the company is today something we need to, of course, continue excelling and also bring learnings from there over to the European operations. Next, please. Here are the 6 cornerstones around how we intend to drive our increased profitability, return on sales on short to midterm, so by 2024, be able to reach a 9% return on sales, moving from today's around 4.5%. So I will take them through one by one, so I will not read the slide for you. So if we just click once again, I start with the new integrated powertrain. This is -- Christian mentioned about the CBE, Group CBE. Already by next year, we bring it over to North America. This has started before the merge and is now, let's say, hitting the market quite soon. As you can see here, just on the left slide, this is how today our split between 13-liter and 15-liter is. The CBE is, as you know, a 13-liter engine and which is actually under selling the 13-liter even compared to the industry split, very much reliant on the 15-liter. Having, yes, the A26 engine selling on the 13-liter, but mainly depending on external supplier for the 15-liter. So for us, the opportunity is immense here. The market does accept. In very long conversations and tests being done by a major operator in the U.S., we have a good acceptance for this. The engine is performing and there's no reason to stick more than history and legacy in the 15. These 13 liter's torque and performance is incredible. So we have an ambition here, not only to reach the, let's say, the average industry split, but actually drive it further, thus being able to double, let's say, our volumes of 13 liters in a reasonable period of time beyond '23. Why is this so important? Well, it's important because, first of all, the engine is performing like never before. You've seen now the performance that when it's in the Scania vehicle, and it's the same coming over to us, integrating to our vehicle. But also, you can see here on the right side of the slide, the potential of profit. If you look on the integrated, on the CBE to furthest to the right, we see a potential on the new engine as such, a 40% margin increase compared to today. The headline is value proposition. This is very much a thinking of Scania. We sell on value, not on price. This engine, it's not -- it's an increased potential here based on its enormous fuel consumption saving and also the reliability we see on it. Why we see that we have this potential of pricing on the vehicle. But on top of that, and the biggest mover of the needle is really the service business. By bringing in this into captive into, let's say, proprietary parts, it drives both the revenue side, but also it has a huge leverage on the percentage of profitability. So being captive, selling our own parts, but also how we now into this engine, let's call like that, also built-in service products, extended warranties, repair maintenance contracts, maintenance contracts, bringing the business model, let's call it, of Europe, of Scania into the U.S. blended, launch together with this engine. And again, also their acceptance is good. It gives confidence for the market that we believe in this engine on it's, let's say, reliability. And it's also a product that, today, fleets are becoming more oriented on their core business, which is logistics and not running workshops. Next, please. Electric transition, it is here and now. Hard to believe when we talk about U.S. perhaps. But I say it's here now because these 2 segments, very present in both of these segments. We're market leader in school buses, and we are, as said, #2 in Class 6 and 7. This has started to move now. You see our products outside where the [indiscernible] today, we brought over 2 products as to showcase what we have today, more is to come. And if you look up to the right side, this is the potential in 10 years' time. I mean school buses will be fully converted basically and also medium duty more than 70%. But again, it's already happening now, primarily school buses because there is also in the Biden infrastructure bid that was launched earlier this year. It was -- there's $7.5 billion earmarked to this, let's say, to put in electrifying school buses. On top of that, there's another $5 billion for electrification -- sorry, for charging. So money is starting to get in here and all, let's say, the school authorities and the municipalities are now starting to move, how can they start electrifying their school buses. The rolling fleet of school bus in the U.S. is over 400,000 units. This will take very long time, of course, to convert it all. Average age is plus 20 years, but it starts from next year and on. For us, this is a great opportunity, both to, of course, try the hardware, but above all the extended surrounding services, the turnkey solutions to go together with partnership, with energy companies, with the operator, with financing and go in and make it easier for the end user and buyer to buy this. This is the model basis for the future also in Haulage, and we can already start applying it by next year in school buses at large scale. Next, please. Dealer network. I talked about it before. This is, of course, a very key reason for acquiring a company in America, the distribution network. I mentioned before, we have 0 captive dealerships. Nevertheless, what's happening now is that we see a clear consolidation driven by us in the dealer network to drive for the strong and the fit, which are the groups that are -- have enough footprint, enough, let's say, investment potential that will be here for the long run. And in the last year, the multiple for acquiring an international dealer in the U.S. has gone up by 2 to 2.5x. There are major operations going on, 4 to 5 of them. We're talking about 9-digit dollar figures for acquiring dealer groups, and we're getting in strong partners from -- mainly from the U.S., but also some from Mexico, we have some from Latin America, but it's important groups with a track record that come in and grow the footprint. What will we do ourselves in supporting this? Of course, 2 things are very important. One is to support them in improving their performance. Some might ask, but they're not yours? It doesn't matter. A profitable dealer is always good, a profitable dealer that runs its operations efficiently, also drives customer satisfaction, drives customer uptime, drives down costs for our customers. And we talk about learnings from group very tech-focused and product. We have a lot of experience in learning within this. Myself ran the Commercial Operations for Scania, the last 5 years, and we run a lot of, let's say, dealer performance and always achieving both efficiency in the dealership profitability for, let's say, this case was Scania, but for the dealer, and driving also simultaneously measuring on a daily basis digitally, the customer satisfaction. And also for us, of course, this will drive parts sales in short term. To the right, we see also increase our customer base. Why is that important? Today, 60% of our volume in the states go to fleet operators. We are converting this the opposite to do it 60% to the smaller and medium-sized operator that goes through dealers and, let's say, slightly decreasing our fleet dependency. We shall not, in absolute numbers, decrease our sales to the fleet, but our growth will come more through smaller customers and smaller fleets. Next, please. Here is illustrative also how we drive, let's say, bundling solutions from selling mainly parts, some extended warranties, a little bit of finance, more floor planning, the potential is enormous. When it comes to selling repair, maintenance contract, extended warranties, insurance, financing, all of this we're putting together now and also, let's say, with the restructured finance company, which I will mention, this will -- that will be an enabler to bundle like this, go towards leasing and have also, let's say, future residual commitments, which is something we've been running for decades elsewhere and have experience of that. So gradually increase this, again, combined now with the CBE. Why so? Well, to the right side, we see we need to increase both our top line and our profitability on services. Today, it's about $2.2 billion, and we have an ambition here to double that by the end of this decade, having a plus 10% CAGR per year. So it's a top line growth. But also remember, shifting to more captive parts as we go now, starting with the CBE and gradually introducing more group technology, we also see a huge potential of margin increase by 5% or more in the coming 8 to 10 years. So it's a double effect of that. Next, please. What does group bring us in as additional into all of this? Well, Modularization. Explained and understood by all of you, this brings leverage into us, simplifying production, more purchase power, faster adoption, integration of group technology, less parts out to the dealerships, and never compromising the customer choices. To the right -- sorry of left down the shared R&D, we're all in for this. There's nobody in the group that is as encouraging and opening to share and get the technology that we have in group. Navistar is on board. We are used to collaboration. We're now integrating all the working groups. Our road map is there, and we see a lot of response also from the other brand companies or, let's say, supporting this journey and thus, we see this as a very good potential to speed up this exchange of technology within the group. So right up our production footprint, what you see there is our recently inaugurated production plant down in Texas in San Antonio, just about 1.5 months ago. It's a great plant. Invested slightly more than $200 million. It was built in less than 2 years now during the mid-pandemic. And we started, let's say, building vehicles there again 1.5 months ago, gradually ramping up towards a latter part of the year, a capacity of 100-plus units per day in 2 shifts. And this also takes off some, let's say, burden from our Escobedo plant. So we're bringing in some more value-added work integrating that into production in cab assembly and some manual work of bringing in from suppliers into our Escobedo plant. And the footprint down the south brings down logistical cost. It's a favorable labor market and a lot of, let's say, benefits of being down there. And also, of course, with the state-of-art production facility as this, we also bring in a lot of efficiency in that. Last, but not least, already initiated before, our global purchasing program that we had a joint venture in place of TRATON inside Navistar already some years ahead of the merge. This is now fully integrated and just happened, let's say, in a question of months that Navistar is fully fledged integrated into processes, tools and systems, benefiting from the large scale of TRATON and in some cases, Volkswagen benefits in purchasing. Next, please. Financial Services. Christian mentioned before, we had an exclusive partner here, Bank of Montreal, that had a 2-year exclusivity agreement. This is now discontinued. We continue well. We will do partnership. They will continue in floor planning. And we -- it's not that we don't need, we need them also for the future. So we've done this jointly now, but we see a clear potential increase. Today, about 8% of the volume of Navistar is finance through BMO, and over long term, nothing should we be side of what other OEMs are doing in North America, 20%, 25% should be financed by us. Why so? Lack of capital? No, a lot of capital in the market. Of course, in difficult times, it's less. But the main reason is really to be able to bundle products and services to an attractive value proposition to our customer. And last, but not least, of course, we're moving into new technology. This will be more important than ever. And we're now setting up our own finance company, which we're working with as now, we have Scania expertise and Scania people also bringing the best knowledge from there into, let's say, our way of operating. And we do have Navistar Financial Services is a running entity, which are now, let's say, going more towards retail financing, previously just doing floor planning. Coming to the end of the, let's say, the profitability journey here, next slide now. This will, of course, have also the underlying ambition to earn our growth of market share. I say, earn because market share you don't buy. Market share, my best estimate after 20-plus years in the sector is that you can grow 1% to 1.5% per year without buy. And that is our vision, where we dropped 10% in 10 years, and we will recover this in a shorter period than that. So to the right side here, just repeating what you've just heard about. So the there's no secret sauce. It's hard work. It's getting these things right. And let's say, together with our dealerships, which again, are extremely motivated, investing into business and, let's say, anxious to, let's say, get moving in this direction. And that is starting now again by capturing customers we have a good, let's say, recognition already, let's say, on the stability of today's product offering. And we'll bringing in more tech additional services. This will certainly be something valued by the market. So next, please. All this said, we, of course, are also working with the foundation for the future. Foundation for future, some things take place as we go. I mean, digitalization, both internal processes, but also, let's say, our interface to our customers and our dealers. Also here, we have a good -- we have the OCC equipment installed on our new sold vehicles in the U.S. It's a couple of hundred thousand vehicles that already are collecting data. So the most valuable asset is there is data. We are today bringing that in, how to create internal value from that because, so far, we have created good partnership with external suppliers, and also where it's an open platform that the customers easily connect their systems. So it's very welcoming market and well established. And now we just need to, let's say, to materialize and capture more value from that data. Something, again, have been happening in other group companies. So we're also bringing people expertise and know-how to support this journey. Zero emission of the right, much more to come, Class 8 vehicle coming soon and again, towards the closer part of the end of the decade, we will have fully fledged group component, group common vehicles, battery electric with local band resourcing in the U.S. Autonomous already, as you know. I mean it's in the U.S., it's happening very fast. We are cooperating with too simple. It was already in place before the merge as was [indiscernible] than doing in Europe. -- separate contract Chinese walls between now we bring them together and see how we can jointly do 1 operating model of how running the -- let's say, partnership with too simple. And down to the right, yes, common group components, the more the better. There's a lot more to it. We're exploring all the opportunities. Are there segments that we can bring, let's say, full vehicles? We have today a test up in Canada with some Scania vehicles that are into work there. So all opportunities remain open for exchange of components and products within the group. Next please. All in all, the opportunity ahead is immense, and we will accelerate the impact this opportunity gives to us. We shall recover market share over time, earning it through the new technologies, the services we bring to market and the new business model solutions. We're convinced of the value from the TRATON GROUP modular system and the value it brings into our customers. We are always doing this, remembering where we come from with a very lean cost structure and an efficient investment strategy. So this will not grow. This -- the opportunity now the group brings is rather keep on R&D levels at, let's say, call it, a state-of-art low level, lean in our investments, continue working with partnership this time with TRATON, and, let's say, get the leverage. So we're also very resilient in bad times, not carrying in much of a cost structure. Last but not least, all of this, of course, to increase the return we can give to the group and to our shareholders. So midterm, we have this clear target of 9%. I strongly believe we have a lot of work to do to get there, of course. We have a clear path. We're determined in that, but this is not where we will stop. But again, let's deliver on that, take the steps on a quarterly, yearly basis until we get there, until we start, let's say, talking what comes beyond. But the potential in North America for doing more is just immense, both on the percentage profitability and also on the potential of top line growth given where we are today in market share in segments that we previously had a position, and we certainly will recover it. So that is why I strongly believe that we have the biggest opportunity right now in the industry of medium and heavy commercial vehicles for, let's say, the case and the future of international IC Bus. Thank you very much. It is very hard and sad not to be there sitting in front of a screen just stare like this. I hope I got my message through, there's coming up with Q&A, which I will be glad to answer all that I can. And there's people from Navistar. My team is there. So please pose any questions, doubts or needs you have for more information. Thank you very much.

Thank you, Mathias. It's great to see that you are fine actually. And to be fair, that is what I would call resilience and the right spirit we need.

We will now enter our first Q&A session. And let me ask Christian on stage, please, to join me. Mathias will stay with us, of course. Let me do a couple of housekeeping questions before we start. We will take questions from the audience here in the room only. And if you ask a question, it would be great if you just state your name and firm you're representing. And finally, it would be great if you would limit yourself to one question. And with that, let's kick it off. Christian, I'll join you. Who's the first? Yes. Let's kick it off.

Thank you, Klas at Citi. So first, Christian, on the modularization. It's a great opportunity. You can do a lot on the powertrain side through the CBE. The CBE is -- either powertrain is typically 40% value of the truck, typically getting the chassis modular is a big driver. And obviously, we have Scania being launched in '16, MAN's NTG about a year ago. So getting that alignment right can take quite a bit of time. And my question really then is, how much can the common base engine drive the share of modularity? And what is the share of modularity versus like the need we need from the chassis side as well? That's my first one.

Yes, that's a great question, Klas, and that's at the core of our challenge, I would say. So at some point in time, you just have to decide. There is never -- there's different, as you say, different cab investment cycles, different life cycles. Same on the chassis at some point, we have to say stop with one or the other and say now we go common. And that in itself, of course, is not bringing any customer value. But everything thereafter is going to bring a lot of value and bringing the synergies along. And I will not tell you a date when we do that. That's something that we're planning right now, how to do in the smartest possible way. And of course, try to continue to benefit the investments we've done on -- specifically on the cab side. And of course, you can imagine different routes, depending whether this is an ICE platform or this is a battery electric platform. And then we add Mathias and Navistar to that equation, which likely different legal frameworks and it's getting complicated. But that's the puzzle that we're now putting together and especially Catharina and her team are working very, very hard on finding the best points in time from an investment point of view and also from a technical point of view. What we don't talk so much about is the electrical architecture. And that is just as important and it's growing in importance because we put today more than 50% of our R&D resources actually in software. So where we really put priority now is to come to the same electrical architecture, with the same control systems, both hardware and software. And that's -- I wouldn't say it's easy. That would be definitely exaggerating. But it's actually easier starting to touch all of the hardware. So there, we're putting now very firm road maps and saying, could we do that first, then that would really help all of the rest. So sorry not to give you a precise answer, but you can imagine the struggle behind the curtains here to make the best out of that challenge.

Daniela, you're on.

Thank you. I'll stick to 1 as you asked. I wanted to come back to the margin targets, which obviously we have Navistar is new, but the other targets are similar to the ones that IPO. But during the IPO, the group has talked about the quantified the savings, I think it was [ EUR 700 million ] at the time, if I remember correctly. Can you talk about how much of that was already achieved? How much of that is still in or if the form is different in terms of all the modularity and other actions that you talked about?

Yes. Someone told us before that IPO never say a figure because it will haunt you forever. And I even heard EUR 1 billion before that, but maybe we said EUR 700 million. I think we stopped counting at EUR 100 million, and EUR 100 million we quickly achieved in purchasing. So just bundling the components and the raw materials that were the same. But then it comes into the game that you have to invest in order to get the scale effects through. And we actually said which it doesn't make sense anymore to try to trace this. It becomes just a huge job for no value. I mean the point is to make sure that the brands make money, right? And that's what we need to measure. And one way for the brands to make money is to realize they need to collaborate. And if we have a culture of collaboration where Mathias rather looks to what is in the cupboards of the others and starting to develop themselves, that's where we will gain real scale. So we work much more now on the cultural aspect of creating collaboration. And to be honest, that is coming very much through putting demands on the brands to actually drive profitability and growth. Sure if one brand can drive profitability and growth without any sort of collaboration, that could also be fine. That's then because they have such a specific market area or such a specific price portfolio that's possible. I don't think so, not in our industry, but Nevertheless, just to see the thinking. So we actually stopped -- maybe I'm wrong, Annette. Maybe you are still having someone in a corner doing the calculation. No, you don't. Good, then we could have saved that money. So yes, that's the answer to the question.

It's Miguel from BNP Paribas Exane. Maybe one for Mathias at Navistar. So 3 years to the 9% margin target, you did 3.7% in Q1. The drivers you mentioned all seem more longer term to fully implement within the next 3 years. So modular powertrain, parts and service, financial services. You mentioned also winning 1% market share each year from the 14%. Are there any short-term levers like cost cutting you think you could do that could give us some confidence in this 9% target or maybe some breakdown on the 6 levers you mentioned. What will be the core of the margin expansion targets? If you could give us kind of bridge...?

Sure. I could comment a little bit on the very short term. I mean, right now, we are as everybody else. I mean we're having some supply disturbances, and we see some lost volumes that are hitting us a little bit unfavorably, again, like many others. But if we would come back on the volume side, and there's no such -- I'm not fantasizing on a free market with the supply arranged and getting out the desired price point that we could have got today. But when we came into the operation last year, we had already an order book that basically a year of '22 was sold out. So what have we been able to do? Well, we've been able to do something that is -- that I think we were more of the first ones in the U.S. and North America [indiscernible] to apply surcharges -- apply surcharges on online order book. So we've come a bit on that. I mean there is some additional surcharges hitting in throughout this year. But it comes to roads end. I mean especially we're not able to supply not even the volumes you're committed to. So you cannot get further on that. But I see that when we get the balance a slightly better balance on the supply side, which, again, everybody is looking at the crystal ball and having different opinions. It's a bit into next year in the best case, I would say. We have a volume potential right now that will definitely help us a couple of percentages up on the profitability side, very immediate. Then, of course, there's still a gap from, let's say, I would say, taking from 4% to 6% up to the 9%. And that is what we have to work on, on the coming, let's say, 1.5 years. I would say to cross the line on the 9% is towards the end of the '24. We would start having by then contribution on the sale from the CBE, not on the after sales yet, but on the new sales, yes. And we also have, let's say, some service projects that not only give a revenue along the time, but when you sell a bundled service product into, let's say, a -- into the market, you actually start having revenues from the day 1. So it's not fully needed that you are 3, 4 days down on repair maintenance contracts. You asked about the cost side. On the cost side, it is an exceptionally slim structure we have today. So on the SG&A side, we're cautious, but there's not much to work on the SG&A side. There is on the R&D side, like I said before, and maybe supporting Christian's answer, we could never keep today's R&D levels throughout the coming 3 to 4 years if it weren't for group technology. I'm sure we would have to double that to be anywhere [Technical Difficulty] at all when it comes to, let's say, to respond to the, say, the transformation lies ahead of us. So we will keep very low R&D costs, and that will, of course, help us also [ on the leverage ] getting some top line growth when the, let's say, we keep fixed R&D costs at low level. But to decrease costs right now, that is not the plan. It is to work nitty-gritty and, let's say, also benefiting somewhat now a product mix, which comes in quite quickly when you start selling to smaller customer. On a [Technical Difficulty] market like we have today, now that we start opening book -- order book for '23, we favor better, they call it, the smaller operator with a better product customer mix and also, let's say, going upwards more towards Class 8. So [indiscernible] product and customer mix something that will hit sooner also then, let's say, sooner than later.

Maybe, Mathias, you should add something what you expect out of the shift of footprint over to the San Antonio plant in Texas?

Yes, we have a conversion cost saving here also that will benefit us. We have a slightly, let's say, more expensive footprint in North in our operations at the plants there. And of course, the growth that we see ahead of us comes mainly through the Southern footprint, where we have a better PVA and, let's say, that contributes very positively to the cost of the product. And that is starting ramping up now. Now in the first quarter, it's a burden within brackets because we have the cost, but not yet the output. We're today at 20, 25 units per day, again, reaching towards 100 units towards the end of the year. So that will, of course, come also throughout the year and, let's say, full effect in '23.

Thank you, Mathias. We have another question, Mike, maybe first and then here on left, please.

Mike Raab, Kepler Cheuvreux. When I look at all of the building blocks of your strategy in the 9% target of '24, it looks like the vast majority of the concepts you're going to implement are coming from Scania. And perhaps there is historically a very good reason for that. But you could also argue that on the back of that, the other brands of the group will have to conceive what used to be core competencies, thus suffering frustration, which in turn could pose a risk for execution. So how do you keep up motivation in the future despite having to concede competencies? And is this motivation perhaps also kept up by tying -- reaching the targets to variable remuneration of management at high -- mid-level and perhaps even low level? So how far down do you go?

That's a great question and really difficult to answer because we don't really have the answer, but I can give you a few clues how we are thinking. Of course, you're right, and we should add to your analysis there that also in the past, all of the common technology or, let's say, 90% of the common technology was developed in Scania. So apart from the rear axle gear that has been developed in MAN, the whole driveline, the whole control system, the after treatment, gearbox and engine is coming out of the Scania R&D team. And by the way, also the electric drives that are adding to the group. But always done in competition and with friction and with these management challenges that you're into. So what we have to build now is, yes, we're going to ride on the Scania technology and lots of the competencies in the advancements, but we have to be, from the Scania side, much more inclusive. We have to -- I mean, we are coming from a culture where we think we're always right, and we do everything ourselves, and that will never fly. Also not as a stand-alone case in this new economy. But to really open up and what we work with is very much values. So we don't want the same culture in Traton. We want to have different cultures because the customers are attracted by the different cultures of the different brands. But to have the same values. And the most important value that I'm working with this respect, respect for the others. And with respect comes curiosity and try to understand what are -- so why are you doing what you're doing and why is that good. And that's really something that the Scania side needs to -- and Scania leadership needs to work with. Now to really understand why are the others doing it differently. Because a lot of that is, of course, better than what Scania is doing, even if Scania as a whole system has been outperforming the others. So that curiosity is something that I demand from the leadership team and that cultural journey or that leadership and value journey, we are going to perform. And I did not go into that in my strategy presentation, but the foundation for the execution part is really values, to work with common values. And then comes the mixing of the teams. So of course, we have to have senior leadership. And I think Catharina's team is a great example of that. That started out also as a team that was quite Scania focused and that has grown. And today, I don't know exactly how it looks like in your management team, Catharina, but it's -- I think all brands are represented.

[indiscernible] 17 nationalities.

And 17 nationalities In the team. So it's also a maturity thing. But of course, starting up, we will need -- because we will base our whole engineering work on the Scania modular system. You will have to have solid knowledge about the Scania modular system. So not all people in there will come -- the top management will come from Scania for sure not. But yes, there will be a majority. And then that will -- and I expect that with time, we will be completely working with meritocracy, saying that the best one will have the job. So I expect that to change over time and a very active rotation policy where people are changing from one brand to the other, living up to -- and I think we can learn from Volkswagen, the 2+2+2 system should be the basis for promotion, meaning that you have worked in 2 different functions, you worked in 2 different regions and you have worked in 2 different brands, in order to actually be promoted to the higher management levels. So a very fair question. And I think it's a question that you should also ask to Alexander and to Roberto to Mathias and say how can we together cope with this question inside the brands.

[indiscernible]

Yes, absolutely, yes. So everyone on top level, and we already implemented that for 2022. They have -- depending on the level, the higher the more Traton share you have in the remuneration system -- the variable remuneration system, so that we are all I mean, on truck board only Traton, of course, but on the levels also in the brands, they have a fair share of Traton performance in their remuneration, which is more of a symbol, but nevertheless, it's important symbol, yes.

And we will address that question also later today. Next question.

Erik Golrang with SEB. And the question comes on the back of Mathias share gain ambitions which you seem very confident. Actually going to ask you, Christian, about market share in a bigger perspective. I think Scania came from a legacy that seemed to focus a bit less on market share. It was more of a residual and then things changed a bit. And for a period, it was a lot about market share and volumes. We're over now? Is market share super important? Is -- are the league tables up there on every management meeting? What's the most important...

I would disagree even if I was away 3 years from Scania, I would disagree. Market share was never on top. But you're right that when we put the -- at 2015, when we put a 2020 strategy to life in Scania, we realized in order to really grow the service revenues, we also needed to grow volumes. So there was not a market share focus, but you can -- of course, you can interpret it that way. But it was really about getting a more stable role in population to harvest from in terms of services. That has been successful, I would say. But even more successful has been the service market share growth on that volume. So Scania has typically been, if you go 10 years back, been around 12% to 14% market share in the last 5 to 10 years, rather been around 15% to 16% market share average. And I feel very comfortable. I talk about Europe or talk about Latin America, it's the same. I think that's where Scania really should be in order to preserve the price leadership because that is for me what defines then the premium role of the brand that you managed to get EUR 10,000 to EUR 15,000, 10%, 15% more from the end customer because you offer more value. That is what counts. And when looked then to MAN in Europe, I expect MAN to outgrow Scania in terms of volume and market share by working then closer to the upper but midpoint price point in the market, where there are lots of activities with big fetters and with long haulage transport in all European markets. So that's something about the strategy. So Scania clearly needs to be the price leader. And also the one who actually supplies most of the services, having the highest service market share on that volume of sales. Otherwise, I think we will risk the price premium.

Thank you, Christian. That -- I know there will be further questions, but this concludes our first Q&A session.

Unless it's for Mathias because he's not in the next session. If it's for Mathias, we will give the...

He will be back in the second.

He will be back. Okay. Sorry.

I promise. And so there will be a second round of questions. And I promise it will be longer than the first one. Thank you, Christian. Thank you, Mathias. Yes, you may leave. I'll stay for a second because it's now my pleasure to lead over to VWCO, which is our next presentation. Roberto?

Ladies and gentlemen, good afternoon. I am really happy to meet some of you that we last met in London in February 2019. Very happy and it's also a big pleasure to be here to talk again on one of the Traton's brand, the Volkswagen Caminhões e Ônibus brand translating to English the Volkswagen Truck & Bus. A brand -- let me go back, a brand with products and services following their philosophy, "Less, you don't want, more, you don't need." So exactly the way the customer wants. I'm really excited to present to you the developments and achievements we did since we last met and also what are our plans for the future. For those that are not familiar with the Volkswagen Caminhões e Ônibus brand, just some key factors -- facts from our company. We are a very young truck and bus brand. If we compare it to our group fellows like MAN, more than 250 years; Scania, Navistar, we are just 4 decades but very intensive one in the business. We are present in 30 countries, primarily whole Latin America, from Mexico to Argentina, Africa and some business in Mid East. We have produced and sold more than 1 million vehicles so far. And we are the market leader in Brazil, in the truck business for several years, including last year and this first quarter, and we are running up position in the bus market. We are a full liner product from 3.5 to 125 [Technical Difficulty] 120 gross weighted vehicle. We have more than 350 dealers throughout the South Hemisphere, primarily half in Brazil and half in the other countries. We have a state of the art production system, knowing as consortium modular based in Resende. And we have a very motivated people. So a lot has happened. And I would say a lot of good things has happened since we last met in the Capital Market Day in London in February 2019. And the most important thing is that I can say happily that we deliver everything we promised to you at that time. We said that we would expand our product portfolio. We did. We said that we would enter in the electric business, we did. We said that we would enjoy growth in volume, both in Brazil and in the other markets, despite of COVID we did. And above all, we delivered the promised financial results. Going very quickly through each of those deliverables. When we met, we were pretty much in the medium to heavy-duty truck with the high tons delivery constellation vehicle. Since then, we introduced what we call the light-duty truck Delivery Express, which we went in the new truck segment of compete even with bus, sprinters and so on in the [ 3.5 ] segment. At the same time, we grew to the extra heavy segment introduced. First, the constellation as the head based on the MAN powertrain and most important, also based on the MAN, the Meteor, which I hope you had a chance to drive here today. With that, we expanded our product line to a range of gross combined weight from 3.5 with the Delivery Express to 125 tons. Regarding the -- our play in the electrical vehicle, we are very proud to announce that we were the first company to locally develop, produce and sell the 0 emissions truck in Latin America, the e-delivery, which I hope you also had a chance to drive here, is a urban truck with 11 and 14 tons [indiscernible]. Clear, we invest in this vehicle because especially in Brazil, we believe that there will be a huge potential for further sales. And as you can see in the graphic, we expect that by the end of the decade, half of the sales on this application can be electric and the same is not valid for the long haul which will take some time to hit the market. Regarding our third achievement when we said that we would grow, despite of the COVID and some part shortage since 2019, our sales grew by 34% in the Brazilian market. We increased our market share, as you can see in the line on the right side box, in the last 2 years. So part of that is really harvesting from these 2 new products that I have just announced, especially the extra heavy segment. The same is valid for the exports, where on top of new products, we are growing a little bit in each market that we are in, enjoy 57% growth. We talked a few minutes ago where the volume share. The importance for us was that we were able with this product level we have and a good base to grow both in the share and the volume and in the profitability. So while we were growing like this, we were able to grow, pricing our products and increasing our margins. So as a consequence of this, you can see that last year, we achieved the promised 8% over the cycle object return on sales, glad to achieve already last year. And we say that over the cycle because I hope that some or most of it then will be above that. And because of the cyclicality 1 or 2 may be below, in average 8% is our strategic target. But as you can see, we further improved in the first quarter of this year, which despite the difficulties, we achieved 9.5% close enough if we round it to double digit if we can force a little bit. So that's pretty much our deliverables, what we have done, but this shows that we have a good base to further leverage the future. And that's -- we say that looking forward, we really can go even further. And we are ready to that. In which manner, I don't need to explain a lot. I can summarize it's just repeating what we are doing. We have to keep benefit from the market growth in Brazil and Latin America and harvest from the new products [Technical Difficulty]. So that is the first point. We have a potential to further go in export to further expand e-mobility. We have just 1 model, and we have the whole product line to enter, entering new business and as important as or maybe even more important leverage from the Traton Group modular system and technologies. So we are ready for the future and the first big change in line with the Traton strategy is that we reset our value ambitions and proposition. And now we're aiming to be the best value for money solution provider for the transport and the logistic system by offering tailor-made products and service while creating sustainable value for our shareholders. And also, looking forward, and as another step for our future, today, I'm very glad and proud to announce that we have an important change in Volkswagen Caminhões e Ônibus. Aligned with the strategy of further internationalize the Volkswagen Caminhões e Ônibus brand, we have just changed our legal corporate name to better reflect these ambitions. So today or until last month, we are legally MAN Latin America and now from now on, we are legally Volkswagen Truck & Bus. And brand-wise, we also are going to change from Volkswagen Caminhões e Ônibus, which is a name pretty much Brazilian or only for the Portuguese to pronounce it more or less, now we would be proudly using English name, Volkswagen Truck & Bus, and we are no longer after today, VWCO, but we are VWTB. So -- and most important, we are going to keep the brand is -- with Volkswagen Caminhões e Ônibus where the Portuguese line prevails like Brazil. If we go or we are in South Africa or other English country, it is going to be Volkswagen Truck & Bus or if we are in Mexico, Chile or so on, we go Volkswagen Camiones y Buses. So back into the future, just to detail what's coming. And this is Volkswagen Truck & Bus way to the future. We have 5 building blocks to assure the continuation of a profitable business developing, which will take us from where we are today with some years above, but in average, the 8%. Those are ready to grow, designed for volatility, global expansion readiness, future ready and always focused on efficiency. I would like to go now in details of each of those building blocks, starting ready to grow. Like I said, that's -- we have already a good product base, refreshed the full line, following the moat, "less you don't want, more you don't need". The complete product you offer is reinforced by our cost proximity philosophy through an extensive global dealer net. So that is very good product base to keep growing and enjoy what's coming ahead of us. In the other box, you can see the change of the industry in Latin America. And if you take a look where we were, the good old times 2010, 2011, '12, and then went down, especially with the crisis in Brazil, now we're starting over. But we are still far away from where we were. So we see ourself has a huge opportunity of enjoy this industry growth for the catch-up that was not done in those difficult years and especially because our fleet are getting old and old and it has to be replaced. The second pillar is our value, is our production system, is at 25 years all the concept, but still a state of the art what we call a modular production system, which is operated by key suppliers, which is bringing very low labor costs, I cannot quantify our labor cost in this plant compared to other places in Brazil, but I can tell you that it's substantially lower, is innovative until today and lean, agile and flexible plant to cope with the potential ups and downs, very low fixed costs as well and a consequence -- as a consequence, a very low breakeven operation. Just to give you an idea, we produce in 1 line all the trucks and buses and by adding 1 suppliers or 1 partner which is more, we also starting producing the same plant in the same line electric vehicle. So it is a plant that has 100,000 production output capacity, and we have a lot to grow what we have. So good product, good perspective in terms of the industry and a good plant. And we see ourselves as a huge potential for further growth internationalizing. So we are very strong in Brazil. We have a 30% market share and sometimes we ask why not have 30% primarily reais-denominated country that pretty much depend on Brazil, like Argentina and so on that we have 10% on Mexico, we also have aspiration, but why we have 10%, 12% in those markets and not 30%. So we have better money to increase market share and [indiscernible] the 30 markets we are in, entering new markets are the yellow ones or the golden one that's a huge opportunity in Africa and Mid East and by entering new markets and growing the markets we are in, we see also a big opportunity of grow volume and profits. So we said that we are ready for the future in terms of product, capacity, markets and also we are positioning ourselves to benefit from the new services that are coming. A lot has been said here on the electric opportunity, and we were the first one not just to launch the first electric product, but we were also the first one to launch the whole ecosystem to provide it to our main customer, not just the product, but the whole ecosystem of the service in the electric business. So with that, we are really leveraging our service and the same we plan to do with the digital consortium like we did with the e-consortium. And by leveraging that, we believe that we really have a huge opportunity to leverage the sales. So -- and as a last point is this is our DNA, collaboration. When Chris say, we needed to collaborate, that's what we are all about. We always collaborate with suppliers, with group components with MAN, Volkswagen, [indiscernible]. And we are really very happy with this recent move that we are going to further collaborate but keeping responsibility by brand. That's an ideal way. And this is our DNA. So we are looking forward to work with the group and do what we did on the Meteor. Meteor was based on the MAN. We share the best, and we did it the way the Brazilians [indiscernible] today's hit in the market. And we are going to do that with a very motivated people with outstanding execution team with very experienced and we will get it there. So summarize and thank you for the attention. I would like to say that we would like you to take 5 takeaways. The first one is that we have returned to the profitability level. And important to say that it's not up and down. We have been growing quarter by quarter, month by month and that we are really getting there in a very sustainable manner. We are keeping the growing path, always growing little by little, customize or retain all the customer and gain new customers, especially in the electric, especially in this new extra segment that we fight with the low interest [indiscernible] Scania and the ones that play premium. We have all the required conditions, the Volkswagen brand and our experience in major markets to further grow globally. We are put together the ecosystem for electric and digital and we keep working on efficiency and group synergies to improve even further our profitability level, which is set at 8%. Ladies and gentlemen, before go to the next one, our track record shows that we are able to make it, now it is just to keep it up. Thank you very much for your attention. Very glad to announce my dear colleague, friend, Alexander Vlaskamp, please.

Thank you very much, Roberto. Ladies and gentlemen, very much welcome here, and I'm delighted to represent MAN as a new kid on the block in this room and also very much welcome outside here. At MAN, we have a strong focus on the execution on our transformation. And that's about the transformation of our industry, how we go into digitalization, electrification and autonomous, but it's also about the transformation of us as a company, to deliver what we actually are delivered for and what we've known for since many years in the market value to our customers, but also value to our shareholders. And we definitely have been gearing up with our team for that to show you that we are delivering. The first quarter, actually, we were on track. We started the year well. And actually, we even got more semiconductors available as we expected, gearing up for a good quarter 1. However, then -- and it's a humanitarian catastrophe then the Ukrainian war hit us all. And it more of us hit also the MAN team and the MAN Group. We, of course, have been taking care, first of all, of our colleagues in Ukraine, including our partners and including also our suppliers in Ukraine. As a matter of fact, MAN is supplied by 3 locations, 100% with cable harnesses in [ sequels ] customized production from the Ukraine. As the 24th of February, this situation hit us, we had immediately the task force in place, playing the game through with our suppliers. Unfortunately, already the week after, we're actually running out of sequence. And by mid of March, we were standing still with our truck production. At the same time, our task force together with our suppliers, have built up duplication, a workload, which you normally take 9 to 18 months, actually now has been put into place, and we get the first kits from Brazil with the support of Roberto's team. We get the first kits from another supplier in Poland and helping us to ramp up production again now since the 25th of April. So we are back on track. But of course, first focus was our colleagues and also they are back on track in Ukraine and safe with their families. Secondly, of course, to get back on our supply base and we started production accordingly again. But most of all, of course, it's also about our customers and how actually we put our customers also in a dire state, not being able to deliver the vehicles accordingly, as they are longing for to make sure they deliver on their operation. Also here, we have been working on finding solutions to keep the existing fleet running to make sure that we have vehicles available from our pool of rental vehicles and make sure that we have an eye on the customers. And last but not least, we also have been focused on being very transparent to our customers, to our colleagues, to our suppliers and to you as well on the market. Sadly, actually, we would have liked to show you that we have been delivering here. Because the 2.2% return on sales in the Quarter 1, which actually is the result with 14% lower volume, what we delivered versus last year Quarter 1, we would have actually topped up and had 4-point high percent digit margin for MAN Group, where we actually are in the mid of our realignment program, which we are going to deliver by 2023. So that's the situation we are in, but we are, as a team, further committed to deliver on our realignment program and also deliver on the transformation of our industry. Let me show you which significant milestones actually we have been delivering on. So far, we have reached -- we have launched the new MAN strategy, which we have put into place with our team 18 months ago, which is the foundation for our future success. This is including a realignment program, which we will touch base upon in the next slides and show you where are we within the different building blocks and how are we going to deliver to 2023 and forward. Then, of course, also to enjoy you the full relaunch of our product portfolio, which we have been launching on the truck side in 2020 and on the bus side starting 2019. And also give you a glimpse how this is actually giving value to our customers for their operations. And of course, also, we have put extra focus actually on leveraging on our services business. And our services business here and now but also to make sure that we are growing our services business in the future going forward. Yet, we are not there yet. So we have more focus to progress further on. We have to finalize, of course, our realignment program by 2023. And make sure that we're also leveraging on the tail effects of the program and the learnings we have been doing also by executing ourselves with our own team, the realignment program accordingly. Furthermore, we have to put -- make clear that the foundation to go into 0 emission transport is here to come and there to stay in the coming -- in this decade what we will deliver. And that we do together with our customers, but also with various partners, including also the group competencies. And that leads me then to the last future important building block to progress within our main group to make leverage of the Traton Group competencies and of the modular system going forward. Here we go. The new MAN strategy within our team, we speak about 3 important building blocks: to become a robust company, meaning, of course, being a robust team, which is resilient over the business cycle, deliver there where the business is on high, but make sure we don't fall back too heavily when actually the business is in a dire state and when the market is there, where we don't want to see it normally. But we are in a cyclical industry, and we have to be resilient. We show you how we get there. Second, of course, being a smart innovator, being a smart innovator along the transformation of digitalization, but not only drive to the future but also deliver on digitalization here and now within our service operations, within our production and within also our lean processing within the support functions. But smart innovating also, of course, means to actually lay the foundation for electrification. We have been showing various information here to the market how actually MAN on the bus side but also on the truck side will serve their customers with high-value trucks by the [ break ] of the market when we see actually the S curve going up by 2024, '25 going onwards. And last but not least, also training within the group, but jointly also exploring the area of autonomous transport. And of course, this can only be delivered by a strong team. And by having the focus on our customers making sure that for our customers it's simple and easy to do business with us, but it's complete and that they can focus on their core business. Our realignment program is the important foundation to become a robust company. And here, we have a calibration on 2019, where we delivered 3.3% return on sales with 80,000 trucks accordingly. We have put a program in place along 3 dimensions. The first, having structural dimension, making sure that actually, we have a resilient structure to enjoy the peaks of our cycle and make sure that we don't fall down too much when it comes to actually the lows in our business cycle. Secondly, of course, we are also focusing on the material cost when it comes to the material cost when it comes to also the product cost structure and furthermore, of course, what we buy as energy, as transport and so forth. Lastly, the dimension is also a long volume and price. How actually effectively we are making sure that the value what we put into the delivery of our trucks, of our buses, how do we bring this forward to our customers, including also a broader range of service contracts and including a broader range of also a service footprint. So if we dive into our realignment and where we are standing, then we can say that when it comes to the structural measures, we are well on track. And an important part of our structural measures takes place in our production footprint. Here, it will have a EUR 550 million effect throughout 2023, and we're expecting even some tail up into '24 to be leveraged upon. We have been closing down and agreeing to close down the Steyr plant for medium- and light-duty trucks, which is an assembly plant in Austria. We are successfully ramping that down and the ramp down will be completed by May 2023. The capacity of the plant will be shifted actually to the west coast country, Poland, to our plant in Kraków. We have also closed already today our bus modification plant in Plauen. And this job has been integrated in our bus factories in [indiscernible] in Poland and in Ankara. Also here, again, moving from a high cost country to the best cost country operation. We also have been laying the foundation for expanding our plant in Kraków, our truck assembly plant in Kraków. There, we have been investing and will invest EUR 130 million to make sure that we go from 100 to 300 trucks per day capacity. And at the same time also, we will build in their flexibility because we will have there the flexibility to make sure that we can assemble also medium, light and heavy-duty trucks on the same assembly line within the same takt flow. Our Munich plant, we have dedicated to become our e-mobility truck plant, where we will start to build our e-trucks, but also with a very innovative concept to make sure that we are filling the S curve towards e-mobility. I'll show you later. At the same time, also, we have been working on structural measures when it comes to the engineering footprint. We have been ramping up more staff in Pune and in Ankara to make sure that we have the brains going forward to facilitate on the transformation and also to develop into the Traton modular system. But at the same time, we are ramping down a number of engineers in Munich and again, here, proving that we are moving the footprint from a high cost country to a best cost country. When it comes to material costs, here, we have implemented very much a cross-functional work team to make sure that we are working on the material cost savings from commercial negotiations and discussions with our partners here. But also from technical product cost optimizations throughout the products, making sure we are reducing the variance, but not jeopardizing the customer value going forward. At the same time, of course, we have been also working on nonproduct-related costs but also on energy and of course on transport savings accordingly, even together within the group. And one example is, for instance, how we together with Scania in Europe actually optimizing our transport routes. But here again, as you have been seeing in the previous slide, we definitely have some headwinds, which we counted for into the program. But the current supply chain disruptions, the semiconductor shortages and the current inflation on raw materials, of course, make sure that we really have to put all set on sale to counter attack these issues. So what we're doing here is that we definitely are re-scheming program there, but at the same time also, we move a lot of the inflation, raw material cost into actually our price and volume plan accordingly. And the same as Mathias also mentioned, we're also going back to our customers and have to reveal that we have to do a surcharge accordingly on the orders we have in the order book. At the same time, also, the third dimension of the program is to work on volume and price. And of course, here, it is to work with the customers and also to make sure that we are showing to our customers what a fantastic product we have in place. And I will show you later more about that and the testimonials we get there from the press and from our customers. But also here to work on the pricing and optimization, training of the sales staff, making sure that we have combined offers, products and services that makes actually getting and gaining speed here on the volume and price mixture. But of course, also what has been important is to the turnaround of our used business. There has been a good demand, which has given us some tailwind. But at the same time, also, we have worked very much on the used truck business to make sure that the quality is good, on the vehicles when we take them in that we also have a fast turnaround focus, at the same time also when we are reselling them, that we resell them, again, in packages when it comes to finance, when it comes to service contracts. So also gain there on the tail of the service business. And lastly, also making sure actually that we are reducing the quota of used trucks and residual values in our balance sheet, so make sure actually that in the future, we have less risk going forward. So we have been working very thoroughly with our team through all the 3 dimensions. And I can tell you, every day new ideas are coming up. The mostly -- the biggest lever what we actually gained is the change of the footprint as we have been speaking. And that means that when I speak about moving from best cost countries to -- sorry, from high-cost countries to best-cost countries, then actually, this is contemplating in a 17% gross reduction of staff costs. So this is a structural change, which we will have in the company. At the same time also, we are moving to markets where we have a higher flexibility of staff. And lastly, also, the ratio between direct and indirect also has been a lever, which we have used to skim through actually our structure and our setup of the organization. And we see that full earnings of this comes into effect from 2024 and onwards. To deep dive into this, when we look into our production footprint, we have been moving from 3 truck assembly plants are moving then by May next year to 2 truck assembly plants. One plant where we are fully flexible to ramp up e-mobility and that's our Munich assembly plant and then having a full flexible plant in Kraków in Poland, where we can up to 300 and more vehicles per day produced over the full range what we have in place. And that also makes it easier for us actually based on the market demand to put the right truck on the line to make also sure that we don't feel pressures to fill actually with the medium- and light-duty trucks a high-cost country plant like we have in Austria. At the same time also, we have been moving from our Munich production plant, the high labor-intensive interior production of the caps to Poland, which we also actually have been transferring right now. And when it comes to the mood in the company, this is done in a joint atmosphere. I've been moving around a few times now through our plant. And I see our Polish new colleagues being trained by actually our colleagues in Munich. And everybody in the company understands that we have to do this to make sure that the company comes to a new earning level so we can actually make sure that we earn the money to transform ourselves into the future, to make sure that actually our customers stick to us as we have a wonderful customer base around the globe. So when it comes to trucks, we're moving actually from 25% assembly in high-cost country to 65% assembly in best-cost country. And here, our team has delivered on a fantastic optimized system going forward with full delivery from mid next year. So there, definitely, we have to hold on, and I can promise you, I cannot wait to show you the results then together with our team. What is important, of course, is always to bring the value to our customers. And our trucks actually are definitely now bringing the value to our customers. You have been driven them before on the test track here. And without TG3, we have won numerous fuel consumption tests. We also have won various cap tests and lately actually be on par with the latest introduction of a peer by Commercial Motors. And why I'm saying that? Because, yes, it's important for customers to have a good TCO. But if you want to have a truck, which delivers a good TCO, you also need to find a driver. And there, you need actually a fantastic cap and a fantastic cap atmosphere. And that is exactly what we now have in the market and what our customers underlying. And of course, we would like to come back into full production swing to make sure that we can lever on this, both for our customers, as well as for our earnings and our team. When it comes to the bus, here, MAN has been focusing very much on, first, electrifying the bus business. And why is that? Because MAN has a 17% market share on the bus business in Europe and even 20% and above when it comes to city buses. So here, we are electrifying Europe. And with our electric for city, which you have enjoyed also driving here, we have already today 750 buses in the order book, and we are delivering to high demanded customers as the city of Zurich, as the city of Hamburg and in various Southern European countries. Both in 12-meter and articulated optimal combinations delivering also even a record 550-kilometer range for even long city range operations a day. So also here, we are learning for the technology of tomorrow what we will need in our trucks. And what we will get in our trucks and in our buses going forward will be going towards 0 emission and in a later step towards autonomous transformation. And throughout that journey, we will step-by-step actually lever on the group components accordingly. When it comes to our battery electric truck, we will lever to close to 65% on group components, even including Volkswagen Group Components and Technology. And when it comes to our new ICE future powertrain, which we are investing in the factory in Nuremberg EUR 170 million and delivering soon onward, we will have another 65% actually stepping from close to 20% today to 65% value creation through group components. And yet, as Christian also presented, the next step is to jointly have the lever of a common modular system, where we will step gradually into but make a huge step to actually take away all the interfaces work and make sure that 3,000 engineers at MAN can also work actually on adding value and not trying to figure out how this component can be interfaced to other components because that competence we need for, of course, creating customer value when it comes to our bus program and when it comes to also our truck program. I'm really proud on this movie and how the guys have me show there. And I really am frustrated that we can't show you this in real time right now. But when it comes to our electric truck, we will make sure that we will be flexible and also CapEx efficient by having a production line in Munich, where in the same takt time as of today, we can actually install our ICE future powertrain as well as we can install our battery electric powertrain going forward. And you see this simultaneously on the movie here, and it's a fantastic work from our cross-functional production engineering and engineering team to make this happen. And by this, we are flexible and resilient as we actually are moving into the area of e-mobility. Yet we, of course, have to lever beyond the volume and price, also make sure that we lever on our service business. And this goes and started definitely with the products. And the product is connected. And right now, our product range is offering over-the-air updates and the over-the-air updates bring service to our customers while actually they can enjoy more up time of the vehicles. And actually, our current product range is delivering better quality and better uptime actually than our previous one, and that is also valued by our customers. At the same time, by this, we can much more effectively operate then services business when it comes to contract portfolio and stick then to the scheduled maintenance accordingly. Last but not least, of course, also making sure that we are connected digitally, not only through the vehicle and the driver, but also making sure actually that we are connected to the operating base of the customer and smoothly plan in our network to service operations. And by that and by having this digital connection, which we will use then also for our e-mobility rollout on the trucks to make sure that it's not only about doing your service but is also to make sure to connect the vehicle to the right and available charging bay. And that charging bay might be in one of our own captive dealer network or also at the captive service point of our partners accordingly. And last but not least, to bundle this complete product, financial services is key. Our -- today, financial services with Volkswagen Group is operating, but we believe we can step up here to actually drive financial services together also with, for instance, insurance supply to support our business going forward. So a lever on services is key. But what is even more key is a fantastic team to work this and bring this forward to our customers and make sure that we are staying a robust and resilient company. That is the commitment what we have. And as we also have been moving our footprint accordingly, we also focus very much on empowerment, as well as top-down and also bottom up. And by this, we are using the matters, of course, of inclusion and diversity and at the same time, also commit to a 20% female managerial roles by 2024 and also 30% female managers roles by 2030 accordingly. MAN will deliver, and we deliver on our realignment program. We deliver on our product road map and also make sure that we are leveraging on the group components and the modular toolbox, which we will get available. And last but not least, our growth will be focused on our customers and make sure that along the lifetime of the products, we are servicing our products with our service business. And by that, we are stepping up with the realignment to 7% and going forward to a strategic 8% return on sales. Thank you very much, and you have a deserved break right now for 25 minutes. [Break]

Right. So over to my favorite topic, Scania, and welcome again to Scania. I think Lars said it this morning, but where you are is really where we inject -- yes, between 15,000 and 20,000 doses of Scania family culture into customers predominantly coming here. So you are at a very wholly place. And you are at the Holy Grail of Scania which is Sodertalje, where absolute majority of both R&D, purchasing, production, sales and marketing, central functions are located, which is something quite strange and something we have to learn not to live with in the future where we are going truly global and being part of the Traton Group. My focus for the coming 20 minutes is to take you a bit through what are the key success factors of Scania in the past, which of these are relevant for the future and what do we need to add in order to make Scania future-proof the way it needs to be as the profit leader of this group. Of course, our entire industry is going through a huge transformation, and we have a strategy to cope with that, and on top of that sits sustainability. And we have even lifted it up and say our purpose is to drive the shift towards sustainable transport system. But the building blocks of that is decarbonization, just as I talked before. For Traton, it is people sustainability, and it is later on circular business. And the way we measure our progress is through science-based targets, and we measure that in all parts of the organization. But going back to why has Scania been successful throughout the years? Well, if you ask me, there are perhaps versions of this. But very much is coming through the very bold business model saying, we do everything to make our customers profitable. That's a very bold statement. But we do that because we believe if we make them profitable, we can also be profitable. And to the extent we've been able, through different management consultancy firms, to measure, the average profitability of our customers are higher than the average profitability of customers in general in our business. So that seems to be paying off. Another part is our modular system, and we spent a lot of time on that today because we're expanding that into the Traton space, but the modular system is actually part of the magic. We did not talk enough about software but to build modular software is just as important as building modular hardware. And then, it's our company culture. It's a very culture-based leadership style where we rely on the house with the values and the leadership principles in there. And on top of that or part of that is the inspiration from Toyota that started up in -- back in the '90s, looking to -- and I should say, the modular system started in the '40s. So you look at me as some kind of fossil standing here. But it has been working, it has been serving its purpose. And the journey together with Toyota in the '90s has created so-called Scania production system, and from there comes one of our main values, which is elimination of waste. Question everything in a systematic way, and you will not only save resources, but you will also save the planet and you will achieve higher quality. So that's part of our background. I think we have not delivered up to expectations in the last couple of years. We used to outshine the industry, hovering around between 10% and 12% return on sales. And well, these are the latest year. Of course, 2020 with its COVID lockdown and production stops were something special. But nevertheless, we are not where we want to be. And why is that then? And from a very high level, when I look into what we have been doing. One thing is, of course, a big investment into the new truck generation. And in parallel, invest for the group in the common -- the FPP that we talked so much about. So the common engine, the common gear books and the common drivetrain. Which has been, let's say, financed by the brand but not yet giving any benefit as the first other brand taking it is Navistar, and that's not until next year. Another thing that has harmed us, I must say, is our product cost. So we have struggled in the last years from the introduction of the NTG to get that product cost down, and we have had a very good product cost optimization project running which really has started to pay off, and we see clear improvements looking at 2021 compared to 2018 when we really started to see the first tendencies that the product cost was -- had not been enough considered in the development of the new product. And finally, being part of the Traton Group or the Volkswagen universe implies a lot of things on you. Everything from reporting to IT systems to kind of things that makes you less fast, flexible and agile, and that's something that we are also addressing now through the Scania transformation program that I will touch shortly in a while. So I'd say product cost problem under control. I wouldn't say it's solved. It's never solved, but we have a method to take care of it. The -- on the product side, we're also launching the Scania Super, that you have all been test driving here in the room. So 8% on average, giving us a fantastic opportunity to increase pricing. And then there is much more potential to take out of the service business, and I'm going to come back to that. But here is our hero. The first then commonly Traton developed driveline, and we are confirming through test, but now also through customers as the first delivery has started. On average, an 8% improvement, and that is a lot in our industry. It has been going through testing, of course, and it did manage to win the most prestigious test in our industry, the German [indiscernible] Test coming out first. But even more important, we received the news last week that we also won, actually for the sixth time in a row, the European Green Truck Award, which is a comparative testing on which vehicle that actually runs the most economically or environmentally, happens to be the same thing in our industry. So 6x in a row, of course, starts to be an issue where our competitors say, hey, this is not possible. Why should we even be part of this testing? But that's just confirming that this new powertrain investment is paying off in a very, very nice way. And it's also confirmed through the measurement of CO2 emissions that you know our industry, just as the car industry in the European Union will have to gradually reduce CO2 emissions. And the base year is 2020, and that meant that EU had to implement a mechanism to start to measure which are the CO2 emissions. And CO2 emissions equals fuel consumption in our industry. And there, it was confirmed that Scania, with a big distance, was the leader in fuel consumption in the industry. And that's the first time we actually have an official measurement on that, so that feels very good. Second best was actually [ a mile ], which was not a surprise to you and your team, but it was a surprise on this side of the Traton Group. So congrats also to that, Alexander. On the footprint side. So here is Scania in a nutshell, with a very clear philosophy that we have one global product. It's the same everywhere. The modular system is applied in all our factories, meaning, that we can shift component production and even vehicle production between our sites. But with a rather big handicap that has been more and more visible in the last, I would say, the last 4 years. So 3 out of the 4 last years, we could not deliver what we managed to sell. So we are clearly hovering around our capacity maximum. So our challenge has been, should we add capacity -- even more capacity either in the Latin American system or in the European system by moving into more shift forms, which is very expensive when you're already running 3 shift? Should you expand your fact -- should we build another factory? But as the geography where we suffer the most by the distances and by our sales model is Asia, we decided that added capacity has to come out of Asia. So that was actually the first steps in looking for China. So it was not that we later managed to get the license, but it was really the fact that we need more capacity if we should be able to grow. We have been capable of delivering close to 100,000 trucks but we could never cross that line. I thought we would be able this year, but with the semiconductor shortage again, we won't do it. But it doesn't matter. We cannot reach the 130,000, 140,000 that we could be capable of doing from a pure sales point of view with our global presence. So therefore, the investment in China is for us super important. And on top of that, we get to address the Chinese market from a better cost positioning. So -- but you can imagine a customer in Australia or New Zealand, Super tailor-made big V8 rig with a lot of axles, they have to wait between 6 months and 1 year in a normal demand situation. And right now, we are way beyond that just because of the transport and logistics time. What you also have here on this slide is a glimpse of our sales and services network. That's also, of course, part of the Scania secret sauce that we own so big part of the network. So we have more than 600 workshops in our own books, and we're running this through a system called Commercial Operations, where once I was heading that, and Matthias Carlbaum replaced me. And there, we run the captive sales and service business with its own accountability. And that has proven to be extremely successful, and that is, of course, a system that we can continue to roll out and benefit even more from. So in a nutshell, a clear purpose to drive the shift, sustainability ahead of everything, best-in-class vehicles and engines, a business model that is extremely integrated based on tailor-made solutions through the modular system, and tailor-made solutions means also services. And the global footprint that had served as well, but that needs another step in order to continue to grow. But what more can we add? Well, new technologies are bringing new opportunities. And one thing, I mentioned services, which is contributing today greatly to our bottom line, we can do so much more. And thanks to the connected vehicles, that we were the first in the industry to standardize already in 2011, we started. So we have more than 600,000 connected vehicles now where we are collecting data. Based on that data, we can go much more proactive. One big step was a couple of years ago with the launch of the NTG. We decided to start to offer customers-only tailor-made maintenance, meaning that we only do exactly the amount of maintenance and maintenance in the exact time based on the usage of that individual vehicle. And that has proven extremely successful. And that can be done thanks to the data stream, of course, based on good AI learning, so good algorithms on that data. And of course, also experience from the workshop managers around the world. So by that, we handle today maintenance in a completely different way. Meaning that we don't overmaintain, but we also don't under-maintain, and we can match the maintenance to the actual usage of the vehicles. That has many advantages for the customer, but it also has an advantage for us, and that is that we can plan. So we can run our workshops like small factories. Having exactly the right inventories, the right people in place, the time slot planned, and by that, being very, very efficient. But for the customer, it's mainly an uptime issue. Next step, which we now launch together with Scania Super is a service called ProCare, and ProCare is then moving the same concept into repairs, saying that the dream is that the truck never breaks down. Just like an airplane, it just has to be up and operating. But there is usage of parts and certain parts does not have, and it's also not economically viable, to invest in 2 million kilometers lifetime. So let me take a typical case generator. To build a dam generator that lost 200,000 Swedish meal, [ SEK 2 million ], it is possible, but it would be super big, super heavy and super expensive. It doesn't make sense. But let's make sure that does not break down and cause a vehicle stop because that's the worst thing that can happen to our customers. Typically, it costs them around EUR 2,000 every time it happens because of the still stand, because of tooling, because of on-site repair, because they are on a French highway and they are not allowed to stop there, and there are millions of problems that occur when it happens. So with our ProCare service, we now expand the usage of data and sensors on the vehicles to start to actually kill the repair work and just make that a subscription-based service, and customers are prepared to pay for it. There is no doubt. They all know what still stand costs. So very interesting new contracts are taken into the market in the Scania system. I promised to come back also on electrification and be a little bit more precise what is happening. So what we have as Scania in the market right now and what you can see coming out of the Sodertalje factory, 2-axle, 3-axle vehicles up to 29 tonnes, typically vehicles for inner city work. So distribution, taking goods in, garbage collection, taking stuff out, city buses where MAN has been much more successful and faster to market, but also Scania has now a range of city buses, fully electric. It does not cover the heavy typical long-haulage vehicle, the 40-tonner. So that's the next step. So during next year in 2023, we will launch the typical tractor unit. And this is also where we start to take deliveries, big deliveries of battery cells from [ North Walt ], meaning that we can add more range, and that's needed to those vehicles because they typically do more distances. And then in 2024, what we can add and what we're planning to add is more charging capacity. And that's also when we think that the first mega chargers are out in the market. Meaning that you can charge in 45 minutes, which is the resting time of the driver. So with that update, you really can handle most of the typical European long-haulage transport, which is 60%, 70% of the market. In 2025, we expand this into our entire modular system. And this is the beauty of our modular system that we just need to add the e-axle, which is the drive. All the rest we will have. And then we can cover any type of configuration. We can do fire fighters. We can do heavy mining vehicles. We can do forest vehicles. We can do whatever you want, military vehicles, if they want. And by relatively small effort because we're just adding components that is missing into the system where everything already fits together. So it's not new models. We talk about it like that to make media understand, but it's actually adding building blocks to our existing offer. So 2025, we think that 10% of our sales will be electric. And 2025, we will be able to cover basically every application there is. All right. I touched this already in the Traton presentation. But what is interesting when we go electric is that there is a whole new ecosystem that emerged around the vehicle. And this is something we have to learn and we are learning as we speak, that customers ask for new things. And all of this is an opportunity to actually build business. And that's what we are doing as we speak. So apart from helping them with incentives, yes, it's actually, to us, the customers come and say, hey, can you help us to apply for that subsidy that we can now get through the government? Two, the most obvious one, which are charging and energy provision. So we are now installing together with partners. We're installing infra in depots, in destinations. We're setting up contracts with energy providers where we have teamed up with a number of renewed European names. And we are, of course, doing the normal services that we already did on the electric vehicles. So we're just in the beginning, but this is a super interesting shift that is happening around electric vehicles. I mentioned some of these babies where we have a strategy to learn in small series before we before we actually go public. All of these have already the components I'm talking about ready for '23 and '24, even if there is different level of prototype of the components, and of course, we will have to change them once we go serial production. But these are the customers that give us back lots of feedback and learnings. Wibax, I didn't talk about before. That is one of the suppliers into the Northvolt plant up in [ Skelleftehamn ]. So as you see, it's a silo transport taking powders from the port and up to the -- up to the factory constantly. And of course, they wanted that to be electric, which is -- makes sense, so also a great marketing experience. The customer is a normal transport customer that is working in Northern Sweden, and they are so happy now that they ordered more vehicles. So they will have more of this despite the rather high product cost. So I think this is a work that we're really doing to move the whole industry in showing that everything is, with electric, possible. And it's very important for us also talking to the policymakers, because there is still doubt that we are actually decarbonizing the so-called hard to date sector. And we're now putting the ball in their camp and say, hey, Scania is ready, you are not. And that's actually a fact. In most countries, the policymakers are not ready to support this enough. And therefore, the discussion around hydrogen, we had before is also important to help them also to focus, put the resources where it makes sense. Don't throw money at building out a huge, dense hydrogen filling station network throughout Europe. Save that for the heavy industry that really need green hydrogen, there's so little of it available. And then let us have chargers just like for the car side, but just more powerful. So key takeaway from the Scania side, we keep our business model. We work with the modular system for both software, hardware and services. We continue to build up a global system. We need a third hub, and it will be China. We drive the shift to secure our profitability leadership. And the service offering, you've just seen the start of it. Even if we pass the [ EUR 30 billion ] threshold last year, we're already talking about substantially higher numbers, and we grow the services sales in the first quarter with 19%. So I'm not saying it's going to be 19% every quarter, but it just shows the potential there is in the service markets. So with that, I stop, because I realize that the most important parts of these [ CMDs ] are the Q&A session, so I will make sure that we have enough time for that, both for our sake and for your sake. So thank you very much, and I hand over to Annette to take you through the financial part. Annette, please.

Hello, [ together ]. And as we explored this morning to the audience, here, I think you enjoyed the [indiscernible] with the trucks and the takes. And I think the most important is that we come together after 3 years and talk with another, what is the development ahead of us. And you heard a lot today. And now, I will take you to the finance part of the Capital Market Day. I'm the CFO of Traton since October last year. And you heard from my colleagues the group strategy, the band strategy and how we want to go forward with a very defined plan. And to sum it up before we go to the financials, we have straightened a responsible company to a transformation towards sustainability and becoming a frontrunner of e-mobility. This is our aim. We have a strong focus on long-term value creation for our stakeholders. We're shaping the future of the logistic ecosystem and we are all in to expanding our business model as explained today by driving and leveraging a partnership culture and to embracing digital. And this is our strategy going forward. And now, I will explain the role of finance in this strategy and how we want to drive this. First, a look back on our financial performance in the last 5 years. We improved the revenues by EUR 6 billion. Traton recorded improvement which was harshly interrupted by COVID-19. Now, in 2021, the revenues are almost back to pre-pandemic levels. At the same time, we benefited from the consolidation of Navistar that we consolidated on July 1, 2021. Navistar contributed EUR 3.6 billion. Return on sales, we're following the same trend, but then COVID-19 pandemic and the subsequent event really dumped the return on sales. Calendar year 2021, as you know, was below the 7% that we achieved in 2019 due to strong impact from the supply chain shortages and also from the headwind of the input costs like raw material. Even in that phase, we reported reasonable quarter. So in the first half year of 2021, we had over 8% return on sales, that one harshly interrupted with the shortage that we have. So this show the potential that we have, but still we are not there where we want to be. When we come to the pillars of the Global Champion strategy, this we are executed. And the most important pillar was the acquisition of Navistar and to get access to the profit [ ports ] in the United States, Canada and Mexico. And as you all know, this was one of my major project, and I'm very proud that we made it, but it came also as aside. This deal was debt funded. Net liquidity has become a net debt position above EUR 6 billion. At the same time, we maintain the invest grade rating. So based on our strategy and the described execution plan, we have defined clear focus area for me as CFO, to going on, and here, you see it. First, the team and I will steer to support the group to even focus more on sustainable profitability by optimizing the regional mix and increased share of value-added services. We will also make the group more robust on earnings quality and cash flow, and stronger against cycles in the industry. Second, we have to shape and to drive the development of new technologies. We will become a front runner in e-mobility and new business model. To do this, we have to invest in common components, in new business models and state-of-the-art technologies. It is a key to keep an efficient allocation of cash and sustaining our competitiveness. Last, is dedicated my focus, and we have to reduce our net debt levels and to straighten our capital structure. Now, let's have a look on our profitability. As you can see on the chart, we have an ambitious target. As a new management team, we are committed to deliver. This is our main focus. We count on each brand to deliver the strategic target and make fair contribution for the group. Scania, as explained from Christian a few minutes ago, maintains the profitability leadership and where we have a double digital turn on sales. Volkswagen Caminhoes e Onibus with Roberto leverages excellent position and maintains the market leadership in Latin America. The strongest absolute upside will come from MAN Truck and Bus and Navistar. MAN, we're benefiting from the [indiscernible] execution of the realignment program, and Alexander explains the way how they want to gain and come back to the strategic target of 8%. And Navistar will regain market share and the respective volumes will drive the margin, and Matthias explains the building blocks to come to the 9% overall for the group. And we, as Traton, have a return on sales target of 9%. Not only long term, we want to reach this target in 2024. You will remember the 9% from the IPO in 2019. This 9% have a much higher quality. What is the reason why? Because it's including higher R&D and investment to supporting a stronger competitiveness and growth opportunities. And it's including a PPA of EUR 250 million at this time related to the Navistar acquisition, more than 50 basis points. As you heard from my colleagues throughout the day, each of our brand has find an ambitious target and a very defined plan and of initiatives and drivers how to get there, and we are confident that they will deliver. Also on group level, we have a plan to get there in 2024. We have the building block in place, and as you see here, volumes are the key driver. We are convinced that our markets with significant growth. Further important driver is a successful execution of the MAN realignment program as explained, and that we have a positive net effect price of volume versus the higher input cost that we expect. And so we will have there a positive driver for our result despite the challenges that we have at this point in time. At the same time, we will invest more in R&D and in CapEx, and we aim to more to compensate these effects to have a significant efficiency gains across the group to reach our 9% in 2024. What are the key building blocks that driving Traton's margin and earnings in the next years? First, we expect the market to continue to support our growth. Traton meets the demand with highly competitive products often that we will continue to upgrade. With normalized supply chain, we will benefit from economics of scales and improved fixed cost absorption. This will be complemented by a further expansion of our vehicle and service business and a better price positioning. Talking about fixed cost was MAN's realignment program that has a very defined plan that Alexander explained. This will lead to a further decrease in fixed costs and bring in to a better fixed cost structure and increased productivity. Q1 result showed the first positive signs here. And the other building blockers, all brands of Traton Group strive to foster sharing of technology, know-how and R&D cost, all based on the clear distribution of responsibility. Christian explained already the modular system and how we want to do this. We started with a common base engine and we gain further traction with the modular system, and we have the full potential out of this when it's completely installed over all brands. This will not only reduce complexity for Traton, as it will also reduce the cost per unit and creating even more stronger customer value. This, together with the [ port ] footprint, with an increasing share of vehicle services and financial service, will lead to improved robustness. And therefore, strong ability to master the cycles and the challenges in the market environment. Which brings me to the focus area for me as CFO. We sustaining and even increase the competitiveness, while we have an eye on efficient capital allocation. The challenges are very clear. The industry must step up to decarbonize. In doing so, the customer, our first priority. We have to comply with a broad national and international regulations that adds complexity and cost to our products. We have volatile and uncertain markets where we have to really also go with the competitive dynamics and the pressure that is put on us. Overall, we have an ambitious strategy in place, and the most ambition that we have is to make Traton to a frontrunner in new technologies. But this will not come for free. This require investments, both decisions and choices to be made. And as you will see, we want to pull forward the group with the best way we can do it, and we want to increase the competitiveness with targeted investments. Looking at our playbook to manage the shift towards sustainable mobility, we do not just step up. We also reallocating existing buckets, and we will make clear choices where we spend the money. Here, R&D is key. And we aim to step up the investments in the coming years, especially to drive the transformation to a sustainable future. A strongly increased share will be spent and invested in future technology and in growth. As a result, the Traton Group is planning to invest EUR 2.6 billion in electric mobility R&D by '26, securing our competitiveness and also about the wide level and the wide areas of CapEx. Also here, the share of future technology will increase. At the same time, we will further diversification of our business setup. For example, we plan to build up our own capacity in China. Absolute spend level, both in R&D and CapEx, are set to increase especially short term, but it will be not a straight line. Based on the underlying sales growth, the percentage to sales are expected to be lower in '26 as today. To be clear, staying disciplined and focused while keeping a certain degree of flexibility is, here, the key. It brings me to Pillar 3. A strong commitment to reduce net debt level and to strengthen capital structure. Our capital framework is straightforward and simple, generating more cash than spending, complemented with active portfolio management and the structural equity measures. Our first priority, improving the cash conversion. We continue to work towards a level of around 70% in medium term. The key levers are, first, the strong momentum of our earnings in the Traton Group was a 9% return on sales target based on the stronger sales revenue base. Focus will be optimizing the working capital and to ensure that only such capital is tied up as needed to steer our business. We will also screen our portfolio, and we will take a look which assets and participation across the group we need in order to build our business. And we will free up these resources that are not needed for our daily business. Besides this, no major acquisition. This is a clear commitment. At the same time, we will stick to a dividend policy of 30% to 40% of earnings after tax. All this should result in a decent and continuous reduction of our net debt position. In order to take a bigger step, structural equity measures are necessary. And I'm sure it's not a surprise for you, but we will look into this, but the timing must be wide. To sum it up, we have a clear path and commitment to execute to deliver our 9% return on sales based on a diversified portfolio, and improved resilience of earnings and cash flow. Stepping up investment and driving the development of new technologies and become a front runner of e-mobility, with a disciplined approach and a well-targeted capital allocation. And, improving cash conversion and balance sheet efficiency, with a clear commitment to reduce net debt level. And as you asked today already, all this is embedded in our new Traton bonus system. It is in place since the beginning of this year, and it's valid for management level and all non-tariff employees. The short-term bonus is based on our major financial KPIs, return on sales and return on capital employed. Targets are based on our strategic ambition. For example, [ derive ] for our 9% return on sales target for the group. With ESG, we have added a third pillar to the target system in order to drive the focus of the trade and transformation to more towards sustainability. Depending on the individual responsibility and hierarchy level, the set target a mix of group and brand-specific ambitions. The long-term bonus, however, is entirely focused on Traton Group as a whole. The target achievement is based on EPS performance over a 4-year period and on total shareholder return in the period under review. Overall, a strong incentive for the Traton team to deliver and execute. Let's wrap it up. The Traton team focus and my priority is to bring Traton's financial performance and the resilience of our business and balance sheet to the next level, with a clear commitment towards an ambitious target of 9% turn on sales by 2024, leveraging the potential of the group and supporting targeted investment in our future. At the same time, improving our resilience and efficiency. With a strong financial policy and a clear focus deleveraging our balance sheet, our new bonus system is fully aligned with our strategic targets. And this is also why all these levers will lead to the next point, and why I want to convince you why I think we are a highly attractive investment. An investment in group has had a strong competitive position. An investment in a diversified portfolio of brands across different regions and attractive global growth markets with access to large profit pools, with state-of-the-art products and services that are strongly good towards future trends. Our investment in the future are focused to be a front runner in new technology. We, as a group, has a significant potential to leverage the huge know-how of our brands that is best positioned to benefit from our modular system, and we are in the driver seat of the transformation of the industry to a sustainable future. With the management team, it has a clear plan and that is fully committed and to deliver the 9% return on sales and an efficient balance sheet. And therefore, we will drive attractive shareholder returns. Ladies and gentlemen, I'm completely convinced we have an exciting, intensive and demanding pathway ahead of us. And we, as one team, as a management team is sitting here, we are all in to bring Traton to the next level. And I'm really personally looking forward to this journey, and then I invite all of you to follow us on the way to a successful future. Thank you.

Thank you, Annette. And now, I will be delivering on my promises. There will be a second Q&A, I said it. And let me invite all team members of the management to the stage, and I think we will also have Matthias with us virtually. Hi, Matthias. Good to have you back. Again, during that Q&A session, we will take questions from the audience here in the room. [Operator Instructions] But I think now we're a bit more flexible with time, so we're happy to take the first questions, and I hope more will come. Who is first? Klas again.

So this is a question to you, Matthias. So on Navistar, looking at the U.S. market at the moment, your chart is showing that you close the peak but not at peak, and this was in the beginning of Christian's presentation. I guess this is your assumption on builds that still have upside as semi bottlenecks East. There is a big backlog in North America. But every single U.S. truck indicator at the moment is now going down, be it on freight, be it on used truck values, at sleeper, used inventories are going up. And I just have a question then on your margin of 9% by 2024 in that slide, which looks pretty ambitious as we might have a downturn before you can get to 9%. So just curious on what volume assumptions you think you can deliver your 9%? I'll start there.

Good question. Of course, it's -- as you mentioned, I mean, the indicators of a slowdown on the American market have come very fast and very recent. You see, as you mentioned, the spot market price for freight is down very much. And I'm not -- we still see very, very high price level used vehicles. So let's say, that will still prevail for a short while, though. On the total market, the total market for this year is less expansion areas than we thought. It is down by 7% so far this year compared to same quarter next year. I do think, as you mentioned, there's a lot, let's say, in pipe now to come out. With supply chain and nurture the deal, let's say, so it comes over last year's figures. Perhaps, I would believe that the total market more or less ends up at last year's figures catching up now in the coming quarters. What happens in '23 and beyond, which I think your main question was about? We do see, of course, the very aging part in the states today, the huge, let's say, overusage, if that will be allowed, that use of the rolling fleet the last year, 1.5 years due to lack of supply. So even if the market slows down a little bit, we still see a huge replacement need in the big operators. And as you know, the North American market is more condensed to big players where we do have a strong foothold. Again, we do not intend to, let's say, to lose out, and I think customers rather try to grow on the smaller ones. So when talking very close to our key accounts, I met them in person just the last 2 weeks, 3 or 4 of them actually put in a similar question as yours, about the slowdown we see in the market and what they are seeing. And they are all very confident that their need of replacement in the coming 12 to 18 months is standing by. So we do see, let's say, a quite favorable market as long as we can see throughout '23. What happens in '24, again, I wouldn't speculate that far. Do we need a bigger market or, let's say, from today to reach the 9%? No. I think if we do on our promise here, let's say, our commitment to grow the share 2%, 3%, I mean, on today's market, there is, again, slightly below year-to-date than last year, we should be able to be in that broad range about the 8.5% to 9%. So of course, any volume addition to that will help us, but we're not contemplating that this will pursue or continue at these levels of today. So Klas, I don't know. It's a bit -- I want to put the crystal ball for '24 in the total volumes. We try to match that with our, let's say, profit. But we do not need a growing market compared to today to be, let's say, to go for the 9%.

Okay. Very, very clear. Can I squeeze in one follow-up, Lars?

Just because it's you.

And my follow-up is not on Navistar, it's on Scania. But so on R&D, as you become more modular, Christian, across the group, you're talking about liberating resources. And Scania's margin today, and it was evident particularly in the first quarter, is burdened by high investments that is linked to the group. It feels like -- I mean, you say that you have product costs under control, but it feels like R&D for Scania for the group can linger on for quite a while. Do we need to wait until '25, '26 until you have the CBE across Navistar and MAN? Or can R&D go down earlier than that? That's my follow-up.

Yes. If you think specifically about Scania for Scania, it will and can go down. I think -- and we have to ask Annette how we set up a new financial governance system for what is common development. And so far, the role has been that the brand, normally Scania then, that [ does ] the investment takes it all on own books and then get paid through a license fee later on. And of course, with our product cycle and development times, we're talking 4, 5, 6 years before that actually starts to create some revenues. And in between, you have both a balance sheet problem and you have an R&D problem, and of course, that's not beneficial to anyone. So we will build a system where there will be group R&D instead. And then yes, I think Annette can explain different ways we're thinking how to allocate that cost more fairly. So for Scania as a brand, that problem will at least partly disappear. Then I also align with Annette, I mean, I think in all brands, we need to continue to invest in R&D in this transition period. There is no -- I mean, we should not pretend that we can decrease heavily our common R&D spendings. If we manage to get the scale effects out or the collaboration effects out, meaning, that we get 10% or 20% liberated, I think we should immediately reinvest that into actually creating even more customer value. Annette, I don't know if you want to fill out?

Yes, we can honestly that with the new [indiscernible] organizations that we presented, we want also to change how we allocate the R&D cost in the group so that it's more fair, so that we split the management and the legal entities' view. Now, we have the legal interview, where we have first somebody has to spend it, and then we get the license, and it takes very long to get some money back. And with this new structure, we will want to move to a management structure where we allocate from the beginning the R&D to the brands that will use it later on. And so it's a more fair view, and it's also an ambition that the brands fight for to get it to the customer and to work together and not wait. You talked about the risk when we work together. We have to work together because we split from the first days of cost. And then we feel the burden and the brand results, and this also will foster to work together.

We have one.

Yes, Bjorn, [indiscernible] Bank. Question, Annette, on net deleverage. If you're looking at the improved momentum on earnings and you also talked about working capital, et cetera, how much do you think that will contribute to deleverage if we leave the structural part side?

We really see already that we come down in a range, 10%, 15% of our revenue and working capital binded up, and we strive to keep this and get even lower so that we get to a competitive view. And you know better than me, the competitors that one very well and some has also more working capital, but our aim is really 10% of our revenue would be a good figure for us to bind the working capital and help us to deleverage, but it takes a while. Now, we are in a special situation with all the semiconductor shortage and hardly to manage. Sometimes we need some material there. Sometimes, we don't have the trucks finalized, and so on. So this is hard. But we're working on this, and it will help us really to bring us a certain degrees. But even more, I think the better leverage or the better help is really from the profit improvement, and now, to generate cash.

And on the portfolio management, what could that be you will add? -- on portfolio management, what could that be?

Yes. I think one example I can also bring us that we sell MWM from Navistar [indiscernible] because we think we don't need this any longer as a part of our portfolio. So we will go by every brand and take a look what we really need in our portfolio for the future, and what we can sell or bring to other levels or say we bring into a joint venture and so on. So we're working on this one. We need to go with the brand, and this is a starting point, what we can really sell or bring to a joint venture or something add so that really we do see our assets.

Thank you, Annette. I think we'll continue the -- yes, thank you, Fabian.

Himanshu from Jefferies. I have a question on the financial services. Could you just give us a bit more detail on how you're thinking about it, the time frame, the potential funding needs? And how are you going to basically meet those funding needs, given the high leverage?

I can say something about the time frame, and I think Annette or even Johan sitting next to you, you can say something about the funding ideas. But of course, we want to move quickly, and top priority would be to support Matthias in the States. So to really make sure that when the notice period with Bank Montreal's running out in less than 2 years, we should be really ready to fly. In the meantime, as I said, we are discussing them with Volkswagen Financial Services, how can we, in the best way, start to roll that business over for the sake of MAN, especially. And we are looking into -- together with them what is an adequate time plan market by market to phase out and ramp up. And that job is started, so we are in very frequent discussions together with the team of Christian Levin to come to a solution there. So I think I stop there. So that's -- I don't have an answer to expect which market will happen when, but we would like to get that started, of course, as soon as possible.

Christian, if you were here, I was asked to do some comments on that.

Yes, please.

Exactly the time frame. But some key takeaways. For us, it's important to build portfolios, so we get the access to the ABS's structures, for example. We don't have critical mass fully yet. We will do a buildup portfolio transactions, so don't put any calculations of taking over assets and by that, I mean to fund it. That's the strategy at least. And we will look into different ways of maybe doing some sort of funding on financial services level as well as we do it on the trading group level. You know we have been continuing to do the EMTNs in the Nordics and the Nordic currencies from the Scania platform, so we try to work on those kinds of different sources as well. So we're well aware of the situation, what we're looking also to different sources.

Okay, thanks, Johan. And Annette, you want to add?

No, I think [indiscernible].

I think we will continue. Yes, Johan, if you just provide, yes, that micro? And then we will continue with Miguel thereafter.

It's Nicolai Kempf from Deutsche Bank. My question would be on the U.S. market and gaining market share there. Can you give us some more color on which segment you want to gain market share? Was it Class 8 long haul or more a Class 7? And maybe even from whom you want to gain the market share? And can you also promise us that you're not giving up on pricing to increase your volumes, especially as we are approaching the peak of the cycle maybe?

Yes. Well, let's start from the end there. I mean, the price is -- we talked before about value pricing, right? And I think we come out with a good value proposition here now already by next year to secure our price level. Also, again, drifting over the mix of customers that enables us to keep up a good, let's say, average price level. Where to take? I mean, again, it is not fierce to buy market share again. But I mean, if you look on historically, Navistar has been a market leader in Class 6 and 7, which we are not today. We are #2, but have dropped considerably there. It is something that I think a little bit perhaps differently from Europe, it still is a very profitable segment for us, so it's nothing that scares us on the contrary. We do good results and good profit, and it's also a vehicle that is very welcome, let's say, working close to the [indiscernible] -- perhaps closer to the local dealership, so you can call it, bundle in services, well around the project. So we will grow in the medium range. And also on the Class 8, again, with the new 13-liter engine performing as it should, we have some, I would say, rehaul or overhaul on the cap coming up in a couple of years will also support us in that growth. So I won't say that we will be picking any segment because to grow at the pace we need, we need to pick something here and there. So both in Class 8, and were today down at about 11%, 11.5%. There's a journey back there. And on the -- remember where we come from, have been very strong in 6 and 7. The distribution network we have is very, let's say, very local, very well integrated local communities, which supports Class 6 and 7. But -- So I must say it's a little bit everywhere, but keep it to this pace, 1 to max, 1.5 per year to not to lose the price and value point.

Thank you. I think you have mic, Miguel, right? If you -- we will continue with you, Daniela. Maybe, Nicolai, you can hand over the mic in the meantime? Miguel, please.

Miguel from BNP Paribas Exane. First one for maybe Roberto at VWTV. So last year, you achieved 8%. Starting off the year where you had, why not raise the bar beyond the 8%? And also, do you have a range through cycle? I think at the time of the IPO, you were saying between 200 and 250 basis points for the group. What about VWTV? What would be the floor for profitability when the cycle turns? Or what if the cycle continues, how high could it go? And is 9% the peak? And then my second question for Alexander. Will the margin expansion be stable? Or will there be a period where a bulk of the internal measures kick in? I think you talked about the new plant in Krakow being ready mid next year, so Will there be a big jump in profitability in 2024?

If I can answer you, Miguel. I think one of our beauty on the business model is that we have a very low breakeven point. Our business model is pretty much low fixed cost and low investment base, so we can -- having 6% even in a kind of a reduced volume. And I think it's a reasonable number, 5% to 6% in not good time. And a good time, can be double up return as we can see in the first quarter.

Look forward to that.

Yes. We are also.

Yes. When it comes to MAN, what we will see is that gradually, per quarter, we see improvements, of course, when the volume comes in. And now, as mentioned before, we will have a dire quarter too. But ramping up cargo production from September, that will give immediately effect going forward. And actually, the full effect we will start to see from the structural program in production by Q3 2023, and then with the tail effects into 2024 going forward.

Daniela?

It's a question for Matthias as well, because I guess, it relates mainly to the U.S., but if you want to expand more broadly for the group, it works as well. I wanted to go back to autonomous because one of your competitors has been recently, I think a few of us have been in an event where they're very excited about autonomous and how quickly that can turn into reality in the U.S. and how sizable it can be by 2030. And you didn't spend too much time on it today, so is that because of your specific challenges that Navistar has? Because you don't believe the technology will be ready to be at scale before 2030? Or if you could give some context on your thoughts there?

Well, you're right in your assumption that is on the market. And I think I mentioned also that tech is moving on the side of autonomous moving exceptionally fast in the United States or North America. So I think why did I spend much time on that? We have this, call it, set up agreement with them to simple that was set, let's say, in the previous ownership. We're revising that. It was a little bit more tendential to, let's say, to be a same support rather than, let's say, really embed the technology and expand, let's say, the business model over the opportunities that autonomous comes. But that side is more like, I think you alluded in your question that we kind of -- this is to be extended the group. Because there is a partnership with Too Simple and others within group, there is, and I would assume that over to Christian. But there is extensive investments within group in, let's say, working on the autonomous. And we see now very much, let's say, how U.S. is and shall be, let's say, a leg for the group development within autonomous. So Christian, maybe you can take over here?

Absolutely. Thanks, Matthias. Yes. So this -- as Matthias says, we have to join forces here between the brands. The majority of the resources are in Scania, clearly, but we have good resources in MAN, and we're building resources up in Chicago, and we need to look at this as one. We can, of course, not develop 3 different autonomous platforms. It has to be one. And we actually started with this mindset between Scania and MAN from the start, so that's one of the areas where things have been done right from the beginning. Too Simple, yes, we have 2 different contracts with them. One is the Traton with a more integrated approach. Whereas on the Navistar side, we found that, well, it's more of that business model where actually Too Simple is facing the customer, and Navistar is supplying the hardware. And of course, we are now discussing together to come up with 1 contract and 1 customer-facing model or several customer-facing models, perhaps depending on which type of customer we're meeting. This is, of course, one of the technologies were which is promising and has been promising for a long time. I personally, I think I said in early days that I thought we would see autonomous trucks on the street before we saw electric vehicles being fully commercialized. I was completely wrong, of course. But the development is going at the speed of light, and it's very, very impressing to see. So within our group, we are then having the first autonomous trucks driving between Sodertalje and [indiscernible], so from here in south with goods, of course, with safety driver. And we have received the permission then, and I think we are the first in Europe. It's hard to get that confirmed. But I think that the Traton Group and Scania is the first in Europe to have a permission to drive also on local roads, which we're now expanding into, and we're also expanding into MAN vehicles with exactly the same platform, to learn even more and to gain even more kilometers. We're focusing on the hub to hub, where we see the best use case from a business point of view, but we are also focusing on hubs because the technology is easier. So closed areas, not -- no legal framework or [indiscernible] framework in new humans around. So ports, MAN has been looking into, Scania is looking into -- continue to look into mines. And we have really interesting development there together with Rio Tinto. So -- but yes, the technology needs to continue to mature. And I will not, again, make the mistake and tell you which year we will actually start to have real customer revenues, that the technology evolves and becomes better and better. That is very, very clear and that there will be a business case on at least hub to hub. That is to be completely clear. And Matthias, visiting you earlier this year, I mean, we learned that now, driver salaries are above $100,000 per driver, couple of drivers per vehicle. And you realize what kind of savings you put on the customer and if you could supply even if it's only the driver robot or the virtual driver, so to say, and then the customer has to do all the integration into the logistics system. It's still -- it would still be a very, very appealing case. So it's coming, and it's coming as a trade-off solution.

Thank you. We can take a further question, if there are any. It's probably a lifetime opportunity to have a third question. Himanshu, your second one today, but don't worry, I'm not counting everyone. So over here, last row, please.

Himanshu from Jefferies. I just wanted to ask, we have talked about the volume benefit at Navistar. But you also talk about -- because Annette, I think you mentioned volume is a key driver in achieving the 9% target. So what kind of volume benefit are you expecting in the bridge from 5% to 9%? Because I think we are on the brink of a potential global recession. And if markets would return? So I just wanted to understand what you could achieve without that.

I think one thing is really the acquisition of Navistar that we did so is that we really have the volume increase. But the gaining of the market share, and also that Roberto has ambition to increase the volume, yes. And we all -- as Chistian explained, the growth in Asia that Scania is striving for and the same for MAN. So all has ambition to grow in the sales volume, and this is also reflected in our targets that we want to have. And I think that the market, it's not that they're all in the peak [indiscernible] as you saw the show at Christian presented with the market in a different cycle. And then we have opportunities there under 2024 that the market will increase, and we have our fair share in this and grow.

Klas. Is there a microphone for him? Yes, I see it.

So just one final one. It's on the charging JV. You're ready, you're waiting for [ anti-trans ] clearance, I think it's coming through now. So reading about what [indiscernible] trucks are saying, they're frustrated and nothing happens. I guess you must be frustrated as well in terms of the regulator. Can we talk a little bit about -- because that is really the bottleneck. I mean, the technology is there on all fronts. So Christian, can you talk a little bit about that ongoing dialogue, and what's the latest?

Yes. Absolutely, and I can also let Alexander chip in. Yes. I think it's, of course, a frustration and it's, of course, pity that -- and you have to understand the historical context. We are, of course, coming from a context where we, as the entire automotive sector, have been pushed by the legislators to apply to tougher and tougher emission legislations. And we're now even in the discussion of a Euro 7 level in Europe, with China, 7 in China, we're with EPA, 27 in the U.S., continuing that rate. And there, of course, they are challenging us. We have much earlier understood the CO2 challenge, I think, from the industry side being one of the hard-to-beat sectors But had good dialogue with both national governments and the EU about the need to work -- walk down this road together. And we've been very much aligned, and I think the Fit for 55 package coming out of Brussels was actually a very good one. But without charging infrastructure and without a clear business case, our customers will not change. It is as simple as that. We will find use cases where it makes sense. We do that already now, and there we are, and we supply charging solutions. So for distribution vehicles and garbage vehicles that we talked about. But the volume both for Scania and for MAN is on haulage, and that's also where the big kilometers are driven and the big CO2 emissions are created in our industry. And therefore, we have to come to the point where long haulage is being electrified. And these 2 missing pieces are still missing pieces. So we try to work with partnerships with the energy suppliers because that could also be a hurdle, and we get very good response from the [indiscernible] and the [ bottom falls ] and the [ Iberdrolas ], I mean, they all have very firm plans to actually come with green energy. So green electricity, I think, will be available, but not at the right space. We also talked to the owners of the grid. The national owners like in Sweden [indiscernible] or the 4 both private and state-owned entities in Germany doing the same thing. And there are 100 reasons why they can't. But right now, they can't. And the only one that -- the only thing that can push them is new legislation. And the Swedish case is particularly frustrating as the electrical infrastructure is not considered to be national interest. So if you want to build a railway, you have the rights to appropriate land and may have a quick process to roll it out. If you want to build a high tension cable, you don't. That's every community needs to take the decision. And therefore, we have some really absurd examples where we have customers who would like to buy electric trucks, but there's not just enough power to their depot. And the answer from the supplier of the grid is, well, 10 years. In 10 years, you will get it. And in 10 years, it's just too late. And we have similar examples, I think Germany is a little bit more flexible. But -- so the legislature have to jump in and say, we have to have special measures, new laws. It is as simple as that. And I know it's not simple from a political point of view, but we have like a COVID situation. When the country needs to start to act like as if we have a real crisis. It's just creeping up on us instead of just falling upon us. So yes, it's highly frustrating. And of course, also from a financial point of view, we do all these investments. And if we don't see the volumes coming and we're not going to live up to our science-based targets, we're not going to get a return on our investments, we're going to be in deep trouble. And I feel that was not the deal. So first time we're ahead of politics, and there is a risk that we get this point. I don't know, Alexander, you --

I can just only underline it. And of course, what we have to do is to showcase it. So last week, Friday, we had an event in Berlin where we showcased our mobility road map to actually 40-tonne heavy-duty transport, what we showed you also on the pictures today, to ramp up by 2024. And including in the event, we had customers with actually infrastructure partner, ABB, and also we had the German Minister of Traffic and Infrastructure. And actually, where they are supported so on having a high charging small series, would say, along the highway A2 in Germany. And also there once more, together with ABB, we underline that, look, infrastructure is ready. Customers, they were sitting right there. They are ready. They want to go and they want to roll, but we need the infrastructure to get in place. And that means we need cables on the depots of the logistic depots. Cable is actually providing the power on our service stations. And yes, of course, we want to make business out of it. But I explained also to the minister, we are in business to business. So our customers, they will tell us what they can afford, yes. We will never be able to rock the market. So don't be afraid like in the telecom industry that you have to set roaming in place as it was before. We are ready to roll with a joint venture and make sure that the technology comes on. And then our customers, they will decide who actually is the best partner to team up with. And -- and I think that's all our duty to make that clear. But I think that is how it goes when you are in a transformation.

Thank you. So I would say --

Just to add some flavor also from U.S. I mean, it's very similar there. We look into the grid in the States. It's very, let's say, fragmented of state regulation and federal regulation, and we have raised that now several times the sector. And that is something that we, let's say, will address now under the umbrella of the upcoming Greenhouse Gas 3 Regulation that should be applied from 2030, which I think will be very ambitious. And hopefully, by then, when this is stated, it also considers the whole question of well to wheel. Which, as mentioned by previous, I mean, if you look into the footprint of green energy in the States, today, it's more or less 40%, and the estimates are by 2050, it will just be about 60%, 65%. So there's still a lot of gap to do so that under the umbrella of Greenhouse Gas 3 that when well to wheel is considered that we get also, let's say, the energy sourcing on the right side of, let's say, on green and gray. And also that we have, let's say, a joint ambition to more, let's say, access to grid because the charging points as such, we don't see it as a big obstacle considering, let's say, what is need the investment on that. But of course, it's a factor of close to 10 when you look on the needs of the grill -- a grid when it comes to investments. And that's, of course, only politicians that can sort out.

Matthias. And now this is the end of our Q&A session, I must say. Thank you for a lively and interesting discussion. And let me hand over to Christian for final remarks.

I would also like to say thank you to all of you. I hope it's been rewarding. Thanks for coming meeting us like this. It's extremely interesting to get your question. We learned a lot from the questions and from your ways of thinking. I think you have all of your short minds and ask questions that we're not used to. So that sharpens us. I would like to thank also the crew listening in. I know it's difficult to do a hybrid event. I hope it has not been too difficult to follow online. So thanks the ones of you who stayed with us. And of course, most important, I want to thank also the crew who made this event possible. I think you've done a fantastic work. We are not used to doing these physical events anymore, so it was a stretch. But I think you did a great job. I think everything has worked perfectly. And yes, with that, I hand over to you to explain or -- the continuation of the evening. Or should I do that?

No. I will do.